The depleted state Rainy Day Fund will be replenished with a deposit much higher than projected, based on the pace of revenue collections as the 2011 fiscal year winds down, Office of State Finance Director Preston Doerflinger announced Monday.
"General Revenue Fund collections for May show the state economy is still surging, dwarfing the national unemployment rate and bringing in revenue well above the official estimate," Doerflinger said as he released the OSF’s monthly General Revenue Fund report.
"We won’t know the figure until next month, but it's certain the Rainy Day Fund deposit will be substantially higher than the $71.1 million forecast at the February meeting of the Board of Equalization," he said. "It could easily double that amount."
The fiscal year ends June 30 and the Rainy Day Fund deposit will be made in July. The state's savings account now contains only $2.03 after having a record $596.6 million before the recession set in and the state experienced huge budget shortfalls.
A constitutional amendment adopted by voters in 2010 raised from 10 percent to 15 percent the cap on the amount of money that can be in the Rainy Day Fund, based on the General Revenue Fund certification from the preceding fiscal year.
Gov. Mary Fallin hailed the latest revenue figures and the prospects for a hefty deposit into the Rainy Day Fund.
"A commitment to fiscal responsibility and pro-growth policies continues to help our economy recover and expand," Fallin said. "It’s encouraging news that May revenues will be high enough for us to make a significant deposit into the Rainy Day Fund.
"However, more work needs to be done to create the very best business environment to foster creation of even more jobs and investment in Oklahoma."
Led by strong income and sales tax figures, state revenue collections for the first 11 months of the fiscal year are outpacing receipts of a year ago by almost 10 percent, according to the OSF report.
Total receipts for May were $414.7 million, which is $36 million or 9.5 percent more than was collected in May of 2010, and $25.4 million or 6.5 percent more than the official estimate.
For the fiscal year to date, total GRF collections are $4.532 billion. That is $409.1 million or 9.9 percent above the prior year and 3.5 percent higher than the estimate upon which the 2011 fiscal year budget was based.
"Income taxes were especially strong in last month, reflecting a decline in the state's unemployment rate in April to 5.6 percent, compared with the national rate of 9 percent," said Doerflinger, finance secretary in Gov. Mary Fallin's cabinet.
"It's evident that Oklahoma companies have stepped up hiring for months and this is helping our receipts in all areas," he said.
Oklahoma's coffers continue to get a bonus from strong oil prices, even though the OSF report for May shows total oil receipts were down from a year ago. That’s because $21.4 million in surplus oil revenue was diverted by the Legislature this year to provide money for the Ad Valorem Reimbursement Fund, the Higher Education Revolving Fund, and the State Career Technology Fund. Without the diversion, oil revenue would have easily exceeded last year's receipts for the month.
The first $150 million in gross production taxes on oil is dedicated to three education funds and other areas. Once collections hit that level, they become general revenue available for appropriation. Oil revenue reached the $150 million mark in December.
Gross production collections on natural gas continue to come in below the estimate, but there are signs for improvement in that area in the months ahead, based on the federal government recently revising its projections upward on production and prices.
"The outlook continues to be bright for the Oklahoma economy, barring something catastrophic on the national level," Doerflinger said.
"Consumers are probably making some adjustments in their household budgets to account for higher gasoline prices, but this has not been reflected in our sales tax collections," he said.
"Obviously, there are more Oklahomans with jobs and they are buying goods and services at a healthy pace. Motor vehicle sales have been strong all year and even our gaming receipts have been holding steady."
General Revenue Fund collections for major tax categories in May were:
Income taxes -- This source collected $142.9 million in May for the FY-2011 General Revenue Fund, which was $27.5 million or 23.9 percent more than prior year collections from individual and corporate income taxes and $34.1 million or 31.4 percent above the estimate.
Individual income tax receipts of $140.4 million were $25 million and 21.7 percent above the prior year and $32.5 million or 30.2 percent above the estimate.
Corporate returns totaled $2.5 million for the month which was $2.5 million more than prior year collections and $1.6 million or 179.3 percent above the estimate.
Sales tax -- Sales tax collections produced $143.4 million for the General Revenue Fund, $12 million or 9.1 percent more than the prior year and $7.8 million or 5.8 percent above the estimate.
Gross production tax -- The May taxes on natural gas and gross production oil accounted for $47.3 million in General Revenue Fund receipts, which was $8.9 million or 15.8 percent below the prior year and $10.4 million or 18 percent below the estimate. The $21.4 million diverted from this source would have brought taxes from gross production well above both the prior year and the estimate.
Collections of gross production taxes on natural gas totaled $26.5 million, $.7 million or 2.7 percent above prior year collections and $8 million or 23.2 percent less than the estimate.
Gross production taxes on oil totaled $20.8 million. This amount was $9.6 million or 31.5 percent below the prior year and $2.4 million or 10.2 percent less than the estimate. Had the diverted oil revenue gone to the GRF, collections for May would have totaled $42.2 million, which would have been $11.8 million or 38.8 percent above the prior year and $19 million or 82 percent above the estimate.
Motor vehicle taxes -- This tax source produced $18.4 million, which was $7.1 million or 62.6 percent above the prior year and $6.4 million or 54.1 percent above the estimate.
Other Revenue -- Other revenue produced $62.8 million in May. This was $1.7 million or 2.7 percent below the prior year and $12.6 million or 16.7 percent below the estimate.