Special to The Sun
After six months of stagnation, the Oklahoma economy finally appears to be expanding again albeit still weakly. Unfortunately, our leaders aren’t making the investments we need to give our economic prospects a boost.
Last week the Oklahoma Office of Management and Enterprise Services reported that in April state General Revenue fund collections were 5.2 percent above the estimate and 14.7 percent higher than last year’s collections. Under normal circumstances, such a report would indicate that the Oklahoma economy was very strong. But this isn’t a normal circumstance, and April isn’t a normal month.
Upon closer inspection, it is clear the strength of the revenue report was driven by a sudden jump in income tax collections. Given that April is the month that 2012 tax payments are due, the strong revenues likely reflect the strength of the 2012 Oklahoma economy as much as the 2013 economy. Throughout most of 2012, we know that the Oklahoma economy was robust — something that undoubtedly affected April 2013’s income tax collections.
State sales tax collections, an arguably more reliable indicator of economic well-being, continued to be relatively weak. According to the OMES report, state sales tax collections in April were 6.6 percent below the estimate and 3.4 percent below last year’s collections. This weakness, which should be apparent in the revenue reports for the next several months, confirms what I’ve been reporting for months, that the Oklahoma economy has been slowing considerably.
The good news though, is that it looks as if the Oklahoma economy is once again starting to expand. Seasonally adjusted state sales tax collections, which had been declining slightly at the beginning of the year, have now started to rise (albeit slightly) in April. While the economy is far from booming, it is at least not contracting at the moment.
While the state revenue reports are likely to remain weak for the next few months, the data indicate that the turnaround is coming. Unfortunately, the weakness from the last several months is not reflected in the fiscal year 2014 revenue estimates the State Equalization Board certified in February. As a result, FY 2014 revenue collections are likely to be considerably lower than the estimates released just a few months ago.
Given that the Legislature has already approved a tax cut for next year, and state funding for core services like education, children’s health care, roads and prisons, still remain below pre-recession levels, further weakness in state tax collections means further weakness in the state’s ability to provide these necessary government services. At a time when state leaders are clearly not making the investment in education that other states make; when we still have too many Oklahoma children lacking health insurance; when our public safety officers continue to be paid at critically low levels — more cuts in state funding are questionable even during the best economic conditions. At a time when state revenue growth is also in doubt, further tax cuts are simply irresponsible.
Oklahoma cannot expect to continue growing our state economy by ranking 48th in the nation in per-pupil education funding. Oklahoma cannot expect to promote job growth by continuing to defer maintenance on our failing roads and bridges. And Oklahoma cannot enhance our quality of life by ignoring the needs of our public safety officers.
But that is the path we’ve chosen. For now, the Oklahoma economy is growing again. But the Legislature’s unwillingness to invest in our future means that our growth won’t be what it should be.
MICKEY HEPNER is the dean of the College of Business Administration at the University of Central Oklahoma. Hepner serves on the Executive Committee of the Board of Directors for The Oklahoma Academy.