How Low Oil Prices Could Block an Oklahoma Tax Cut
Gov. Mary Fallin in April 2014 signed into law a measure designed to gradually lower Oklahoma’s top income tax rate to 4.85 percent from 5.25 percent.
But those income tax cuts only go into effect if Oklahoma’s revenues rise, and the slumping price of crude oil — $63.57 per barrel of West Texas Intermediate at the time of this posting — could block the tax-cut trigger, The Oklahoman‘s Rick Green reports:
Collections from the gross production tax on oil and natural gas dropped below prior year collections in November for the first time in 19 months, down by $3.72 million or 5.3 percent. However, this reflects production from September, when oil was $93 a barrel. It is now about $66, so tax collections are expected to drop further. Oil hit a peak of $106 in June.
But oil prices aren’t the only reason state revenues have declined, the paper reports:
An increasing amount of money collected by the state is being diverted “off the top” to fund various programs. Seven years ago, about 55 percent of overall collections went into the general revenue fund, the main operating fund for state government. Currently, less than 47 percent of collections go into the fund. A long list of tax credits further reduce revenue.
The State Board of Equalization meets Dec. 18 to estimate revenue for the 2016 fiscal year.