May GRF receipts miss estimate by 13.3%
Corporate income tax refunds again exceed collections
OKLAHOMA CITY — Tax incentives for wind producers again contributed to corporate income tax refunds exceeding monthly collections in May, further depleting General Revenue Fund (GRF) proceeds already weakened by the ongoing effects of low oil prices.
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 appropriated state budget. GRF collections are revenues that remain for the appropriated state budget after rebates, refunds and mandatory apportionments. Gross collections, reported by the State Treasurer, are all revenues collected by the state before rebates, refunds and mandatory apportionments.
May GRF collections of $377.2 million were $58 million, or 13.3 percent, below the official estimate upon which the Fiscal Year 2016 appropriated state budget was based and $25.5 million, or 6.3 percent, below prior year collections.
“May’s weak showing was expected and accounted for in the midyear reductions required by the revenue failure,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger.
Sales tax collections in May were $26.7 million, or 15.2 percent, below the estimate and $11.4 million, or 7.1 percent, below the prior year, signaling continued consumer spending reductions as the energy sector has slowed during the oil price downturn.
For the fourth time this fiscal year, the GRF received no corporate income tax collections. May corporate income tax refunds of $14.8 million exceeded gross corporate income tax collections of $9.8 million. To offset the difference, $5 million was borrowed from personal income tax collections to help pay corporate income tax refunds, including $3.3 million in zero-emission tax incentive payments to wind energy producers.
“The month of May saw multiple tax streams sucked dry by low oil prices and another blown away by wind incentives,” Doerflinger said. “The state paid more to wind companies in May than the general fund netted from all other corporate income taxpayers combined. How messed up is that?”
Legislators considered a variety of approaches to adjust wind industry incentives last legislative session, but none advanced. The Tax Commission projects the outstanding financial liability of the zero-emission tax credit now exceeds $900 million over the next 15 years, making it one of the state’s largest outstanding financial liabilities.
“Conventional wisdom says general revenue collections should rebound when oil stabilizes, but the reality is any rebound will be significantly hamstrung by wind incentives without legislative action. The revenue erosion wind incentives caused in May will be the new normal for years unless legislators act,” Doerflinger said.
Total GRF collections through eleven months of FY 2016 were $4.7 billion, which is $471.1 million, or 9.1 percent, below the official estimate and $474.3 million, or 9.1 percent, below prior year collections.
Doerflinger is director of OMES, which issues the monthly GRF reports.
Major tax categories in May contributed the following amounts to the GRF:
Total income tax collections of $135.7 million were $9.3 million, or 6.4 percent, below the estimate and $6.1 million, or 4.3 percent, below the prior year.
Individual income tax collections of $135.7 million were $244,500, or 0.2 percent, above the estimate and $12.4 million, or 10.1 percent, above the prior year.
Corporate income tax collections made no contribution to the GRF from May collections because refunds exceeded collections.
Sales tax collections of $149.1 million were $26.7 million, or 15.2 percent, below the estimate and $11.4 million, or 7.1 percent, below the prior year.
Gross production tax collections of $5.9 million were $22 million, or 78.7 percent, below the estimate and $9.4 million, or 61.3 percent, below the prior year.
Natural gas collections of $5.2 million were $8 million, or 60.6 percent, below the estimate and $5.2 million above the prior year.
Oil collections of $761,300 were $14 million, or 94.8 percent, below the estimate and $14.6 million, or 95 percent, below the prior year.
Motor vehicle tax collections of $15.7 million were $2.1 million, or 11.9 percent, below the estimate and $1.3 million, or 9.2 percent, above the prior year.
Other revenue collections of $70.8 million were $2.1 million, or 3.1 percent, above the estimate and $143,200, or 0.2 percent, above the prior year.
Monthly revenue tables are available on the OMES website: https://www.ok.gov/OSF/News/May_2016_Financial_Report_Data_Tables.html
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