GRF receipts miss estimate by 9.1% in March
YTD collections now 5.2% behind estimate
OKLAHOMA CITY — General Revenue
Fund (GRF) collections tumbled 9.1 percent below the official estimate in March
after another month of unusually low corporate income tax revenue, this time
following a major increase in tax credit claims.
As state government’s main operating fund, the GRF is the
key indicator of state government’s fiscal status and the predominant funding
source for the annual state budget. Made up of nearly 70 revenue sources, the
GRF is where all taxes flow except those dedicated to specific programs.
March collections to the GRF totaled $412.8
million, which is $1.1 million, or 0.3 percent, less than collections for March
2013 and $41.4 million, or 9.1 percent, below the official revenue estimate
upon which the Fiscal Year 2014 appropriated state budget is based.
March’s weak GRF collections rekindled the possibility of
mandatory appropriation reductions for all state agencies in FY 14, the current
state budget year that began July 1, 2013 and ends June 30, 2014.
“Oklahoma’s
economy still shows growth and momentum that has total tax collections continuing
to hit historic all-time highs. The catch is a variety of totally noneconomic government
policy factors are preventing those collections from being used for state
budget purposes,” said Secretary of Finance, Administration and Information
Technology Preston L. Doerflinger. “These revenue issues are the creation of government,
not the economy. Off-the-top apportionments, corporate income tax declines, tax
credits and other tax and budgeting choices that in some cases date back decades
are the reason this situation exists.”
For the first three quarters of FY 14, GRF collections
totaled $3.9 billion, which is $7.2 million, or 0.2 percent, above prior year
collections and $215.4 million, or 5.2 percent, below the official estimate.
The official estimate certified annually by the Board of
Equalization is important because it is used by the Legislature to determine
spending authority and sets the framework for the state’s constitutionally-required
balanced budget. If revenues fall too far below the official estimate, the
state cannot operate within its balanced budget requirements, which leads to
mandatory appropriation reductions.
“I said in January that a string of abnormally weak
months could cause issues, and we’ve had two tough months in a row now,” Doerflinger said. “Unless April GRF collections exceed the estimate, minor appropriation
reductions to agencies may be necessary for the remainder of the year. Cash
flows remain sufficient at this point, but we’ll need a strong finish to the
year because we’re about out of options after two weak months and a weak start
to the year.”
State law requires mandatory appropriation reductions for
all agencies if revenues are not sufficient to fully provide monthly
allocations to all agencies for the entire fiscal year. Such a scenario is
called a “revenue failure.” Under state law, a five percent cushion is built in
to the appropriated state budget to prevent revenue failures from occurring if
revenues dip slightly below the official estimate. Sustained periods in which
collections dip more than five percent below the official estimate put the
state at risk of revenue failure.
FY 14 GRF collections ran more than five percent below
the estimate throughout the first half of the fiscal year before the holiday
season boosted collections back within the five percent cushion.
At the end of February, YTD collections to the GRF were 4.8
below the official estimate after February collections missed the estimate by
8.1 percent. In March, the Tax Commission reported a major increase in claimed
tax credits, which caused further significant decreases in corporate income collections
to the GRF that left YTD GRF collections 5.2 percent below the official
estimate by month’s end.
“I know I sound like a broken record, but it bears
repeating that agencies need to keep their belts tight and watch every penny,”
Doerflinger said.
Among the factors driving
the GRF’s FY 14 decline are:
- ongoing increases in off-the-top
apportionments away from the GRF to other sources;
- major decreases in corporate income tax
collections;
- recent increases in tax credits claimed by
businesses; and
- gross production tax revenue losses related
to horizontal drilling incentive provisions and deferred rebates.
“Policymakers
should continue serious assessments of our fiscal trajectory or the GRF may
continue shrinking like this for the foreseeable future,” Doerflinger said.
Doerflinger is director of the Office of Management and
Enterprise Services, which issues the monthly GRF reports.
Major tax categories in March contributed the
following amounts to the GRF:
-
Total
income tax collections of $146.6 million
were $18.7 million, or 11.3 percent, less than prior year collections and
$28.4 million, or 16.2 percent, below the estimate.
Individual income tax collections of $86.4 million were $9.2 million, or
11.9 percent, more than prior year collections and $1.7 million, or 2
percent, below the estimate.
Corporate income tax collections of $60.2 million were
$27.9 million, or 31.7 percent, below prior year collections and $26.6 million,
or 30.7 percent, below the estimate.
-
Sales
tax collections of $153.6 million
were $7.6 million, or 5.2 percent, more than prior year collections and
$6.1 million, or 3.8 percent, below the estimate.
-
Gross
production tax collections of $39.2 million
were $1.1 million, or 2.8 percent, more than prior year collections and
$1.3 million, or 3.5 percent, above the estimate.
Natural gas collections of $6.6 million were $1.8 million, or 21.2
percent, less than prior year collections and $8.2 million, or 55.3
percent, below the estimate.
Oil collections of $32.5 million were $2.9 million, or 9.7 percent, more
than prior year collections and $9.6 million, or 41.7 percent, above the
estimate.
-
Motor
vehicle tax collections of $14.7 million
were $2 million, or 16.1 percent, more than prior year collections and
$1.3 million, or 7.9 percent, below the estimate.
-
Other
revenue collections of $58.8 million
were $6.9 million, or 13.3 percent, more than prior year collections and
$7 million, or 10.6 percent, below the estimate.
Monthly revenue tables are available on the OMES website:
http://www.ok.gov/OSF/News/March_2014_Financial_Report_Data_Tables.html
Media Contact
JOHN ESTUS
Director of Public Affairs
(405) 521-3097 | john.estus@omes.ok.gov
About the Office of Management and Enterprise Services
The Office of Management and Enterprise Services provides financial, property, purchasing, human resources and information technology services to all state agencies, and assists the Governor’s Office on budgetary policy matters. Our mission: To lead, support, and serve. For more information, visit OMES.OK.gov.
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