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News Release

PRESTON L. DOERFLINGER
Director and Secretary
of Finance and Revenue

MARY FALLIN
Governor

Tuesday, Jan. 16, 2013
For Immediate Release

Media Contact:
RON JENKINS
Public Information Officer
Oklahoma Office of State Finance
(405) 521-3267
Ron.Jenkins@omes.ok.gov

December General Revenue Fund Collections
Indicate Healthy Growth in Oklahoma Economy

UPDATED: Reflects change in sales tax apportionment by Oklahoma Tax Commission

OKLAHOMA CITY – General Revenue Fund (GRF) collections in December featured strong sales tax collections, a leading sign the Oklahoma economy is maintaining healthy growth at the close of the first half of Fiscal Year 2013, according to Finance Secretary Preston L. Doerflinger.

Doerflinger, director of the Office of Management and Enterprise Services, said the agency’s GRF report for December indicated Christmas sales were brisk as receipts from sales taxes were up $9.6 million or 6.3 percent from December 2011.

Sales tax collections going to the GRF exceeded $163 million, the second highest total of the first six months of the current fiscal year.

"It's always a good thing to be riding a wave of consumer confidence into a new year," Doerflinger said, while at the same time expressing concern national events could eventually be harmful to the state economy.

"The danger of adverse repercussions from fiscal strife in Washington still lurks," he said. "Washington must somehow climb out of its long-time fiscal rut, stop kicking the can down the road and start solving our nation's horrendous debt problem."

Doerflinger added, "Until it does, there will always be a risk of another recession and to the economic progress we have made in Oklahoma over the past two years. Decisions still pending in D.C. also could harm our important defense and aerospace industries, as well as complicate the state budget process."

The finance official said he is pleased Congress and the president agreed on a plan that will avert state and federal tax increases for most Oklahomans, but added he is perplexed by "their reluctance to make the hard choices on runaway federal spending…I worry that their dilly-dallying eventually will take its toll on the psyche of businesses and individuals who want to invest in our economy to keep our state and country moving forward."

The Oklahoma Tax Commission on Wednesday corrected its apportionment of $172 million in sales tax receipts to the GRF, which would have been an all-time monthly record. The Tax Commission later said an error in reporting had occurred and some city and county sales and use tax figures were included in the state numbers sent to the GRF. Those taxes were to be withdrawn from the GRF and sent to local governments.

Tax Commission Director Tony Mastin said the GRF report released Tuesday by the OMES "correctly reported and analyzed "data from the Commission, "but our sales tax figures were inaccurate." Mastin went on to say that December "was our first month using a new sales tax system, and we have identified some deficiencies that have been corrected so that this error does not repeat itself moving forward."

Through December, monthly sales tax increases over the previous year have averaged 8 percent.

Combined individual and corporate income taxes were up 5.7 percent in December over the same month a year ago. Total income taxes for the first six months of the current fiscal year have increased 8.1 percent over the first six months of FY-2012.

"In Oklahoma, we are still adding good-paying jobs, our workforce is growing and consumer confidence remains high," Doerflinger said.

"The fact that we have the lowest unemployment rate of any of our six bordering states, including fellow energy states, is a tribute to the pro-growth policies and recruitment efforts of Gov. Mary Fallin," he added.

The latest Oklahoma unemployment report showed a fractional drop in the state’s 5.2 percent jobless rate, with the addition of thousands of jobs in such areas as manufacturing and construction. Oklahoma's unemployment rate is 2.5 percent lower than the national jobless rate of 7.7 percent.

Since January 2011, when Gov. Fallin took office, 62,400 jobs have been created in Oklahoma, according to the Oklahoma Department of Commerce. The state ranks 4th among the states in total job growth and 2nd in manufacturing job creation.

Gov. Fallin was pleased with December's sales tax growth. "Our excitement over increased revenue must be tempered, however, as the ongoing fiscal uncertainty in Washington, D.C., could impact the federal dollars we receive in Oklahoma," she added. "Hopefully, our leaders in Washington will get serious and work together to tackle our skyrocketing national debt and federal spending issues."

Doerflinger said GRF collections from all sources were down marginally from the prior year in December and also are slightly lower for the first six months of the fiscal year. "That is not due to economic factors," he said. "Those fractional declines are tied almost exclusively to natural gas refunds and lower prices for both gas and oil, compared to the same time period a year ago."

Gross production tax collections to the GRF fell $46.4 million in December 2012, compared with the same month the previous year. For the six-month period, gross production tax collections on oil and gas are down almost $231 million.

"We expect energy collections to pick up in the months ahead, especially from oil," Doerflinger said. "One reason is we have met the $150 million threshold on state oil revenue earmarked to education funds. Another is the likelihood of increased drilling activity in the months ahead, based on plans of energy companies. The latest rotary rig count from Baker Hughes shows an increase of four rigs from the previous week to 185."

Reaching the threshold on earmarked oil revenue led to a $5.4 million contribution from that source to the GRF. Education is guaranteed the first $150 million in oil revenue. With that figure now met, oil tax collections to the GRF will increase significantly for the balance of the fiscal year.

The GRF is made up of about 70 revenue sources. It is where all revenue from state taxes and fees flows, except for funds earmarked or dedicated to specific programs.

Total collections to the GRF in December were $518.9 million, a decrease from a year ago of $23.4 million or 4.3 percent. Receipts for the month exceeded the estimate by $4.4 million or about 1 percent.

Total GRF collections for the first half of fiscal year 2013 are $2.6 billion, $53.9 million or 2 percent less than total collections for the same period of FY-2012, but $37.5 million or 1.4 percent higher than the official estimate upon which the current state budget is based.

Major tax categories in December contributed the following amounts to the GRF:

Income taxes –- The total collected from individual and corporate income taxes in the month of December was $277.3 million for the FY-2013 GRF, which was $14.9 million or 5.7 percent more than prior year collections and $17.4 million or 6.7 percent above the estimate.

Individual income tax receipts of $211 million were $3.2 million or 1.5 percent above the prior year and $5.8 million or 2.7 percent below the estimate.

Corporate tax collections contributed $66.4 million to the GRF, which was $11.7 million or 21.4 percent above December 2011 collections and $23.3 million or 53.9 percent more than the estimate.

Sales tax -- The Tax Commission apportioned $163.1 million in sales tax collections to the GRF for month of December, which was $9.6 million or 6.3 percent higher the prior year and $800,000 or 0.5 percent lower than the estimate.

Gross production tax – Gross production tax collections from December contributed $8.3 million to the GRF after rebates, compared to $54.7 million last year.

Collections from natural gas accounted for $2.9 million, which was $23.3 million or 88.9 percent below prior year collections and $14.6 million or 83.3 percent below the estimate.

Collections from gross production oil taxes fulfilled the $150 million cap required by statute and produced $5.4 million for the GRF. This amount was $23.1 million or 81.1 percent below collections for December of 2011. No collections were estimated to be received from this source for the month of December of the current year. In 2011, the education cap was met earlier in the year and the GRF received $28.5 million from oil in December.

Motor vehicle taxes -- Motor vehicle taxes produced $11.8 million from December collections, which was $7.6 million or 39.3 percent less than the prior year and $6.9 million or 36.8 percent below the estimate. Revenue analysts at the OMES said vehicle sales in December, 2011, were unusually high, brought on by pent-up demand as recovery from the recession began to take hold. For the year, motor vehicle collections are down only 2.2 percent from the prior year.

Other Revenue -- Other revenue produced $58.4 million for the GRF in December. This amount was $6.1 million or 11.7 percent above the prior year and $3.8 million or 7 percent above the estimate.

Monthly revenue tables follow:

Income Tax Comparisons with Prior Year (Month)
	FY-2012 Actual	FY-2013 Actual	SUMMARY December 2012 Variance from Prior Year
	MONTHLY COMPARISON		SUMMARY December 2012 Variance from Prior Year
	December 2011	December 2012	$	%
*Taxes*
Income - Individual	$207,776,600.52	$210,953,878.11	$3,177,277.59	1.5%
Income - Corporate	$54,700,514.23	$66,383,047.58	$11,682,533.35	21.4%

Total	$262,477,114.75	$277,336,925.69	$14,859,810.94	5.7%