Historic shortfall deepens for Tulsa and Oklahoma

Tulsa’s sales tax revenue fell 1.1 percent last month while state revenues fell by almost 10 percent as this historic shortfall deepened.

The City of Tulsa’s October sales tax check, which covers the period from mid-August to mid-September as reported by the Oklahoma Tax Commission, totaled $19,613,682. This total is 1.1 percent lower than for the same period one year ago, and 2.2 percent below the budget estimate.

Sales taxes collected for the current fiscal year that began in July total $78,177,318, showing a decrease of 1.3 percent compared to one year ago. Sales tax collections this fiscal year also are 1.0 percent below the budget estimate.

“Tulsa’s lower sales tax collections mirror what is happening throughout Oklahoma, as the state has reported 19 consecutive months of revenue declines,” said Mayor Dewey Bartlett. “Our monthly shortfalls remain near 1 or 2 percent, but we are falling behind our budget estimate, with decreases from one year ago in eight of the past nine months”

Use taxes for October totaled $1,791,198, which is an increase of 5.2 percent from the same period a year ago, but 1.2 percent below the budget estimate. Use taxes for the fiscal year so far total $6,854,445, which is down 11.3 percent from one year ago and 7.7 percent below the budget estimate.

Sales tax and use tax collections provide two-thirds of the City of Tulsa’s general fund. Services such as police and fire protection, 911 emergency dispatch, snow and ice removal from streets, pothole repair and mowing of grass in medians and parks are supported by sales and use taxes.

Gross receipts to the state treasury in September fell by almost 10 percent compared to the same month of the prior year, continuing a 19-month contraction in the broad measure of state economic activity, State Treasurer Ken Miller said.

September collections were $939.6 million. The last time September collections were lower was in 2010, when Oklahoma was only a few months past the revenue trough brought on by the Great Recession. Collections during the past 12 months, at $10.9 billion, are the lowest since March 2012.

“As has been the story for almost two years, Oklahoma is feeling the effects of a supply-driven downturn in energy prices that has spilled over into the rest of the economy,” Miller said. “We are monitoring discussions within OPEC on reducing oil production volumes. Should an agreement to dial back production come to fruition, it could spur oil prices and turn the current negative cycle.”

Gross production taxes on crude oil and natural gas activity generated $31.5 million during the month, down by 14 percent from last September, and continued a string of 21 consecutive months of year-over-year contraction.

After ticking up slightly in August, individual income tax collections dropped by more than 12 percent in September. Tax officials attribute much of the reduction to last year’s tax amnesty program that generated more than $30 million in additional revenue last September. However, monthly individual income tax collections were down by more than $40 million. Sales tax collections were down by 2.6 percent compared to September of last year. It marks the 16th time in the past 19 months that sales tax collections have been below that of the prior year.

For a second month in a row, Oklahoma’s unemployment rate in August was reported as being higher than the national jobless rate. The U.S. rate was set at 4.9 percent, while the state’s rate was reported at 5.1 percent.

Prior to July, Oklahoma’s unemployment rate had been lower than the U.S. rate for almost 26 years.

The Oklahoma Business Conditions Index, predicting economic activity for the next three to six months, was set at 40.3 in September. It is the fourth consecutive month that the state has had numbers below 50, which indicate continued economic slowing.

The report for September lists gross receipts at $939.6 million, down $100.5 million, or 9.7 percent, from September 2015.

Gross income tax collections, a combination of individual and corporate income taxes, generated $349.4 million, a reduction of $89 million, or 20.3 percent, from the previous September.

Individual income tax collections for the month are $283.3 million, down by $40.3 million, or 12.5 percent, from the prior year. Corporate collections are $66.1 million, down by $48.6 million, or 42.4 percent. Wide variances in corporate collections are not uncommon.

Sales tax collections, including remittances on behalf of cities and counties, total $348.4 million in September. That is $9.4 million, or 2.6 percent, below September of last year.

Gross production taxes on oil and natural gas generated $31.5 million during the month, a decrease of $5.2 million, or 14.2 percent, from last September. Compared to August reports, gross production collections are down by $332,000, or 1 percent, over the month.

Motor vehicle taxes produced $64.3 million, down by $3.2 million, or 4.7 percent, from the prior year.

Other collections, consisting of about 60 different sources including taxes on fuel, tobacco, horse race gambling and alcoholic beverages, produced $146 million during the month. That is $6.3 million, or 4.5 percent, more than last September.

During the past 12 months, October 2015 through September 2016, gross revenue totals $10.9 billion. That is $954.2 million, or 8.1 percent, below collections for the previous 12-month period.

Gross income taxes generated $4 billion for the period, reflecting a drop of $420.1 million, or 9.5 percent, from the preceding 12 months, October 2014 through September 2015.

Individual income tax collections total $3.5 billion, down by $256 million, or 6.7 percent, from the prior 12 months. Corporate collections are $459.1 million for the period, a decrease of $164.1 million, or 26.3 percent, from the previous period.

Sales taxes for the 12 months generated $4.2 billion, a decrease of $202.5 million, or 4.6 percent, from the preceding period.

Oil and gas gross production tax collections brought in $341.8 million during the 12 months, down by $244.2 million, or 41.7 percent, from the trailing period.

Motor vehicle collections total $749.9 million for the period. This is a decrease of $20.3 million, or 2.6 percent, from the trailing 12 months.

Other sources generated $1.6 billion, down $67.2 million, or 4.1 percent, from the previous 12 months.