While General Revenue Fund (GRF) collections continued to perform above expectations in March, signals emerged of the coming effect low oil prices may have on state revenue collections.
As state government’s main operating fund, the GRF is the key indicator of state government’s fiscal status and the predominant funding source for the annual state budget. GRF collections, reported by the Office of Management and Enterprise Services (OMES), are revenues that remain for the appropriated state budget after rebates, refunds and mandatory apportionments. Gross collections, reported by the State Treasurer, are all revenues collected by the state prior to rebates, refunds and mandatory apportionments.
March GRF collections of $424.4 million were $11.1 million, or 2.7 percent, above the official estimate upon which the fiscal year 2015 appropriated state budget is based and $11.5 million, or 2.8 percent, above prior year collections.
Total GRF collections for the first nine months of FY 2015 were $4.1 billion, which is $82.6 million, or 2 percent, above the estimate and $216.7 million, or 5.6 percent, above the prior year.
“While this year’s revenues have been solid to date, we’re seeing clearer signals now of a slowdown ahead,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger.
Preliminary effects of sustained low oil prices are likely reflected in March gross production tax collections, which missed the estimate by $22.6 million, or 62.8 percent, and were below prior year collections by $25.8 million, or 65.9 percent.
“Historically, energy downturns see gross production taxes fall first and the other tax categories fall next. The gross production dip in March reflects production from January, when the energy sector started contracting in earnest, so other major tax categories may soon follow suit,” Doerflinger said.
Conversely, March personal income tax collections beat the estimate by $46.2 million, or 60.9 percent, and were above prior year collections by $35.6 million, or 41.3 percent. However, that increase may also be a signal of future declines related to low oil prices.
“When a large economic sector shrinks, states often see individual income tax collections temporarily go up due to severances and buyouts and then turn down in the following months. It seems likely that March’s personal income tax surge was fueled at least in part by energy sector severance paychecks and buyouts, plus tax filing season trends,” Doerflinger said.
Doerflinger is director of OMES, which issues the monthly GRF reports.
Major tax categories in March contributed the following amounts to the GRF:
- Total income tax collections of $182.9 million were $43.4 million, or 31.1 percent, above the estimate and $36.4 million, or 24.8 percent, above the prior year.
Individual income tax collections of $122 million were $46.2 million, or 60.9 percent, above the estimate and $35.6 million, or 41.3 percent, above the prior year.
Corporate income tax collections of $60.9 were $2.8 million, or 4.3 percent, below the estimate and $721,675, or 1.2 percent, above the prior year. - Sales tax collections of $150.8 million were $8.6 million, or 5.4 percent, below the estimate and $2.8 million, or 1.8 percent, below the prior year.
- Gross production tax collections contributed $13.4 million to the GRF in March and were made up entirely of oil tax collections. Lower collections and offsetting refunds eliminated any deposit from natural gas taxes.
Oil collections of $13.4 million were $7 million, or 34.3 percent, below the estimate and $19.2 million, or 58.9 percent, below the prior year. - Motor vehicle tax collections of $15.5 million were $1.1 million 7.7 percent, above the estimate and $807,146, or 5.5 percent, above the prior year.
- Other revenue collections of $61.8 million were $2.2 million, or 3.5 percent, below the estimate and $3 million or 5 percent, above the prior year.
Monthly revenue tables are available on the OMES website: http://www.ok.gov/OSF/News/March_2015_Financial_Report_Data_Tables.html
