OKLAHOMA CITY – Total state tax collections for Fiscal Year 2020 were $6.27 billion, which was $716.1 million (10.2%) below the fiscal year estimate and $586.8 million (8.6%) below prior year collections, the state Office of Management and Enterprise Services (OMES) reported.
General Revenue Fund (GRF) collections in June were almost $565 million, 22.5% below the monthly estimate. That amount also was $114.6 million (16.9%) below GRF collections in June 2019. “The final months of this fiscal year saw revenues fall at an unprecedented rate due to historically low oil and gas prices and the economic impact of COVID-19,” said OMES DirectorSteven Harpe.
“However, ... we were able to use reserve funds to stabilize our state budget,” he said. “Additionally, the state’s combined reserves ended up higher than originally anticipated, since the revenue shortfall was slightly less severe than projected in April and less reserve amounts were necessary to complete budgeted appropriations.”
When it met April 20, the state Board of Equalization was told that state general revenue was projected to decline by $1.3 billion in FY ’21, which began July 1.
$772M OF $1B+ IN SAVINGS SPENT
After expending the mandatory 5% budget cushion, the final FY ’20 revenue shortage was $366.6 million, or 5.2% of the total budget. That was an improvement over the projected revenue failure of almost $417 million declared during the Board of Equal- ization meeting in April. The revenue loss was filled by savings from the Constitutional Reserve (“Rainy Day”) Fund (CRF) and the Revenue Stabilization Fund (RSF), Harpe said.
The Legislature voted in April to transfer $201.55 million from the CRF to the RSF, and to transfer $302.3 million from the “Rainy Day” fund to the General Revenue Fund to compensate for the revenue failure declared by the Board of Equalization. Later, in May the Legislature appropriated $243.66 million in “Rainy Day” funds for financial support of public schools in FY 2021.
In addition, $64.11 million was transferred from the Revenue Stabilization Fund (RSF) to the General Revenue Fund in FY ’20 because of a revenue shortage, and the Legislature appropriated $162.5 million from the RSF to help finance operations of state agencies in FY ’21.
Thus, the state’s $1 billion-plus in savings has been reduced to just under $230 million: $58.6 million in the Constitutional Reserve Fund and $171.2 million in the Revenue Stabilization Fund, ledgers of OMES and of the State Treasurer reflect.
INCOME, SALES TAXES BELOW ESTIMATES; GPT $309M SHORT
Record misses in the fourth quarter for individual and cor- porate income taxes were the result of the 90-day federal and state income tax filing extensions and a deferral option for 2019 state income tax payments and first quarter 2020 estimated tax payments.
However, these deferred payments are expected to bolster the first quarter collections in FY ’21.
Tax collections to the General Revenue Fund for the full fiscal year from major tax sources were:
• Total income tax collections of $2.7 billion were $175.4 million (6.0%) below the estimate – at least in part because the tax filing deadline was pushed back 90 days, from April 15 to July 15 – but were $158 million (6.1%) above the prior year. Individual income tax collections of $2.5 billion were $217.7 million (8.0%) below the estimate but $161.7 million (6.9%) above the prior year. Corporate income tax collections of $238.3 million were 21.6% above the estimate but 1.5% less than the prior year.
• Sales tax collections of $2.1 billion were $195.7 million (8.8%) below the estimate and $116.6 million (5.5%) below the prior year.
• Gross production tax collections of $469.8 million were $309.6 million (39.7%) below the estimate and $256.0 million (35.3%) below the prior year. Natural gas collections of $174.4 million were $237.8 million (57.7%) below the estimate and $20.4 million (79.8%) below the prior year. Oil collections of $295.4 million were $71.8 million (19.6%) below the estimate and $61.3 million (17.2%) below the prior year.
• Motor vehicle tax collections of $52.4 million were $26.7 million above the estimate but $171.4 million below the prior year.
• Other revenue collections of $981.3 million were 6% below the estimate and 17% below the prior year.
As state government’s main operating fund, the GRF is the key indicator of the 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, other mandatory apportionments and after sales and use taxes are remitted back to municipalities.
In contrast, gross collections, reported by the State Treasurer, are all revenues remitted to the Oklahoma Tax Commission.