January General Revenue Fund Collections Take Another Hit from Cheap Oil

By Jason Doyle Oden

Another expected miss for General Revenue Fund (GRF) collections in January. This time, collections missed the estimate by 17.2 percent and was 16.2 percent less than January of the previous year. Oil prices once again get the blame for the lower collections.

Total January collections for GRF were $507.6 million, $105.5 million under the estimate. It is $98.1 million below the prior year’s collections.

The Board of Equalization is set to meet February 16th to update revenue projections and give the Legislature the figure which sets the appropriations budget for the next fiscal year.

“When the board updates the current year projections, it will require a deepening of the midyear general revenue reductions made following December’s revenue failure declaration,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger said. “The precise amount of the deeper reduction will be determined following the board meeting. It is also possible the Legislature may take actions that could affect the revised reduction amount.”

The “lower for longer” oil prices are causing collections to slow in Oklahoma. The January collections reflect November oil prices which were around the $45 a barrel mark. As of Tuesday, crude was trading below $30. That means GRF collections are expected to continue declining.

“The truly bottom of the barrel oil prices that started in November are just now hitting collections and will continue doing so for the next several months,” Doerflinger said. “All tax categories are feeling the pain.”

Doerflinger also points out the wind production tax credit contributed to corporate income tax refunds exceeding corporate income tax collections in October, November, and December. January is the first month the state didn’t have to transfer money to cover the refunds.

“It took until January to pay personal income tax back for the money that was borrowed mostly to pay those wind tax credit claims that started in October,” Doerflinger said.


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