The Economy’s Implications for State Revenue
Original estimates for state personal income tax growth have been revised down as employment and salary growth has slowed. Estimates of sales tax growth have also been recently lowered as consumer and business purchasing has slowed. Purchases of services are projected to remain strong, but most sales of services are not taxed in Oklahoma. Currently the estimate for corporate income tax has not been revised, but this was prior to several events such as impending layoffs and potential sale of the Lucent plant in OKC.
In the case of a national economic slowdown/recession or a specific collapse of energy prices, Oklahoma’s very centralized revenue system will experience a greater shock than many other state governments. Over 40 percent of the $300 million in growth revenue for FY’02 will be derived from natural gas severance taxes. Estimates show the price moderating from $9/mcf closer to under $7/mcf in the next year. National energy policy changes, international politics or recession could impact that estimate significantly.
Source: OSU Economic Outlook