News Release

PRESTON L. DOERFLINGER Secretary of Finance and Revenue OSF Director

MARY FALLIN Governor

May 9, 2011
For Immediate Release

Media Contact:
RON JENKINS
Public Information Officer
Oklahoma Office of State Finance
(405) 521-3267

APRIL REVENUE COLLECTIONS BOOSTED BY INCREASED SALES, INCOME AND OIL TAXES

OKLAHOMA CITY — A resurgence in the Oklahoma oil patch is aiding Oklahoma’s economic recovery and state revenue collections, Preston Doerflinger, director of the Office of State Finance, said Monday as he released the OSF’s General Revenue Fund report for April.

Low natural gas prices continued to be a drag on both gross production and total GRF collections, but sales taxes and income taxes were up again, along with collections from oil.

Oil provided $26.1 million in April to the state’s General Revenue Fund (GFR) for the current fiscal year, and that revenue will likely wind up in the state’s constitutional Rainy Day Fund, said Doerflinger, secretary of finance. The GFR gets 81.4 percent of oil funds once dedicated revenue hits specified caps.

The uptick in oil patch activity was illustrated last week when the number of energy rigs operating in the state increased by nine to 183, an increase of 50 percent from a year ago. The Oklahoma rig count increase was half of the nation’s total of 18.   

"Industry giants like Devon and Chesapeake report to us that they are pursuing drilling activity across the state and concentrating on extracting oil and liquid fuels, sometimes in places that haven’t seen oil rigs in decades," Doerflinger said.

One industry spokesman said improved drilling techniques, including those used to extract natural gas from shale foundations, are allowing companies to drill for oil that previously was too costly to recover. The spokesman said the good thing about the resurgence in drilling activity is that it has great potential to be sustained.

Doerflinger cited a recently released report from the American Petroleum Institute which said the oil and gas industry directly supports 111,461 jobs in Oklahoma and more than a quarter of the state’s economy.

Oklahoma Unemployment Security Commission data indicates significant growth in recent months in mining employment, which include oilfield jobs. Overall, the state’s jobless rate fell to 6.1 percent in March, compared with 7.3 percent in March last year.

"Historically, this industry has been the engine for economic growth in communities across the state," Doerflinger said. "The goods and services it buys and the high-paying jobs it provides help bolster sales and income tax collections. It also contributes tens of millions of dollars in gross production taxes that go to three state education funds, local schools, county roads and bridges and other areas."

"More than once over the years, the petroleum industry has allowed Oklahoma to survive, and even thrive, during national recessions."

In the late 1970s and early 1980s, oil patch earnings pushed the state near the national average in salaries at a time the country was in a recession. Most recently, industry revenue delayed and mediated the effect in Oklahoma of the extraordinarily deep recession that rocked the nation.

The price of oil dipped below $100 a barrel last Friday, but The Wall Street Journal and New York Times quoted analysts as saying prices should stay strong in the months ahead because of worldwide demand. Analysts also believe natural gas prices will inevitably go up, which will be a bonus for the General Revenue Fund, which gets almost 86 percent of national gas collections.

Total GRF collections were hurt in April because natural gas collections got a double whammy as prices remained below the estimate and some unusually large refunds were approved. Oklahoma Tax Commission officials said the refunds were $18 million higher than the monthly average of refunds. Natural gas collections have been down every month of the fiscal year because of low prices.

Income and sales taxes are the largest contributors to the GRF and they continued to be above both the estimate and prior year's figures in April, indicating the state’s recovery is progressing without interruption.

"The increase in tax revenues is good news for Oklahoma," said Governor Mary Fallin. "Unfortunately, we still have a ways to go before we get to where we were before the recession hit. That means lawmakers will need to continue to find ways to make government smaller and more efficient, pursue targeted cuts at state agencies and pass reforms that help to create jobs and boost economic productivity."

Combined corporate and individual income taxes were up 25.6 percent from a year ago and were 1.1 percent above the estimate.

Sales taxes increased by 10.3 percent over the same month a year ago and beat the estimate by 5.1 percent.

The OSF report showed total, year-to-date GRF collections are $4.117 billion, which is $127.8 million or 3.2 percent above the estimate for the fiscal year and $373.1 million or 10 percent above prior year collections for this same period of time.

Total General Revenue Fund collections for April were $576.8 million. This was $64.5 million and 12.6 percent more than was collected in April of 2010 and $14.9 million or 2.5 percent below the estimate.

General Revenue Fund collections for major tax categories in April were:

Income taxes -- This source collected $313.6 million in April for the FY-2011 General Revenue Fund, which was $64 million or 25.6 percent more than prior year collections from individual and corporate income taxes and $3.5 million or 1.1 percent above the estimate.

Individual income tax receipts of $267.5 million were $45.9 million and 20.7 percent above the prior year and $20.6 million or 7.2 percent below the estimate.

Corporate returns totaled $46.1 million for the month which was $18.1 million or 64.7 percent more than prior year collections and $24.1 million or 109.8 percent above the estimate.

Sales tax -- Sales tax collections produced $147.1 million for the General Revenue Fund, $13.8 million or 10.3 percent more than the prior year and $7.2 million or 5.1 percent above the estimate.

Gross production tax -- The April taxes on natural gas and gross production oil accounted for $31 million in General Revenue Fund receipts, which was $23 million or 42.5 percent below the prior year and $25.7 million or 45.5 percent below the estimate.

Collections of gross production taxes on natural gas totaled $4.9 million, $23.2 million or 82.6 percent below prior year collections and $28.6 million or 85.4 percent less than the estimate.  

Gross production taxes on oil totaled $26.1. This amount was $0.2 million or 1 percent above the prior year and $2.9 million or 12.3 percent more than the estimate.

Motor vehicle taxes -- This tax source produced $16.5 million, which was $0.3 million or 1.8 percent above the prior year and $1.6 million or 10.8 percent above the estimate.

Other Revenue -- Other revenue produced $68.7 million in April. This was $9.4 million or 15.8 percent above the prior year and $1.4 million or 1.9 percent below the estimate.

Monthly revenue tables attached.

Chart 1

(1) Other sources revenue estimated pending final accounting

(2) Recurring revenue after subtracting one-time funds
Details may not sum due to rounding

(1) Other sources revenue estimated pending final accounting

(2) Recurring revenue after subtracting one-time funds
Details may not sum due to rounding

Chart 2

(1) Other sources revenue estimated pending final accounting

(2) Recurring revenue after subtracting one-time funds
Details may not sum due to rounding

(1) Other sources revenue estimated pending final accounting

(2) Recurring revenue after subtracting one-time funds
Details may not sum due to rounding

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