State revenue collections for July, the first month of Fiscal Year 2022, were $1.2 billion. That was a $200 million decrease from the comparable month of 2021. But due to delayed income tax filing, last year's July numbers were inflated. Every revenue source except the state income tax saw an increase compared to last year. All signs point to the economic rebound continuing.

Fiscal Year 2021 saw a robust turnaround for the state’s economy. Total revenue collections fell by nearly $1 billion in Fiscal Year 2020 in the aftermath of the Covid-19 pandemic. In 2021 that loss was nearly entirely made up, with total collections only half a percentage point lower than in fiscal year 2019, when adjusted for inflation.

Sources: Oklahoma State Treasurer's Office; CPI Inflation Calculator

The General Revenue Fund, used by the state legislature to fund the state’s appropriated budget, brought in $7 billion, or $282 million over the estimate. That surplus was placed into the state’s rainy-day fund, boosting the state’s total savings to $540 million.

Sources: Oklahoma State Treasurer's Office; CPI Inflation Calculator

Of course, there is no guarantee this economic growth will last. As the U.S. continues to deal with the surge of new Covid cases and some states reinstate restrictions and regulations, the country may again face an economic slowdown that would affect Oklahoma—regardless of what the state decides to do.

Another matter that may affect the state’s economic rebound is recent litigation challenging Gov. Kevin Stitt’s decision to end the expanded unemployment benefit program. With Oklahoma’s labor participation rate still below the national average, continuation of this program would move the state in the wrong direction.

The good economic times may not last. Thus, the state must position itself to continue to grow despite any future challenges, known and unknown, it may face. The recent reduction in the state’s income tax was a good start, but when competing with states like Texas and Tennessee—which have no state income tax—there is still more work to be done.