Oklahoma's economy improved moderately in 2013 and early economic signs for 2014 appear positive, as well, Oklahoma Treasurer Ken Miller said Monday.
Oklahoma gross revenue collections rose 3.2 percent in 2013, reaching a total of $11.446 billion, Miller said at a news conference.
He noted that state revenues had grown 9.6 percent in 2011 and 3.8 percent in 2012 as the nation emerged from a recession.
“The Oklahoma economy continues to advance but backed off the accelerator a little during 2013,” Miller said. “All major sources of revenue finished the year in growth territory, just not as robust as during the past few years.”
Looking forward to 2014, Miller expressed optimism — pointing to a huge 10.9-point December leap in the Oklahoma Business Conditions Index and modest improvements in state sales tax collections during the early Christmas shopping season as positive signs.
The Oklahoma Business Conditions Index jumped from 49.3 in November to 60.2 in December, indicating that Oklahoma's economy is likely to expand during at least the first half of 2014, he said. Numbers above 50 predict economic growth in coming months.
“Going from 49 to 60 is a big leap in one month, and I think encouraging for what lies ahead for Oklahoma's economy in the next year,” Miller said.
Meanwhile, state sales tax collections for the mid-November to mid-December early Christmas shopping season increased $3.5 million, or 1 percent, over the year before, reaching a total of $368.49 million.
The 2012 Christmas shopping season was “real good,” so even a modest 1 percent improvement should be considered positive, he said.
Miller pointed to the performance of Oklahoma's oil and gas industry as a bright spot in Oklahoma's economy.
Gross production taxes on oil and natural gas generated $69.84 million in December, an increase of $9.67 million, or 16.1 percent, from the previous December. For all of 2013, oil and natural gas production taxes generated $795.5 million, a $67.46 million, or 9.3 percent, increase over the previous year.
Gross production taxes and tax breaks granted to the oil and gas industry have been topics of debate within the state Capitol in recent months.
State Finance Director Preston Doerflinger said last July that the Legislature might want to revisit a 2010 oil and gas industry tax break because of the detrimental financial impact it was having on the state treasury.
That law extended a reduction in the tax rate on horizontal wells from 7 percent to 1 percent for 48 months after the start of production and switched from a rebate system to a system where producers just pay lower taxes from the beginning. Under the new law, the 1 percent tax goes entirely to counties and school programs and the state receives no money from new horizontal oil and gas wells for 48 months.
Oil, gas taxes
Meanwhile, House Speaker T.W. Shannon last week announced he would introduce legislation to make the 1 percent tax on horizontal drilling permanent.
Treasurer Miller said Monday that when the current tax incentive expires in 2015, it may be time to revisit Oklahoma's whole oil and gas taxing policy.
“I think that examination may show that incremental changes in the current incentive rate, in turn, may be needed, or it could reveal that comprehensive changes in energy tax policy would better provide stability for increasing global capital,” Miller said.
“It also provides opportunity for lawmakers to simplify and unify the system by lowering the gross production tax rate on all oil and gas production rather than to continue to incentivize what has become the norm.”
The overall effective gross production tax rate in Oklahoma is currently 5.5 percent for oil and 5.3 percent for natural gas, when tax incentives and everything else is considered, he said.
One alternative would be to lower the gross production tax rate from 7 percent to the effective rate oil and gas companies are actually paying, while eliminating incentives, he indicated. That would simplify the system and provide more certainty for producers, he said.
These are figures for several major categories of 2013 tax collections and how they compare with collections for the previous calendar year:
• Personal income taxes, $3.528 billion, up 4.7 percent.
• Corporate tax collections, $579.62 million, down 1.6 percent.
• Sales taxes, $4.267 billion, up 2.2 percent.
• Oil and gas gross production taxes, $795.5 million, up 9.3 percent.
• Motor vehicle taxes, $723.93 million, up 3.1 percent.
• Other sources, $1.552 billion, up 2 percent.
• Total Gross revenue, $11.446 billion, up 3.2 percent.