By Michael McNutt
Gov. Mary Fallin made a push to legislators to support her personal income tax reduction and elimination proposal as revenue reports released Tuesday showed the state set an all-time monthly record for state sales tax collections.
"It is great news that sales tax receipts reached an all-time high and our economy is continuing to grow," Fallin said. "I am encouraging legislators to see this as an opportunity, not to grow government or to spend more on government bureaucracy, but to pursue a bold plan to cut taxes and allow Oklahomans to keep more of their hard-earned money."
Oklahomans went on a buying spree in late December and early January as sales tax collections for the state's general revenue fund, the main source of state funding, totaled $165 million in January, the report shows.
"This is the largest amount of money we have ever collected from sales taxes in any month of any year ever in Oklahoma," state Finance Director Preston Doerflinger said.
"Consumer confidence appears to be high early in the second half of the 2012 fiscal year."
Fallin last week released the outline of her plan to reduce and gradually eliminate the state's personal income tax in her State of the State speech that started this year's legislative session. Fallin's plan calls for reducing the top 5.25 percent rate to 3.5 percent next year, and reducing the number of income tax brackets from seven to three, with individuals earning less than $15,000 not required to pay personal income taxes. Further cuts in the income tax rate would be an additional quarter point in any year in which the state sees 5 percent revenue growth.
"By passing the tax reduction plan I outlined last week, Oklahoma can continue to build on our recent economic successes by creating a tax climate more conducive to business growth, job creation and statewide prosperity," Fallin said. "Moving forward, we must also continue to right-size state agencies and to carefully prioritize spending."
Total collections for the general revenue fund through the first seven months of the 2012 fiscal year, which began July 1, were $3.2 billion, according to the monthly revenue report prepared by the state finance office. The amount is $368 million, or 12.9 percent, above the same period last year. The collections came in about 10.4 percent above the estimate for the first seven months of this fiscal year.
State sales tax collections in January were almost 12 percent higher than for the same month a year ago, he said.
February's tax revenue report covers late December to early January. The collections included spending in the days just before and after Christmas, Doerflinger said.
"Our economic recovery from the recession has not missed a beat in the first half of the fiscal year and is off to a good start in the second half," said Doerflinger, who is secretary of finance on Fallin's cabinet. "So this seems like the perfect time to implement the governor's tax-cut plan, which will generate more economic activity because the vast majority of Oklahomans will have more money to spend, and the state has another arrow in its quiver to get the attention of company executives looking for site locations."
However, low natural gas prices remain a concern, Doerflinger said.
"While we have had reports of companies reducing gas wells because of low prices, this is being offset to some degree by high oil prices," he said. "In fact, the total rig count in the Oklahoma oil patch was much higher in January than the same month a year ago as producers employ enhanced drilling techniques to gather oil, liquefied gas and other profitable forms of energy."
Gross production tax collections from oil continue to generate money for the general revenue fund, he said. Most experts believe crude prices will remain strong through the 2013 calendar year. Oil helped total gross production taxes exceed the estimate by 124.8 percent in January, even though gas prices were depressed.