Budget & Tax
Jonathan Small | July 17, 2014
Revenue shortfall? No such thing
The most recent fiscal year ended on June 30, and the data show that for state government revenues and spending, it’s a time of all-time highs.
Preston Doerflinger, Oklahoma’s Secretary of Finance, Administration, and Information Technology, confirmed this week that the general revenue fund maintained levels from the prior year and exceeded them slightly. This confirms that, when comparing revenues to the prior year, even when one looks only at the general revenue fund, the claims of a shortfall for government are false. This is remarkable, considering that hundreds of thousands of Oklahomans experienced increased payroll taxes and federal income taxes, increased health insurance premiums due to Obamacare, new taxes and fees created by Obamacare, cost increases for state and local government, and periods of depressed consumer demand. This is also remarkable considering that state corporate tax collections experienced a long-predicted massive decline because of President Obama’s insistence that tax burdens increase during negotiations at the end of 2012.
Beginning last summer, there was a strong and coordinated campaign by tax consumers and other big-government advocates for massive tax increases on oil and gas production in Oklahoma. Claims of significantly declining gross production taxes and predictions of declines were cited as a justification for the proposed massive tax increase. Given these dire predictions, a review of gross production tax collections for the general revenue fund is appropriate. According to Secretary Doerflinger and state records, gross production tax collections for the general revenue fund (without a single statutory change or tax increase) grew $111 million over the prior year, even after the state paid back portions of its interest-free loan from the private sector.
But it’s not just the general revenue fund that has seen growth. According to Secretary Doerflinger and State Treasurer Ken Miller, total state tax collections have set another record. In fact, Miller reported in his recent summary of FY-2014: “Gross receipts to the treasury, a good snapshot of our state’s productivity, incomes, and consumption, are higher than ever before .... In fact, collections have been higher than the same month of the prior year in 45 of the past 51 months, which indicates a steady economic expansion.”
Indeed, even though the state over the last decade eliminated death taxes and cut the top personal income tax rate by 25 percent while increasing the standard deduction and adding a child tax credit for many Oklahomans, even state personal income tax collections are still growing. According to Miller, “a general reduction in corporate income tax payments moderated a stronger showing in personal income tax collections.”
But it’s not just total state tax collections that have seen growth. Miller recently noted, after comparing appropriations made by the legislature in each of the last two legislative sessions, that state appropriations grew over the prior year. According to records at the Oklahoma House of Representatives, state appropriations made by the legislature for the upcoming fiscal year set a record high.
In summary, based on state records, reports from revenue officials, and actions of state lawmakers, state government is not experiencing a shortfall.
Jonathan Small, C.P.A., serves as President and joined the staff in December of 2010. Previously, Jonathan served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. Small’s work includes co-authoring “Economics 101” with Dr. Arthur Laffer and Dr. Wayne Winegarden, and his policy expertise has been referenced by The Oklahoman, the Tulsa World, National Review, the L.A. Times, The Hill, the Wall Street Journal and the Huffington Post. His weekly column “Free Market Friday” is published by the Journal Record and syndicated in 27 markets. A recipient of the American Legislative Exchange Council’s prestigious Private Sector Member of the Year award, Small is nationally recognized for his work to promote free markets, limited government and innovative public policy reforms. Jonathan holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.