Economic expansion in Oklahoma continues regardless of steep declines in gross production tax collections, Secretary of Finance and Revenue Preston L. Doerflinger said Wednesday.
Strong income and sales tax collection gains during the past fiscal year put Oklahoma on solid footing, Doerflinger said.
“It was a good revenue year that would have been even stronger if not for losses stemming from gross production tax changes passed in 2010,” said Doerflinger, director of the Office of Management and Enterprise Services.
The General Revenue Fund in Fiscal Year 2013, increased by $248.4 million increase in income and sales tax collections above FY 2012. This gain offset a $208.9 million, or 48.5 percent reduction, in oil and natural gas collections, according to a preliminary report for FY 2013 that ended June 30.
“Total FY 13 GRF receipts were $5.6 billion, an increase of $10.3 million, or .2 percent, over FY 12 that is $26.5 million or 0.5 percent below the estimate upon which the FY 13 budget was based,” the report states. “Income taxes yielded $2.6 billion, an increase of $177.1 million or 7.4 percent over last year, while sales taxes produced $1.9 billion, an increase of $71.3 million or 3.9 percent over last year.”
Monthly collections for June were sluggish with $527.5 million added to the GRF, a decrease of $54.8 million, or 9.4 percent, from a year ago. This was $61.5 million, or 10.4 percent, less than the estimate for the month.
Higher than anticipated gross production revenue losses may prevent a Rainy Day Fund deposit this summer, Doerflinger said. The Rainy Day Fund is at $532 million.
The reduced gross production revenue is linked to how horizontal wells have been taxed since a 2010 gross production tax was enacted, according to OMES. The gross production tax rate was reduced on horizontal wells from 7 percent to 1 percent for 48 months after the start of production.
“The 2010 law has led to some real revenue loss,” Doerflinger said. “In our estimation, policymakers should consider revisiting this law in consultation with the energy industry to determine whether it is fair and equitable to the industry, the state and all its taxpayers.”
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