Good revenue report stirs hope for Oklahoma recovery

Mar 10, 2010 — The Daily Oklahoman

Michael McNutt

Mar. 10, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- Oklahoma appears to be prying loose from the grip the recession has had on its economy, state Treasurer Scott Meacham said Tuesday.

State revenue collections in February exceeded the estimate for the first time since December 2008, Meacham said.

"What we're seeing now appears to be signs that we've hit the bottom, and now we're starting to climb back up a little bit," he said. "We're starting to see the very first signs of what has been the longest, deepest downturn in state revenue history may be finally starting to bottom out and end."

Collections still fell short of previous-year collections for February but not as drastic as in recent months. Tax collections for a few months in 2009 were more than 20 percent below the estimate or last year's income.

The revenue shortfall caused state finance officials to order what will average to be an additional 7.5 percent across-the-board cuts to most Oklahoma agencies since August and will continue through June.

"What we think we're seeing is that we're just past the bottom," Meacham said. "The bottom probably occurred ... somewhere in the fourth quarter for Oklahoma."

Meacham said he's encouraged by an increase in individual income tax collections during February and a drop in the state's unemployment rate.

Oklahoma's unemployment hit a high of 7.3 percent in October but has been improving since.

December's rate was 6.6 percent; January's figures are to be released today.

"We're expecting to see that trend continue," Meacham said.

"Initial surveys of employers' intentions all look positive."

Personal income tax collections for February were 35 percent above the amount collected in February 2009 and 217 percent higher than the estimate.

Legislative leaders were cautious. Legislators have about $1.2 billion less to spend this session compared with a year ago.

"Agencies are currently facing significant additional cuts if revenue projections prove true," said House Speaker Chris Benge, R-Tulsa.

Senate President Pro Tempore Glenn Coffee, R-Oklahoma City, said, "We are still well below where we need to be, and we will plan accordingly as we move through the process."

Oil tax revenue provides a boost

Preliminary reports show general revenue fund collections in February are $220.6 million.

That amount is $17.3 million, or 7.3 percent, below last year, but $800,000, or 0.4 percent, above the estimate.

That's a dramatic improvement over December's collections, which were about 30 percent below last year and 31 percent below the estimate.

February revenue collections are historically the lowest of the year because income tax refunds are paid out, Meacham said.

Collections were, as expected, not sufficient to fund allocations to state agencies for the month even with the previously announced 10 percent across-the-board reductions to agencies.

In addition to available general revenue fund cash, an additional $84.8 million had to be tapped from other funds to make the $321.1 million monthly allocation, according to the treasurer's office.

So far, the state has borrowed about $290 million from various funds, all of which has to be repaid by the end of the fiscal year.

Gross production taxes on oil are providing a much-needed boost in revenue collections, Meacham said.

The first $150 million in oil gross production collections each fiscal year is used to fill three education-related funds.

After that, the majority of the revenue goes to the general revenue fund.

"We received $25 million in gross production taxes on oil in February, while the official estimate anticipated no oil gross production taxes would be deposited to the general revenue fund for the entire fiscal year," he said.

Newstex ID: KRTB-0148-42738223