Oklahoma Gross Receipts to the Treasury in March show the calm before the storm.
As has been the case for several months, they indicate slight overall growth, but with slowing sales tax collections and reduced oil and gas production,
State Treasurer Randy McDaniel has described the state tax revenue report from March as “the calm before the storm.”
“This month marks the end of almost three years of economic growth,” said Treasurer McDaniel. “I expect to see a much different picture emerge in the coming months.”
Governor Kevin Stitt said the State of Oklahoma is expected to experience a revenue failure of approximately $416 million for the remainder of fiscal year 2020 which ends June 30.
“This revenue failure is not unexpected given the significant impacts of the COVID-19 pandemic as well as the dramatic downturn in the oil and gas markets,” said Gov. Stitt.
“Times like these further reinforce how critically important it was for our House and Senate leadership to work with me to save an additional $200 million during last year’s budget surplus.”
Under normal circumstances, this revenue failure would automatically result in 6.2% budget cuts to all state agencies.
However, Gov. Stitt has called for a special virtual meeting of the Board of Equalization. Monday to begin the formal procedures necessary for the state legislature to tap into the state’s savings account.
The State of Oklahoma’s Rainy Day Fund currently has a balance of $806 million, up to $302 million of which is constitutionally available to the legislature to supplement the FY20 budget.
Additionally, due to the governor’s declaration of an emergency, the Legislature is authorized to access an additional 25% of the Rainy Day Fund, or $201 million.
In March, Oklahoma took in $1.09 billion, up by $6.4 million, or 0.6 percent, from March of last year.
McDaniel listed several data points showing a significant decline is underway:
- First-time unemployment claims hit almost 45,000 the last week of March, the highest number ever reported in Oklahoma.
- Oil prices fell from some $47 per barrel at the start of the month to less than $20 before month’s end. Already suppressed drilling dropped from 50 wells in April to 39 in March.
- The Dow Jones Industrial average dropped by 23 percent during the first quarter of the year, its worst quarterly performance in history.
- The Oklahoma Business Condition Index dropped to 45.7 in March, down from 51.5 in February. Numbers below 50 indicate expected economic contraction in the next three to six months.
“The economic indicators are disconcerting, but working together we will get through this downturn,” McDaniel said.
The total income tax collections were $422 million – up $19.2 million.
Sales taxes brought in $368 million – a drop of $14.8 million.
Gross production taxes (oil and natural gas) were $78.9 million – a decrease of $17.3 million.
Motor vehicle taxes were $72.5 million, up by $5.2 million from 2019. Other taxes amounted to $134.4 million – up $10 million.
State revenue totals $13.72 billion from the past 12 months, April 2019 through March 2020.
That is $456.5 million, or 3.4 percent, above collections from the previous 12-month period.