OKLAHOMA CITY - The previously expected slowing of the Oklahoma economy has finally arrived.
After year-over-year monthly increases for 32 straight months, Gross Receipts to the treasury were less than they were from the same month last year. Total collections in November 2019 were $989.7 million, down 4.2% from November 2018. The primary culprit continues to be significantly lower collections from oil and gas gross production the number of active oil rigs and active natural gas rigs at their lowest since mid-2016 and for the fifth time in the last six months, sales tax receipts were lower than the same month in 2018. Motor vehicle taxes were down by 10.8% and corporate income taxes were down 30.2%.
The Oklahoma Business Conditions Index, which forecasts the growth of the economy on a scale of 1 to 100, fell from 48.7 in October 2019 to 47.8 in November. Anything below 50 is considered growth negative, indicating slow to no economic growth in the next three to six months. Despite the loss of year-over-year revenue, signals from Moody’s Investors Service indicate Oklahoma is positioned for a possible upgrade in its bond rating. The better a state’s bond rating, the less it pays in interest costs on bonds used to finance infrastructure projects.
Moody’s is one of three rating agencies for state credit-worthiness, and published an opinion on Oklahoma in late October of a positive outlook. Oklahoma currently is rated Aa2, which is just two steps below the best rating offered by Moody’s. State Treasurer Randy McDaniel said, “The state’s improved fiscal condition is being recognized nationally. Our efforts to increase reserves, eliminate structural deficits, improve pension finances, and diversify the state’s economy are working.”
He continued to claim, “Our financial house is in order and we are poised to strengthen our position.” Oklahoma’s debt burden and pension burden continues to be well below the 50-state median. The Constitutional Reserve Fund, or Rainy Day Fund, contains over $806 million and a structurally balanced budget has allowed for a more positive outlook. The state jobless rate increased in October by one-tenth of one percentage point compared to September 2019, following the national rate’s increase of the same. Oklahoma’s seasonal adjusted rate was 3.3%, with the U.S. unemployment rate at 3.6%. Over the previous 12 months, Oklahoma saw an increase of 13,088 workers, with an increase of 3,812 unemployed.