State tax revenues reveal the economy is turning the corner

The financial picture for Oklahoma state government is turning the corner as evidenced by the June statement – the best report since 2014.

State Treasurer Ken Miller reported that at the end of the 2016-17 fiscal year, Oklahoma is experiencing a six-month pattern of recovery.

With recessions typically defined as two or more consecutive quarters of GDP reduction, the state has emerged from a one-year recession.

That’s good news for legislators who have had to battle giant budget deficits for the past three fiscal years.

Monthly gross receipts have been higher than the same month of the prior year for five of the past six months. FY-17 gross receipts remain lower than the prior fiscal year by 1.5 percent, but the rate of decline has become much smaller than the 7.2 percent decline between FY-15 and FY-16.

June gross receipts, at $1 billion, are the highest June total since 2014. FY-17 gross receipts, at $11 billion, are the highest 12-month total in 10 months.

And Oklahoma’s economy is growing.

The latest state GDP figures from the federal Bureau of Economic Analysis show Oklahoma’s economy expanded by 1.3 percent in fourth quarter of 2016 following four consecutive quarters of contraction.

“Current data is encouraging with lagging economic indicators showing improvement in the state economy,” Miller said. “Leading indicators also point to continued growth, but the anticipated strength of the recovery may be moderating as oil prices have come down slightly.”

June gross receipts are higher than those of June 2016 by $87 million, or 9.4 percent. All major revenue streams – income, gross production, sales and motor vehicle taxes – are above those of the prior year. Collections from gross production taxes on crude oil and natural gas are higher than the prior year for a ninth consecutive month, generating $41.6 million, up by 63.5 percent.

Oklahoma’s seasonally-adjusted unemployment rate remained at 4.3 percent for a third consecutive month in May, according to the Oklahoma Employment Security Commission. State jobless numbers improved by seven-tenths of a percentage point over the year. The rate is equal to the national jobless rate for the same month.

The Oklahoma Business Conditions Index, predicting economic activity for the next three to six months, was set at 57.7 in June, up from 54.2 in May. Numbers above 50 indicate anticipated economic expansion.

The U.S. Labor Department reported that the U.S economy added 222,000 in June – thousands more than economists had predicted. Those same economists say that employment rose because more people are re-entering the job market and that is at least in part due to the policies of President Trump concerning job creation and welfare.

The unemployment rate rose barely to 4.4 percent – right around the lowest level since 2001. Unemployment peaked in 2009 at 10 percent when Barack Obama was president.

Oklahoma State Revenues

Wages grew by 2.5 percent in June compared to June of 2016.

State unemployment rate

4.3 percent – same as national rate

State revenue (June 2017 vs. June 2016)

June $1 billion – up $87 million (9.4 percent)

State income tax revenue

$371 million – up $18.2 million (5.2 percent)

State sales tax

$373 million – up $22.4 (6.4 percent)

Gross production tax (oil and gas)

$41.6 million – up $16.2 million (63.5 percent)

Other miscellaneous revenue

$156.6 million – up $26.7 million (20.5 percent)

State revenue

(12 months, July 2016 to June 2017)

$164 billion – down $164 million (1.5 percent)

State individual income revenue

$3.9 billion – down $198 million (4.8 percent)

State corporate income revenue

$400 million – down $126 million (24 percent)

Sales tax

$4.2 billion – down $68.7 million (1.6 percent)

Gross production revenues (oil and gas)

$442.7 million – up $76 million (20.8 percent)

Motor vehicle taxes

$753.6 million – down $5.2 million (.7 percent)

Other miscellaneous revenue

$1.6 billion – up $32.2 million (2 percent)