Farley Economic Trends

  • Economic Trends

Effects of the global COVID-19 pandemic continue to slow Oklahoma’s economy as seen in September’s gross receipts report.

Three of the state’s four major revenue streams were down last month, according to figures released by State Treasurer Randy McDaniel. Income from combined sales and use tax, oil and gas production, and motor vehicle taxes are down $40.2 million. The extraction tax on oil and gas accounts for the lion’s share with a $27.4 million reduction.

“There’s been a global downturn in demand, and the energy sector is front and center,” he said. “Prices (per barrel) are coming up again, but there needs to be further recovery. We need more demand worldwide.”

The year started at $61.17 per barrel, and increased to $63.27 before the COVID-19 pandemic.

The gross production tax, the state’s tax on oil and natural gas, is well below the collections from the prior year for a 13th consecutive month, state figures show. Oil and gas prices remain depressed, while drilling activity and oil field employment levels are at historic lows.

In addition, September receipts from all sources total $1.15 billion, down by almost $8 million, or just less than 1%, from September of last year. Over the past year, gross receipts total $13.26 billion, down by some $468 million, or 3.4 percent, compared to the previous 12 months.

Still, McDaniel remains optimistic Oklahoma can rebound. Part of that upbeat attitude is based on an uptick in the state’s combined individual and corporate tax receipts, which showed a $21.9 million, or 5.1%, increase for September.

“Considering the major challenges the state faces, Oklahoma’s economy has been weathering the pandemic-driven downturn relatively well,” McDaniel said. “We still have reasons for concern in the months ahead, but the perseverance reflected in the September report is encouraging.”

Other economic indicators show Oklahoma may be inching forward with its economy. For instance, the Oklahoma Business Conditions Index in September remained above growth neutral for the fourth month, following three months of numbers indicating economic contraction. The September index was set at 58.6, down from 61.8 in August. Numbers above 50 indicate economic expansion is expected during the next three to six months.

Another highlight was the state’s unemployment rate, which dropped to 5.7% in August, down from 7.1% in July. The U.S. unemployment rate was listed at 8.4% in August.

September collections

Compared to gross receipts from Sept. 2019, collections in Sept. 2020 showed:

  • Total Sept. 2020 gross collections are $1.15 billion, down $7.9 million, or 0.7 percent. 
  • Gross income tax collections, a combination of individual and corporate income taxes, generated $452.7 million, an increase of $21.9 million, or 5.1 percent. 
  • Individual income tax collections are $346.4 million, up by $8.9 million, or 2.6 percent.
  • Corporate collections are $106.4 million, an increase of $13 million, or 13.9 percent.
  • Combined sales and use tax collections, including remittances on behalf of cities and counties, total $457.8 million – a reduction of $8.4 million, or 1.8 percent. 
  • Sales tax collections total $393 million, a decrease of $15.1 million, or 3.7 percent.
  • Use tax receipts, collected on out-of-state purchases including online sales, generated $64.8 million, an increase of $6.7 million, or 11.5 percent.  
  • Gross production taxes on oil and natural gas total $46.4 million, a decrease of $27.4 million, or 37.2 percent.
  • Motor vehicle taxes produced $58.9 million, down by $4.3 million, or 6.8 percent. 
  • Other collections composed of some 60 different sources including taxes on fuel, tobacco, medical marijuana, and alcoholic beverages, produced $133.5 million – up by $10.4 million, or 8.4 percent. 

Twelve-month collections

  • Combined gross receipts for the past 12 months (Oct. 2019 through Sept. 2020) compared to the prior 12 months showed:
  • Gross revenue totals $13.26 billion. That is $467.5 million, or 3.4 percent, below collections from the previous 12-month period.
  • Gross income taxes generated $4.77 billion, reflecting an increase of $120.8 million, or 2.6 percent. 
  • Individual income tax collections total $4.1 billion, down by $24.2 million, or 0.6 percent.
  • Corporate collections are $664.9 million, an increase of $145 million, or 27.9 percent. 
  • Combined sales and use taxes generated $5.46 billion, a drop of $149.8 million, or 2.7 percent. 
  • Gross sales tax receipts total $4.7 billion, down by $196.5 million, or 4 percent.
  • Use tax collections generated $758.7 million, an increase of $46.7 million, or 6.6 percent. 
  • Oil and gas gross production tax collections generated $708.8 million, down by $428.7 million, or 37.7 percent. 
  • Motor vehicle collections total $773.6 million. This is a decrease of $18 million, or 2.3 percent. 
  • Other sources generated $1.55 billion, up by $8.2 million, or 0.5 percent.