July 6, 2016 - 6:10 PM EDT
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Increase in Oklahoma tax receipts may point to oil industry turnaround, state treasurer's report suggests

July 06--Taxes paid by oil and gas producers increased over the last two months, providing a ray of hope that Oklahoma's dominant energy industry has seen the bottom of its two-year slide.

Oil price hikes appear to have stimulated the small upturn in tax receipts from this business sector.

Collections from gross production taxes on crude oil and natural gas remain below prior year numbers but rose in May and June after hitting a 17-year low in April, according to a monthly report released Wednesday by state Treasurer Ken Miller.

June receipts are based on oil prices in April, when the spot price of West Texas Intermediate crude oil was $40.75 per barrel. The commodity hit a low of $30.32 in February. It reached just under $49 last month.

"Prices have certainly moderated for oil and gas, and have come up, so hopefully we have seen the worst," Miller said.

Oklahoma's economy remains heavily dependent on the oil industry, so any signs of a rebound are significant at a time when all major revenue streams for the state are down from the prior year.

The state budget for the fiscal year that started Monday is prefaced on $40 oil. If the commodity's price continues to increase, Oklahoma officials could get some breathing room in their struggle to fund key state services like health, education and public safety.

Tax revenue declines were so severe this year that two rounds of across-the-board spending cuts were required. It turns out the state cut too much, leaving more than $100 million to be refunded to state agencies after final calculations are made later this month.

"I think most people are agreeing it's going to be north of $100 million and that's a tidy sum, but in the scope of things, percentage-wise on a $6 billion budget, it's less significant, but it's still a pretty good chunk of money," Miller said.

An alternative to returning the money to state agencies in proportion to previous cuts would be to call the Legislature back into session to decide how the funds would be spent.

"There's pros and cons," Miller said. "You've got to look at the expense of bringing the Legislature back in session and weigh that against the benefits of re-prioritizing that spend into core functions that perhaps are having more difficult times compared to others."

The overall economic report released by the treasurer's office showed the state's economy is still hurting more than a year after Oklahoma went into a recession.

Tax receipts from all major revenue streams -- income, sales, gross production and motor vehicle taxes -- are smaller when compared to the same month of the prior year and the previous fiscal year. The monthly bottom line has been less than the same month of the prior year for 14 consecutive months.

June gross receipts were $925.7 million, down by almost $74 million or 7.4 percent from June 2015. It is the lowest June total in six years.

Fiscal year 2016 collections are $11.1 billion, down by more than $860 million or 7.2 percent from the previous fiscal year.

After almost 13 years with unemployment rates below the national average, Oklahoma's monthly jobless rate climbed by two-tenths of one percentage point in May to match the U.S. rate. The state and national rates were set at 4.7 percent in May.

The report for June shows gross income tax collections, a combination of individual and corporate income taxes, generated $353.4 million, a drop of $53.5 million or 13.1 percent from the previous June.

Individual income tax collections for the month were $285.4 million, down $22.4 million or 7.3 percent from the prior year. Corporate collections were $68 million, down by $31.1 million or 31.4 percent.

Sales tax collections, including remittances on behalf of cities and counties, were $351.1 million in June. That is $13.5 million or 3.7 percent below June 2015.

Gross production taxes on oil and natural gas generated $25.5 million in June, a decrease of $10.5 million or 29.1 percent from last June. Compared to May reports, gross production collections were up by $1.4 million or 5.7 percent.

Motor vehicle taxes produced $65.8 million, down by $3.6 million or 5.1 percent from the prior year.


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