Collections also down in September from a year ago..
State General Revenue Fund (GRF) collections declined 6.6 percent in September from a year ago and are down 4.1 percent for the first quarter of Fiscal Year 2014 from the first quarter of FY 13.
As state government’s main operating fund, the GRF is the key indicator of state government’s fiscal status and the predominant funding source for the annual state budget. Made up of almost 70 revenue sources, the GRF is where all taxes and fees flow that are not dedicated to specific programs.
Total GRF collections for September were $505.8 million, which is $36 million or 6.6 percent below collections from the same month a year ago and $54.7 million or 9.8 percent below the estimate for the year. Total GRF collections for the first quarter of FY 14 were $1.263 billion, which is $54.1 million or 4.1 percent less than the prior year and $113.8 million or 8.3 percent below the official estimate upon which the FY 14 state budget is based.
“As anticipated, state revenues have softened a bit. This is why we’ve been stressing not to anticipate a big pot of growth revenue money this year,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger. “Ample time remains for collections to pick up, but it’s looking like the state may see tighter revenues than in recent years. Agencies should continue to keep their belts tight, find efficiencies and prepare for potentially flat budgets.”
Collections from all four major tax categories are running below official estimates for the first three months of the fiscal year that started July 1. Gross production taxes are down 33.4 percent, followed by motor vehicle taxes at 13.6 percent, income taxes at 9.4 percent and sales taxes at 3.7 percent.
Current and future decreased revenue collections are likely due to a combination of market uncertainties caused by the federal government shutdown and other federal budget debates, an anticipated softening of the state economy, and various noneconomic factors resulting in temporary decreases in state revenue collections.
“A lot of this isn’t a surprise, but it’s still cause for caution,” Doerflinger said. “The deadlock in Washington, D.C. is a big concern. Oklahoma made a great run after the recession and now we’re in an expected soft period that should pick back up soon provided D.C. doesn’t drive everything into the ditch. Regardless of what happens this week, D.C.’s recklessness has already done some damage here and across the nation, and that’s a shame. We anticipate the more pronounced effects of the stalemate in D.C. to be evident in next month’s revenue report.”
Noneconomic factors reducing state revenues include the apportionment of $60 million in FY 14 income tax revenue to state Capitol building repairs pursuant to legislation signed into law in May. The first $20 million of that $60 million was apportioned in September and the remaining $40 million will be apportioned by June 30, 2014, the end of the fiscal year. The law requires another $60 million in income tax collections to be allocated for state Capitol building repairs in FY 15.
“Looking forward, we’re still confident in the Oklahoma economy’s proven resilience under the pro-growth policy climate the Fallin administration has put in place. Low unemployment and continued innovation within energy, manufacturing and other sectors of our economy will continue to serve Oklahoma well in the months ahead,” Doerflinger said.
Doerflinger is director of the Office of Management and Enterprise Services (OMES), which issues the monthly GRF reports.