Increased oil activity reflected in state’s tax collections

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New state figures from the Oklahoma Treasurer showed improved oil and gas gross production tax collections during the month of July, another sign of how the state’s oil and gas industry has recovered since the 2020 collapse during the COVID-19 pandemic.

 

Treasurer Randy McDaniel’s release indicated the revenue from the fossil fuels was up 260.1% and totaled $82.6 million, an increase of $59.7 million for the month.

In the past 12 months, oil and gas gross production tax collections generated $814 million which was an increase of $42.6 million or 5.5%.

All July collections totaled $1.22 billion with growth reported in sales and use, motor vehicle, and gross production taxes. Even so, individual and corporate income tax receipts are almost 50 percent less this month.

McDaniel explained the state’s gross receipts for July were impacted by last year’s delayed income tax filings but at the same time also showed solid economic growth.

McDaniel said the monthly report appears negative at first glance due to a reduced bottom line of 15 percent compared to the same month of last year. However, he pointed out the comparison is distorted because income taxes were paid in July instead of April in 2020. He also noted every revenue stream except income taxes have substantial gains.

“Gross receipts demonstrate a resilient and expanding state economy,” McDaniel said. “Last July’s large income tax collections are an outlier caused by a timing issue.”

Consumer confidence is strong as sales and use tax receipts are 12 percent higher than a year ago. The gross production tax on oil and natural gas is 260 percent more than last July. Every major revenue stream, including income taxes, exceed collections from 2019.

Twelve-month total collections of $14.1 billion reflect a year of economic expansion with every revenue source higher than during the previous 12-month period. This 12-month report is the first in 19 months showing positive growth in oil and gas production tax collections.

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Other indicators

The Oklahoma Business Conditions Index for July anticipates continued economic growth. The monthly index was set at 72.7, down slightly from 73.6 in June. Numbers above 50 indicate expansion is expected during the next three to six months.

The June unemployment rate in Oklahoma was reported as 3.7 percent by the U.S. Bureau of Labor Statistics. The state’s jobless rate was down from 4.0 percent in May and from 8.2 percent in June 2020. The U.S. unemployment rate was set at 5.9 percent in June.

July collections

Compared to gross receipts from July 2020, collections in July 2021 show:

  • Total monthly gross collections are $1.22 billion, down $214.3 million, or 15 percent.
  • Gross income tax collections, a combination of individual and corporate income taxes, generated $352.8 million, down by $346.7 million, or 49.6 percent.
    • Individual income tax collections are $324.2 million, a decrease of $226.9 million, or 41.2 percent.
    • Corporate collections are $28.7 million, down by $119.8 million, or 80.7 percent.
  • Combined sales and use tax collections, including remittances on behalf of cities and counties, total $545.8 million – up by $58.3 million, or 12 percent.
    • Sales tax collections total $464.9 million, an increase of $43.3 million, or 10.3 percent.
    • Use tax receipts, collected on out-of-state purchases including internet sales, generated $81 million, an increase of $15 million, or 22.8 percent.
  • Gross production taxes on oil and natural gas total $82.6 million, an increase of $59.7 million, or 260.1 percent.
  • Motor vehicle taxes produced $81.3 million, up by $6 million, or 7.9 percent.
  • Other collections composed of some 60 different sources including taxes on fuel, tobacco, medical marijuana, and alcoholic beverages, produced $154.2 million – up by $8.4 million, or 5.8 percent.
    • The medical marijuana tax produced $5.6 million, up by $372,354, or 6.7 percent from July 2020.

Twelve-month collections

Combined gross receipts for past 12 months compared to the trailing 12 months show:

  • Gross revenue totals $14.1 billion. That is $784.3 million, or 5.9 percent, above collections from the previous period.
  • Gross income taxes generated $4.97 billion, an increase of $237.9 million, or 5 percent.
    • Individual income tax collections total $4.21 billion, up by $119.5 million, or 2.9 percent.
    • Corporate collections are $759.4 million, an increase of $118.3 million, or 18.5 percent.
  • Combined sales and use taxes generated $5.88 billion, an increase of $393.6 million, or 7.2 percent.
    • Gross sales tax receipts total $5 billion, up by $270.5 million, or 5.7 percent.
    • Use tax collections generated $873.7 million, an increase of $123.1 million, or 16.4 percent.
  • Oil and gas gross production tax collections generated $814 million, up by $42.6 million, or 5.5 percent.
  • Motor vehicle collections total $828.3 million, an increase of $44.7 million, or 5.7 percent.
  • Other sources generated $1.61 billion, up by $65.6 million, or 4.2 percent.
    • Medical marijuana taxes generated $66.5 million, up by $21.3 million, or 47.2 percent.
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