Income tax and sales tax collections are up, and lawmakers will have about $43 million more to appropriate this year. That’s good news for an upcoming fiscal year with an estimated $100 million hole.
But energy industry estimates were too generous.
Natural gas prices are down, and anticipated revenues from gross production taxes have been cut by almost $87 million.
And the expected cost of some tax breaks to the oil and gas industry has doubled, costing the state about $48 million.
The Oklahoman’s Michael McNutt reports:
“We’re an energy state,” Reece Womack, the Tax Commission’s economist who prepared the estimate, told commissioners. “That makes our revenue stream volatile because energy is volatile.”
The tax breaks are on oil and gas production taxes for horizontal and deep-well drilling, reports Sean Murphy with the Associated Press:
… Oklahoma must repay developers $294 million over the next three years, not $150 million as initially projected. Oklahoma temporarily suspended tax breaks amid a fiscal crisis in 2010 and promised to repay them beginning this year.
State Senate President Pro Tem Brian Bingman, R-Sapulpa, told the AP such incentives attract oil and gas companies, which generate economic development and other revenues.
Sen. Tom Adelson, D-Tulsa, said the tax breaks are giveaways to wealthy companies:
“You’re basically taking away services from working class families and giving it to people who already have extraordinary wealth,” he told the AP. “I think it’s really an embarrassment.”
In December, it was estimated that natural gas would bring in about $267 million, which was based on projected average of $4 per 1,000 cubic feet.
February’s estimate is based on $3.64 per MCF, which is a cut of about $86.9 million, reports The Oklahoman.
The Board of Equalization meets Tuesday to decide whether to approve the Tax Commission’s revenue certification, which is the final determination of how much money is available to lawmakers for appropriation.