Budget & Tax

Myths and facts: Is Oklahoma state government experiencing a budget shortfall? The answer is no

May 12, 2014

Jonathan Small, Dave Bond

[Advocates for raising Oklahoma’s gross production tax from the current 1 percent rate to 7 percent on horizontal and deep-well drilling for oil and natural gas have made questionable claims about the nature of the tax, the effects of energy drilling on Oklahoma’s economy, and the relationship between taxes on drilling and funding state government. This is one in a series of posts in which we will present the facts.]

Myth: Oklahoma is “unable to fund state services” like schools, roads, and prisons because state tax collections, appropriations, and total spending are below prior years, creating a budget shortfall.

Facts: According to data from the Oklahoma Tax Commission and the state’s budget office, total state government spending in Oklahoma has exceeded prior year spending every year since at least 2001. Also, total state tax collections in Oklahoma from all tax sources are on track to hit record highs for the third consecutive year. Finally, in the most recent fiscal year for which the data are complete, available revenues for Oklahoma’s public education system from all sources – state, local, and federal – were at an all-time high.

Oklahoma lawmakers have more money to spend than ever before. Claims that Oklahoma’s state government currently faces a budget shortfall are simply not accurate. In actuality, we will likely have a surplus in total state tax collections compared to the last fiscal year. It is true that Oklahoma revenue estimators miscalculated, prior to the 2014 legislative session, as to how much the state would collect in taxes, predicting that higher tax collections would come in compared to actual receipts. It is also true that some policymakers in charge of writing the state budget would prefer to spend based on these overestimates. But reports from the state treasurer’s office indicate that gross tax receipts are likely to exceed the prior year, and even deposits into the state’s general revenue fund, from which state lawmakers make appropriations, are on pace to exceed last year’s deposits. Meanwhile, Oklahoma still gives state tax dollars to golf courses and rodeos.