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January 3, 2013

State treasurer: Economic growth continues, slows

By Sean Murphy Associated Press

OKLAHOMA CITY — Oklahoma's economy is still improving, but state revenue increases weren't as strong last month or in 2012 as they were a year earlier, state Treasurer Ken Miller said Thursday.

Overall state revenue collections in December exceeded those of December 2011 by 1.5 percent, marking the eighth time in 2012 in which monthly collections outpaced those from the prior year, according to figures released by the treasurer's office.

In December 2011, collections were up 11.1 percent from the previous year, in part because motor vehicle sales soared amid pent-up demand from the recession, Miller said in a conference call from Naples, Fla.

"I think it can be best explained by looking back at the previous December and saying that month was exceptionally strong," said Miller, who is on vacation but called reporters to discuss the state's revenue picture.

Collections throughout 2012 were up 3.8 percent over 2011, Miller said. A year earlier, collections were up 9.6 percent from 2010.

Miller noted December sales tax collections, which reflect sales from mid-November to mid-December, were nearly 6 percent higher than those during the previous holiday season.

Gross income tax collections, which include corporate and personal income taxes, increased about 1.6 percent in December, while sales tax collections last month outpaced those of the prior year by 5.9 percent.

Those increases were offset by declines in both the gross production taxes on oil and natural gas, which dropped 15.7 percent from December 2011, and a 12.4 percent dip in motor vehicle tax collections last month. Vehicle sales in December 2011 were unusually high, Miller said.

Overall gross revenue collections from 2012 totaled $11.1 billion, an increase of $405 million or 3.8 percent, over collections from 2011. Personal and corporate income tax collections, sales taxes and motor vehicle taxes all increased, while oil and gas gross production tax collections declined.

The marked decline in oil and gas production taxes in 2012 of nearly 30 percent compared to 2011 is attributed largely to a change in how oil and gas companies receive tax exemptions for drilling deep and horizontal wells. Tax rebates were suspended for two years in 2010 to help lawmakers close a hole in the state budget, and now the state is paying back an estimated $300 million that accrued while they were suspended — nearly double the amount that lawmakers anticipated.

Miller, who served as chairman of the House Appropriations Committee in 2010 and helped craft the deal with the oil and gas industry to change how those tax exemptions work, acknowledged Thursday that lawmakers might consider revisiting those exemptions.

"When those incentive packages were first designed, it was to help get high-cost gas out of the ground. Now as time has gone by and technology has improved so much, most of the gas that is coming out of the ground now is what was previously considered high-cost gas, and I think most of our drilling now is horizontal and deep," Miller said. "I don't know what the answer is today, but I think we probably need to sit down with the industry and sit down with other state leaders to take a look at it and make sure it is as up-to-date and effective as possible."

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