Rising income tax revenues yield FY 2013’s biggest general revenue fund surge, Doerflinger says
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Published: 14-Feb-2013

OKLAHOMA CITY – State Finance Secretary Preston L. Doerflinger announced this week that rising income tax receipts lifted collections to the General Revenue Fund to $578.3 million in January, the highest monthly total for the first seven months of the current fiscal year and an increase of $53.4 million or 10.2 percent from the same month a year ago.

“Income tax collections are outperforming expectations by double digits through the first seven months of Fiscal Year 2013,” Doerflinger said as he released the monthly General Revenue Fund report. “Sales taxes also are performing well. These figures are evidence of continued economic expansion as we approach next week’s final certification of revenues available for the next state budget.”

The Board of Equalization will meet Feb. 19 to certify the official, final revenue estimates that will be used for the FY 2014 state budget.

“Another month of double-digit revenue growth is a great sign that Oklahoma’s economy is headed in the right direction,” Gov. Mary Fallin said. “To make sure it stays on track, I will continue to pursue pro-growth policies with the Legislature, including a measured, responsible tax cut in 2013. As the state continues to see increased revenue growth, we want to make sure as much of that money as possible ends up back in the wallets and bank accounts of hard working Oklahomans.” 

In January, combined personal and corporate income tax receipts totaled $281.5 million, beating collections from the prior year by $46.1 million or 19.6 percent. Individual income tax collections reached $255.9 million for the month, exceeding the total for January 2012 by 20.2 percent and the estimate by 21.1 percent.

“We always preach that income taxes can vary greatly from month to month because of remittance issues. But net income taxes over the seven-month period are above estimates by almost 15 percent and personal income taxes are above estimates by 10 percent. Net dollars collected from income taxes over seven months are up 10.1 percent over last year. That’s a definite positive trend,” Doerflinger said.

The finance secretary also pointed out that sales tax collections for the first seven months of FY 2013 have increased from a year ago by 6.8 percent and are running 1.4 percent ahead of the estimate for that time period.

“January sales taxes yielded $166.1 million, an all-time record for any month,” he said. “Other bright spots for the Oklahoma economy include our 5.1 percent unemployment rate – one of the lowest in the country – and the recent rise in rotary rigs erected in the oil patch, up to 196 after falling to 183 earlier in the fiscal year, according to reports from Baker Hughes. This increase in drilling should generate new economic activity across the state in the months ahead.”

Doerflinger added: “Although Oklahoma’s economy continues to perform admirably, we must recognize that it could be adversely affected by external events down the road. As long as there is fiscal strife and budget uncertainty in Washington, D.C., the threat of another national recession will exist. We have to continue proceeding cautiously.”

The finance official said that if a national downturn should occur, Oklahoma will be prepared to address it. In addition to the state’s strong economic growth and low unemployment, the constitutional Rainy Day Fund balance is expected to exceed $600 million for the first time ever upon its July deposit.

Doerflinger added: “The governor has worked very hard to recruit businesses, enact pro-growth legislation and support tax policy designed to grow the economy. Her success in these areas has our state growing and well-positioned to defend against the fiscal unrest in Washington. We have to keep the pedal to the medal, recognizing that the best defense is a good offense.”

In her State of the State speech, Fallin proposed a quarter percent income tax cut to bring the state’s top marginal rate down to 5 percent, while signaling she would support a larger reduction if lawmakers could agree on reforms in the tax code.

“State revenues have consistently grown after the other incremental income tax reductions Oklahoma has made in recent years. That revenue growth has far-exceeded the cost of those tax cuts,” Doerflinger said. “The numbers don’t lie, and they show clearly that these types of income tax reductions have brought big benefits to the economy and government revenues alike.”

Doerflinger, the governor’s lead negotiator with the Legislature on budget issues, said it was only two years ago that Fallin took office and supported a quarter percent income tax cut set to go into effect under previous legislation once certain economic conditions were met.

“Tax consumers and their advocates were fear-mongering then, as they are now, by insisting the state could not afford that reduction. Today our income tax collections are strong and growing, and our total revenues for appropriations are expected to exceed $7 billion next year, approaching peak revenues before the recession,” Doerflinger said. “History has shown that lower taxes grow the Oklahoma economy while diversifying and growing government revenue streams, allowing for the necessary resources to sustain and enhance core government services.”

Total GRF collections for the first seven months of FY 2013 are $3.2 billion, which is about $500,000 above or essentially flat from total collections for the same period of FY 2012, but $98 million or 3.1 percent higher than the official estimate upon which the FY 2013 state budget is based.

The General Revenue Fund is where all revenue from state fees and taxes flow, except those revenues that are dedicated or earmarked to certain agencies or programs. Doerflinger is director of the Office of Management and Enterprise Services, which compiles the monthly GRF reports from almost 70 state revenue sources.

OMES, which is responsible for building the governor’s executive budget, was formerly known as the Office of State Finance and has generated GRF reports continuously for decades. The GRF is state government’s main operating fund.

Major tax categories in January contributed the following amounts to the General Revenue Fund:

Income taxes – The total collected from individual and corporate income taxes in the month of January was $281.5 million for the FY 2013 General Revenue Fund, which was $46.1 million or 19.6 percent more than prior year collections and $50.1 million or 21.7 percent above the estimate. Individual income tax receipts of $255.9 million were $43 million or 20.2 percent above the prior year and $44.6 million or 21.1 percent above the estimate. Corporate tax collections contributed $25.6 million to the General Revenue Fund, which was $3.1 million or 13.9 percent above January 2012 collections and $5.6 million or 27.9 percent more than the estimate.                 

Sales tax – The Tax Commission apportioned $166.1 million in sales tax collections to the General Revenue Fund for month of January, which was $1 million or 0.6 percent higher the prior year and $7 million or 4.1 percent lower than the estimate. 

Gross production tax – Gross production tax collections from January contributed $35.3 million to the General Revenue Fund after rebates. This amount was $17.9 million and 33.7 percent lower than January collections for last year and $11.9 million or 51.1 percent above the estimate.

Collections from natural gas accounted for $9.9 million, which was $9.9 million or 50 percent below prior year collections and $5.9 million or 37.3 percent below the estimate.

Collections from gross production oil taxes contributed $25.4 million to the General Revenue Fund. This amount was $8 million or 24 percent less than collections for January of 2012 and $17.8 million or 236 percent above the estimate. 

Motor vehicle taxes – Motor vehicle taxes produced $18.2 million from January collections, which was $394,171 or 2.2 percent above the prior year and $630,938 or 3.4 percent below the estimate. 

Other Revenue – Other revenue produced $77.3 million for the General Revenue Fund in January. This amount was $23.8 million or 44.5 percent above the prior year and $6.1 million or 8.6 percent above the estimate.

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