Oil/gas revenues slump in October in Oklahoma—other tax revenues were weak

Gross production taxes from oil and gas in Oklahoma fell nearly 30 percent in October compared to a year ago while the state’s overall tax collections were weak, increasing by less than one percent for a second consecutive month.

State Treasurer Randy McDaniel said gross production taxes on oil and gas were $71.6 million for October, down $30.5 million or 39.8 percent compared to October of 2018. The October collections were also down $2.2 million or 3 percent over revenue generated in September 2019.

Oil and gas gross production tax collections were $1.1 billion in the past 12 months. That’s an increase of $246.9 million or 28.7 percent from the previous 12 months.

Total monthly collections from all sources in October were $1.14 billion, an increase of $6.1 million or 0.5 percent from October 2018.

“Gross receipts indicate Oklahoma’s economy is continuing to grow, albeit quite modestly, in spite of a pullback in two of the state’s major revenue streams,” McDaniel said. “Lower energy prices have pushed down gross production receipts. Additionally, for the fourth time in the past five months, sales tax collections are below those of the prior year.”

Monthly receipts for individual and corporate income, use, and motor vehicle taxes are all above those of October 2018 at rates ranging from 25 percent to 1.4 percent. Gross receipts for the past 12 months, at $13.74 million, are up by $1.04 billion, or 8.2 percent.

Medical marijuana revenue

In effect for the past year, Oklahoma’s medical marijuana tax of 7 percent, along with sales tax generated at licensed dispensaries, have added $41.3 million to gross receipts in the past 12 months. Of that, $18.1 million has come from the marijuana tax and $23.1 million from sales tax remitted by dispensaries.

In October, marijuana sales generated $6.8 million, including $3 million from the medical marijuana tax and $3.8 million in sales tax from dispensaries.

The figures indicate medical marijuana purchases have totaled $259.1 million during the past year.

Other indicators

The Oklahoma Business Conditions Index for October fell below growth neutral for the second time in the past three months. October’s rate of 48.7 is down from 50.1 in September, indicating slow to no economic growth in the next three to six months.

The seasonally adjusted jobless rate for Oklahoma was unchanged at 3.2 percent in September for a fifth consecutive month. The U.S. unemployment rate dropped to 3.5 percent in September, down from 3.7 percent the prior month, according to figures released by the Oklahoma Employment Security Commission.

October collections

October gross collections total $1.14 billion, up by $6.1 million, or 0.5 percent, from October 2018.

Gross income tax collections, a combination of individual and corporate income taxes, generated $395.7 million, an increase of $26.3 million, or 7.1 percent, from the previous October.

Individual income tax collections for the month are $373.9 million, up by $21.9 million, or 6.2 percent, from the prior year. Corporate collections are $21.8 million, an increase of $4.4 million, or 25 percent. Large monthly variances are not unusual for corporate income tax collections.

Combined sales and use tax collections, including remittances on behalf of cities and counties, total $459.3 million in October. That is $3.2 million, or 0.7 percent, more than October 2018.

Sales tax collections in October total $399 million, a drop of $3.6 million, or 0.9 percent from the same month of the prior year. Use tax receipts, collected on out-of-state purchases including online sales, generated $60.4 million, an increase of $6.8 million, or 12.8 percent, over the year.

Motor vehicle taxes produced $66.9 million, up by $912,072, or 1.4 percent, from the same month of 2018.

Other collections composed of some 60 different sources including taxes on fuel, tobacco, medical marijuana, and alcoholic beverages, produced $151 million during the month. That is $6.1 million, or 4.2 percent, more than last October.

Twelve-month collections

Gross revenue totals $13.74 billion from the past 12 months, November 2018 through October 2019. That is $1.04 billion, or 8.2 percent, above collections from the previous 12-month period.

Gross income taxes generated $4.67 billion for the 12 months, reflecting an increase of $275.2 million, or 6.3 percent, from the prior 12 months.

Individual income tax collections total $4.15 billion, up by $248.5 million, or 6.4 percent, from the prior period. Corporate collections are $524.3 million for the period, an increase of $26.7 million, or 5.4 percent, over the previous 12 months.

Combined sales and use taxes for the 12 months generated $5.61 billion, an increase of $264 million, or 4.9 percent, from the prior period.

Gross sales tax receipts total $4.89 billion, up by $103.8 million, or 2.2 percent, during the period. Use tax collections generated $718.8 million, an increase of $160.1 million, or 28.7 percent over the previous 12 months.

Motor vehicle collections total $792.5 million for the 12 months. This is an increase of $15.8 million, or 2 percent, from the trailing period.

Other sources generated $1.55 billion, up by $241.4 million, or 18.4 percent, from the previous period.

About Gross Receipts to the Treasury

The Office of the State Treasurer developed the monthly Gross Receipts to the Treasury report in order to provide a timely and broad view of the state’s economy.

It is released in conjunction with the General Revenue Fund report from the Office of Management and Enterprise Services, which provides information to state agencies for budgetary planning purposes.

The General Revenue Fund, the state’s main operating account, receives less than half of the state’s gross receipts with the remainder paid in rebates and refunds, remitted to cities and counties, and apportioned to other state funds.

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