Continuing shift to online shopping
OKLAHOMA CITY – Sales and use tax receipts generated in February show the continuing shift to online shopping was apparent even before the coronavirus pandemic shut down the economy. Meanwhile, tax receipts from medical marijuana transactions in Oklahoma have increased in 16 of the last 18 months.
The April distribution of sales tax collections by the Oklahoma Tax Commission (OTC) primarily represents local tax receipts from business transactions conducted in February.
‘OUR ECONOMY FEELING THE PAIN’
In a news release issued April 14, Steve Harpe, director of the state Office of Management and Enterprise Services, said total state General Revenue Fund (GRF) collections during the first nine months of fiscal year 2020 were $70.6 million below the estimate and $11.4 million below prior year collections for the same period.
“Although we have yet to see the full impact of $20-per-barrel oil, it is clear from dropping sales and use tax collections that our economy is beginning to feel the pain,” Harpe said. “This, compounded with COVID-19 ‘stay at home’ requirements and extended IRS tax filing deadlines, we expect to see the greatest impact to collections over these last remaining months of fiscal year 2020 and into the upcoming 2021 fiscal year.”
“Next month probably will be grim,” Tax Commission Public Information Officer Paula Ross said recently. Income tax collections “have helped prop up GRF totals to this point but are projected to take heavy losses beginning in April,” Harpe said. Total income tax collections of $186.6 million in
March were 14.9% above the estimate and 32% higher than the prior year. Sales tax collections of $165.1 million were 10.5% below the estimate and 5% below the prior year. Gross production tax collections of $59.8 million were 28.7% below the estimate and 19% below the prior year. Natural-gas collections were $18 million, 52% below the estimate and 46.8% lower than the prior year.
Motor vehicle tax collections of $2.8 million were 28% above the estimate but 84.6% below the prior year. Other revenue collections of $80.3 million were 0.5% above the estimate but 21% below the prior year.
The last three months of the fiscal year (which ends June 30) account for one-third of the state’s general revenue collections. “Heavy losses in these months will have a significant impact on revenue,” Harpe said.
25 OF 43 CITIES, TOWNS EXPERIENCE DECLINES IN SALES TAX RECEIPTS
The disbursement of $146.9 million in sales tax collections returned to cities and towns this month reflected an $894,000 decrease from the distribution to Oklahoma communities in April last year. More than half of the 43 cities and towns in eight southwest Oklahoma counties experienced declines in their sales tax disbursements this month compared to a year ago Temple’s sales tax check this month was just $5.26 lower than it was in April 2019.
But some of the regressions were steep. Altus’s payment was $86,345 lower this month than it was in April 2019. Gotebo’s payment was 55% lower than a year ago; Indiahoma, 37%; and Velma’s disbursement was $17,700 (34.5%) lower. Waurika’s check was 51% lower this month, down by $40,245 from April last year, and Loco’s payment, too, was 51% lower.
Jefferson County’s sales tax check was $31,400 lower (34%) than it was a year ago. Conversely, Medicine Park’s sales tax check this month was $8,277 (29%) higher than in April 2019, and Mountain View’s payment increased 73%.
USE TAX PAYMENTS INCREASE IN MANY CITIES
The OTC’s use tax payments this month to cities and towns across the state totaled almost $21 million. The use tax is a sales tax on purchases made outside one’s state of residence for taxable items that will be used, stored or consumed in one’s state of residence and on which no tax was collected in the state of purchase.
Of 42 southwest Oklahoma communities that receive use tax revenues, 78% of them reaped more revenue this month than they did a year ago.
The use tax disbursement to Altus, for example, was $19,400 (almost 31%) higher this month than a year ago. Eldorado’s payment doubled. Elgin realized a 22.7% increase; Sterling, 126%; Olustee, 61%; Frederick, 43%; Manitou, 45%; Geronimo and Gotebo, 64% each; Hobart, 31%; Velma, 79%; Mangum, 83%; Medicine Park, 124%; and Mountain Park, 166%.
County governments shared in the bounty. Tillman County’s use tax payment this month was almost $22,000 higher (340%) than it was a year ago. Jackson County’s payment was 34% higher, and Greer County’s was 75% greater.
MARIJUANA TAX RECEIPTS CLIMB TO RECORD AGAIN
Tax receipts from medical marijuana increased yet again, to a record $7.8 million in March. That included $3.42 million from the 7% tax on purchases of marijuana products, plus $4.39 million in state and local sales taxes on those purchases.
Combined tax collections on medical marijuana in Oklahoma have climbed to $78 million in the past year and a half. More than $1 million in taxes were collected on medical marijuana transactions in 15 cities and towns in nine southwest Oklahoma counties during the first three months of this year, Tax Commission ledgers reflect.
Tax Commission spokesperson Paula Ross said all of the proceeds from the 7% marijuana tax will be deposited to a designated fund at the State Health Department until the annual budget for the regulatory office is fulfilled.
Any proceeds in excess of the budgeted amount will be allocated to the Drug and Alcohol Rehabilitation Fund at the Health Department (25%) and the balance (75%) will be deposited in the state General Revenue Fund for appropriation by the Legislature, Ms. Ross said.