OKLAHOMA CITY – Gross receipts to the Oklahoma Treasury for calendar year 2019 “painted the picture of a sound but slowing state economy,” State Treasurer Randy McDaniel announced recently. Gross receipts during all of 2019 were 5.7% more than during 2018, but that growth rate was down from 13.2% in 2018 compared to 2017.
McDaniel said the slow- down becomes more pronounced when viewed on a quarterly basis. Growth in collections during the first two-quarters of 2019 reflected expansion of almost 10%. Third-quarter growth fell to 4.2%, while fourth-quarter receipts contracted by 0.5% when compared to the fourth quarter of 2018.
“Recent economic trends appear to be primarily related to low oil and gas prices,” McDaniel said. “We are seeing both a direct and spillover effect on some tax collections due to suppressed energy prices.”
Tax collections on oil and gas production have been significantly below the prior year for four consecutive months, and sales tax receipts have shown contraction for six of the past seven months. In December, use tax collections on out-of-state purchases dropped below those of the prior year for the first time in more than three years.
Tax records show the downturn in sales and use taxes reflect the spillover effect of reduced oil field activity due to a drop-off in the acquisition of drilling equipment and related purchases, the Treasurer said. Drilling activity plunged by more than 60% in the past year. Natural gas prices are down by almost 30% and oil prices are off by almost 25% since this time last year.
Oil and gas prices are expected to remain relatively flat, McDaniel said.
BUSINESS CONDITIONS
The Oklahoma Business Conditions Index for Decem- ber rose slightly to 48.4 compared to 47.8 in November. Numbers less than 50 are considered below growth neutral. The index has been below 50 four times in the past five months, indicating expected economic slowing through the middle of 2020.
THIS YEAR’S STATE BUDGET
The State Equalization Board met Dec. 20 and certified a preliminary estimate for Fiscal Year 2021. “The estimate of $8.34 billion is virtually flat from the current FY-20 budget,” McDaniel said. “It is up by $9.4 million, or 0.1%.”