The Oklahoma State Board of Equalization (BoE) met recently to certify the amount of money the legislature will have to appropriate for this year’s budget. The BoE certified $9.64 billion, a $1.8 billion increase from last year. However, due to last year’s use of one-time funding, which is non-recurring revenue, the legislature will only have $7.95 billion in recurring revenue available this year, a $552 million increase.

This increase has been driven largely by a more optimistic view for the oil and gas industry, which not only affects gross production taxes, but income and sales taxes through the sheer volume of jobs the industry provides. Certainly, economic recovery is good news for all Oklahomans in the wake of the pandemic, the shutdown, and the resulting economic recession, but lawmakers should not be content with the current situation.

Oklahoma’s economy has always been volatile because of the reliance on cyclical industries like agriculture and oil and gas. This has made budgeting decisions difficult for the legislature. As always, Oklahoma must deal with the reality that international forces, ones that Oklahoma has no influence over, play a large role in the state’s economy. That, along with the growing trend of shifting to new energy sources and a Biden administration looking to hasten that shift with new regulations, points to a future of even more uncertainty for Oklahoma’s flagship industry.

In a deficit year the immediacy of deciding where to make cuts often takes precedence over forward-looking reforms. This current surplus for Oklahoma’s budget provides an excellent foundation for real tax reform in Oklahoma that will brighten Oklahoma’s long-term future.