Figures released today by the State Treasurers office aren’t pretty, and basically the message Scott Meacham had for state agencies was: look for more ways to cut your budget.
Many state agencies are already grappling with a six percent budget cut this budget year which began July 1. Revenue collections for the fiscal year that ended June 30 showed that collections were down $434.7 million below the previous year and $427.8 million or 7.2 percent below the estimated figures.
Estimates are made in February. The Board of Equalization approves the collections estimates set by the Tax Commission.
The recession has hit Oklahoma and so far state officials aren’t sure where or when it will end. But in order for the state’s bottom line to improve one thing has to happen, Meacham said. The price of natural gas has to improve.
Natural gas is the lynch pin in Oklahoma’s economy. Drilling employs people. People who work on rigs spend money in the rural parts of the state, thus helping sales tax collections. When the industry is booming we see oil companies, like Chesapeake, investing in land or million dollar drilling rigs. And don’t forget those royalty checks. When the price is good, Oklahomans have a little more extra money to spend. It’s not rocket science. Gross production taxes, the money the oil and gas producers have to pay to the state, were down by 82 percent below estimates for the year.
“The hole is getting bigger and we haven’t hit the bottom yet,” Meacham told reporters who gathered at his press conference today.
Revenue collections could improve. Oklahoma was riding high when oil prices were topping $100 a barrell. Our state’s economy and budget is commodity driven. So when the rest of the America (and Oklahomans) are complaining about how much it costs to fill up their tanks, Oklahoma is sitting pretty. When the gas prices fall, state agencies have to get creative.
But Oklahoma consumers are doing their part to help keep the state budget intact. Sales tax collections accounted for $1.647 billion, yup– that’s billion with a B. That figure was $34.8 million or 2.2 percent above the previous year. Despite the gain, the figure was still below estimates by about $54.8 million.
So the take away on this economic doom and gloom:
1. We’re not California, or the seven other states that still don’t have a budget in place and could face a government shut down, or have to issue IOU’s to pay the bills. We’re paying our bills, keeping services and doing pretty good in the scheme of things, Meacham says.
2. If you want to be a good Oklahoman, get a car that drives on natural gas to help the state’s bottom line. Cook with the blue flame. Increasing demand for natural gas means state agencies can better serve you.
3. Get out there and spend that hard earned cash. Buy, buy, buy. Oh and eat beef and pray for rain. Easier said than done right?
With all these factors it could be a lackluster legislative year. If state agencies are forced to trim their budgets we could see a change in services, or furloughs, or layoffs. No state official is ready to say that’s going to happen immediately, but the reality is that state agencies already think they’re operating on a barebones budget. What else is left to cut?
Taxes…could be interesting. Hide and watch. It’s an election year. Everyone wants to lower taxes, not raise taxes.