Oklahoma's Tax Revenue Plunges as Recession Hits State
Staff and Wire Reports
OKLAHOMA CITY - Oklahoma tax collections plunged in June with the national recession and a drop in oil and natural gas revenue, and a state budget shortfall is probable in coming months, state Treasurer Scott Meacham said Tuesday.
That could mean another round of cuts, Meacham said.
State agency budgets were cut 1.4 percent because of a shortfall for the month of June, and lawmakers reduced government spending by 7 percent for the entire fiscal year that began July 1.
Total revenue collections for June were down $190 million, or 30 percent from the same month in 2008.
"The hole is getting bigger and we haven't hit bottom yet," Meacham said at a news conference.
Gross production taxes on oil and gas generated only $13 million in June, which is $91.7 million, or 88 percent, less than collections a year ago and 82 percent lower than the estimate upon which this year's budget was built.
Income taxes, both personal and corporate, fell 25 percent from a year ago. Sales taxes were down 11.5 percent and motor vehicle taxes were off 25 percent.
Meacham said he will meet with state finance officials and Gov. Brad Henry to determine whether officials should schedule a series of cuts to head off a huge shortfall that would trigger automatic and disruptive reductions in agency budgets.
The state has a $600 million rainy day fund and federal stimulus dollars it could tap, he said, but added it is premature to talk about a special session of the Legislature to take those actions.
"I think we are well positioned to get through this," Meacham said.
Henry said he has asked agency directors to review their operations in anticipation of more cuts.
"All agencies of government should begin making reductions as soon as possible to prevent drastic consequences later in the year if deeper cuts are required," Senate President Pro Tem Glenn Coffee said.
Of particular concern are weak energy prices. Higher prices had kept Oklahoma's economy strong for the first six months of last year.
But now, oil has dipped below $60 a barrel. Natural gas has been under $4 per 1,000 cubic feet for weeks, while the budget for the fiscal year starting July 1 was based on gas averaging $5.2 per 1,000 cubic feet over 12 months.
Natural gas exploration, which produces higher sales and income taxes for the state, has come to a standstill, Meacham said. And even if gas prices begin to climb, there is a lag of two to three months before the state gets a tax benefit, he said.
June tax collections were enough to cover the state's bills for July, but August is a question mark, Meacham said.
Preliminary reports show General Revenue Fund collections fell sharply in the second half of the fiscal year ending June 30 after climbing by 6 percent in the first six months.
Read Oklahoma State Treasurer Scott Meacham's Report: