THE state Office of Management and Enterprise Services reports Oklahoma's general revenue fund collections in July were 5.3 percent higher than collections in July 2012. That's a good start for the state fiscal year, which launched in July. But that healthy growth may have to accelerate to avoid shortfalls.
A report by the National Conference of State Legislatures identifies Oklahoma as one of only three states forecasting revenue increases greater than 5 percent in fiscal year 2014. The NCSL report notes Oklahoma is forecasting 5.6 percent growth. Thus, 5.3 percent growth won't get the job done.
This doesn't guarantee Oklahoma is headed for a budget meltdown. Significant month-to-month variations in revenue collections are routine. But the fact that Oklahoma's budget writers assumed stronger revenue growth than their counterparts in all but one state is reason for concern.
The other states forecasting similar growth are North Dakota (6.6 percent) and New Jersey (5.2 percent). Like North Dakota, Oklahoma has benefitted from an energy boom. Yet state gross production tax collections in July were 21.3 percent below estimates. State income tax collections that exceeded estimates may still reflect energy industry gains, but current energy tax collections are not reason for outsized optimism. There's no doubt the energy boom is benefiting Oklahoma's economy. The question is whether it will have the impact necessary for tax collections to meet state budget-writers' expectations.
Nationally, officials expect this fiscal year's tax collections to grow at a much slower rate. The NCSL report found general fund revenue in the 50 states combined grew 5.3 percent in fiscal year 2013, but just 1.3 percent growth is expected for 2014. What's more, last year's revenue surge likely had less to do with economic growth than tax strategy.
“Most states attributed the increase to taxpayers pushing income into tax year 2012 to avoid an anticipated increase in federal tax rates in 2013,” the report stated.