Unusually high income tax refunds contributed to General Revenue Fund (GRF) collections dropping 10 percent below last year’s receipts in August and missing the official estimate by 17.4 percent.
“This was a single-month collection anomaly rather than any reflection of Oklahoma’s economy. One month does not diminish the strength Oklahoma’s economy has shown for going on three years now,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger.
Total GRF collections in August were $347.6 million, down $38.8 million or 10 percent from the same month a year ago, according to the monthly GRF report generated by the Office of Management and Enterprise Services (OMES). OMES manages the GRF, the main operating fund for Oklahoma’s state budget. The GRF is where all state taxes and fees flow, except those earmarked or dedicated to specific programs.
The August reduction was caused mainly by reduced income tax collections, which fell $40.2 million or 27.9 percent from last year.
The Oklahoma Tax Commission reported that it is processing far more corporate and personal income tax refunds at this time of the year than it normally does, which has led to temporary distortions of income tax collections. As a result, the GRF received no corporate income tax collections in August because corporate income tax refunds exceeded corporate income tax collections. Personal income tax collections fell $36.2 million or 25.9 percent from a year ago due in large part to an $11 million increase in personal income tax refunds processed compared to the same month a year ago.
“Income tax collections should begin evening out in the months ahead, especially if our unemployment rate remains low,” said Doerflinger, who is also director of OMES. “We still expect overall revenue growth by year’s end, although that growth may be more modest than in recent years due in part to noneconomic factors that could soften revenues.”
For the first two months of the fiscal year, overall GRF collections total $757.4 million, which is $18.1 million or 2.3 percent below the prior year and $59.1 million or 7.2 percent below the official estimate.
Major tax categories in August contributed the following amounts to the GRF:
• Income tax – The total collected from individual and corporate income taxes was $103.7 million, which was $40.2 million or 27.9 percent below prior year collections and $50.5 million or 32.7 percent below the estimate. Individual income tax receipts of $103.7 million were $36.2 million or 25.9 percent less than the prior year and $45.3 million or 30.4 percent below the estimate. Corporate tax collections contributed nothing to the GRF in August because of unusually high refunds that exceeded collections.
• Sales tax – The Tax Commission apportioned $163.4 million in sales taxes to the GRF, which was $0.6 million or 0.4 percent more than the prior year and $6.4 million or 3.8 percent below the estimate.
• Gross production tax – Gross production tax collections contributed $8.1 million, entirely from natural gas production. That amount was $7.6 million or 48.2 percent below the estimate and $8 million above August 2012, when the GRF received nearly nothing from gross production taxes. The GRF received no oil tax revenue for the month and none was expected due to the statutory direction of the first $150 million of gross production receipts from oil to specified funds, mostly for education.
• Motor vehicle taxes – Motor vehicle taxes produced $15.8 million, which was $3.8 million or 19.2 percent below prior year collections and $5.1 million or 24.4 percent below the estimate.
• Other revenue – Other revenue collections produced $56.6 million, which was $3.4 million or 5.7 percent below the prior year and $3.8 million or 6.3 percent below the estimate.