State tax revenues from oil and gas are are down for 5th straight month

Oklahoma has marked the fifth straight month of declines in revenue from gross production taxes on oil and gas.

Oklahoma Treasurer Randy McDaniel says it’s another indication of what the oil and gas industry slowdown is doing to the state’s revenues.

Gross production taxes on oil and natural gas generated $88.3 million in January, a decrease of $11.8 million, or 11.8 percent, from last January. Compared to December 2019 reports, gross production collections are up by $14.1 million, or 18.9 percent.

Oil and gas gross production tax collections brought in $1.01 billion during the 12 months, down by $113.2 million, or 1.3 percent, from the previous 12 months.

Collections of the use tax on out-of-state sales, including online purchases, set a record high in January, while total revenue remained relatively flat, McDaniel announced .

January total monthly collections were $1.26 billion, up by $17.4 million, or 1.4 percent, from January 2019. Use tax receipts generated $83 million, up by almost 19 percent from the prior year. However, collections from four of the six major revenue streams were less than the same month of the prior year.

Only use tax and corporate income tax receipts rose above prior year levels during the month. Individual income, sales, gross production, and motor vehicle taxes saw decreases ranging from 11.8 percent to 0.1 percent.

January sales and use tax collections reflect purchases made during most of December, a majority of the holiday shopping season. When combined, they are up by 1.7 percent from January of last year.

“As Oklahoma weathers an ongoing slowdown in oilfield drilling activity, it is encouraging to see total consumption taxes remain positive,” said Treasurer McDaniel. “Retail sales, both at brick-and-mortar stores and online, reflect healthy consumer confidence.”

Sales tax collections for the month were down from the prior year – as has been the case in seven of the past eight months – but analysis shows most of the slowdown is spillover from reduced spending in the oil and gas industry.

Total receipts from the past 12 months were reported as $13.73 billion, an increase of $660.2 million, or 5.1 percent, over the trailing 12 months.

The Oklahoma Business Conditions Index for January rose above growth neutral for the first time since October of last year. January’s rate of 52.2 is up from 48.4 in December. Numbers above 50 indicate economic growth is anticipated during the following three to six months.

The seasonally adjusted jobless rate for Oklahoma in December was unchanged from the prior month at 3.4 percent. The U.S. unemployment  rate in December also held steady from the prior month at 3.5 percent, according to figures released by the Oklahoma Employment Security Commission.

January gross collections total $1.26 billion, up by $17.4 million, or 1.4 percent, from January 2019.

Gross income tax collections, a combination of individual and corporate income taxes, generated $470.3 million, an increase of $10.9 million, or 2.4 percent, from the previous January.

Individual income tax collections for the month are $412.4 million, down by $527,320, or 0.1 percent, from the prior year. Corporate collections are $57.9 million, an increase of $11.4 million, or 24.6 percent. Wide monthly variances are common for corporate income tax collections.

Combined sales and use tax collections, including remittances on behalf of cities and counties, total $498.3 million in January. That is $8.5 million, or 1.7 percent, more than January 2019.

Sales tax collections in November total $415.3 million, a drop of $4.6 million, or 1.1 percent from the same month of the prior year. Use tax receipts, collected on out-of-state purchases including online sales, generated $83 million, an increase of $13.2 million, or 18.9 percent, over the year.

Motor vehicle taxes produced $66 million, down by $2.1 million, or 3.1 percent, from the same month of 2019.

Other collections composed of some 60 different sources including taxes on fuel, tobacco, medical marijuana, and alcoholic beverages, produced $136.1 million during the month. That is $11.8 million, or 9.5 percent, more than last January.

Twelve-month collections

Gross revenue totals $13.73 billion from the past 12 months, February 2019 through January 2020. That is $660.2 million, or 5.1 percent, above collections from the previous 12-month period.

Gross income taxes generated $4.76 billion for the 12 months, reflecting an increase of $356.2 million, or 8.1 percent, from the prior 12 months.

Individual income tax collections total $4.18 billion, up by $275.8 million, or 7.1 percent, from the prior period. Corporate collections are $584.9 million for the period, an increase of $80.4 million, or 15.9 percent, over the previous 12 months.

Combined sales and use taxes for the 12 months generated $5.59 billion, an increase of $123 million, or 2.2 percent, from the prior period.

Gross sales tax receipts total $4.86 billion, up by $9.7 million, or 0.2 percent, during the period. Use tax collections generated $728.2 million, an increase of $113.2 million, or 18.4 percent, over the previous 12 months.

Motor vehicle collections total $792.4 million for the 12 months. This is an increase of $6.7 million, or 0.9 percent, from the trailing period.

Other sources generated $1.57 billion, up by $187.4 million, or 13.6 percent, from the previous period.

Source: Press release

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