In spite of nagging inflation, Oklahoma enters the 2023 fiscal year in strong financial shape, according to State Treasurer Randy McDaniel's annual gross revenue report.
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Dick Pryor: This is Capitol Insider - taking you inside politics, policy and government in Oklahoma. I'm Dick Pryor with Quorum Call publisher Shawn Ashley. Shawn, the state of Oklahoma just concluded FY 2022 fiscal year and based on State Treasurer Randy McDaniel’s latest gross revenue report, the state economy grew in spite of inflationary pressures. Total collections for the year were way up.
Shawn Ashley: Yes, they were. Collections during fiscal year 2022, which ended June 30th were 16.46 billion. Now that's up by 15% from fiscal year 2021. And let's keep in mind, fiscal year 2021 was not a bad year. Those receipts were 14.32 billion, the highest on record during any 12-month period in Oklahoma history up until this year.
Dick Pryor: What fueled growth?
Shawn Ashley: Well, really, when you look at all the tax collections, one word, everything. Looking at the major tax collections for the first time in any 12-month period. McDaniel reported oil and gas production taxes topped $1.5 billion in fiscal year 2022. Sales and use tax receipts generated an additional 5.59 billion, an increase of 13.3%. And for FY 2022, individual and corporate income taxes generated $5.78 billion. That's up 8.6%. Individual income tax collections were up by 7.9%, and corporate income tax collections were up by 12.2%.
Dick Pryor: And we're talking about gross revenues. How does the Treasurer's gross revenue report differ from the General Revenue Report from the Office of Management and Enterprise Services?
Shawn Ashley: McDaniel's gross revenue report accounts for every penny of tax revenue collected by the state. Now some of that, such as a portion of sales and use taxes, will be returned to cities and counties. And state law requires other collections, such as a portion of individual income tax, sales and used taxes be deposited in specific funds, such as the House Bill 1017 Fund, which benefits common education, and the teachers’ retirement and other retirement funds for the benefit of the retirees in those programs. In the end, the general revenue fund - the largest source of legislative appropriations - receives less than one half of the state's gross receipts, with the remainder apportioned to all those other funds.
Dick Pryor: Which leaves money for the Rainy Day Fund. About how much money would you expect to go into the Rainy Day Fund in the year ahead?
Shawn Ashley: We will know the exact number later this month or early next month, after the Office of Management and Enterprise Services reconciles all the accounts for fiscal year 2022. The Office of Management and Enterprise Services reported in June that general revenue collections through the first 11 months of fiscal year 2022 were $1.6 billion or 25.9% above the estimate. And it's the money over the estimate that goes into the Rainy Day Fund. At that level, the Rainy Day Fund would reach its cap, and some of that money would spill into other reserve funds and into cash, which would be available for lawmakers to appropriate later this year or when they return in 2023.
Dick Pryor: That would leave the state in a good place fiscally. What do these revenue figures tell us about next year's state budget? The appropriated budget.
Shawn Ashley: Both McDaniel and Office of Management and Enterprise Services Director Steven Harpe have expressed concern about the impact inflation could have on Oklahoma's revenues. But that impact has not exactly been seen thus far. So, we'll have to wait and see in December what the Board of Equalization says when they do the revenue estimate for fiscal year 2024, which begins July 1st of 2023. In the meantime, they will be watching the collections month to month to see if inflation does in fact have an impact and how that might continue into the new fiscal year.
Dick Pryor: Do you think this will provide any impetus for what the governor was calling for, which is the repeal of the grocery tax and lowering of the individual state income tax?
Shawn Ashley: It certainly shows that Oklahoma's revenue picture remains strong and that collections are exceeding those levels, which are expected - the estimate leading to the Rainy Day Fund. That could encourage some to consider reducing the individual income tax or perhaps even reverting back to the plan to provide taxpayers a direct rebate of some of those collections. But we'll really have to wait and see what the House and the Senate decide to do in the third special session.
Dick Pryor: That is correct. Thanks, Shawn.
Shawn Ashley: You're very welcome.
Dick Pryor: If you have questions, email them to news@kgou.org or contact us on Twitter at @kgounews and @QuorumCallShawn. Until next time, with Shawn Ashley, I'm Dick Pryor.
