With the release last month by Office of Management and Enterprise Services (OMES) of the new Comprehensive Annual Financial Report (CAFR) for the state of Oklahoma, we now know that total state tax collections and total government spending are at record levels.
The fact that state tax collections reached an all-time high in fiscal year (FY) 2013 is particularly noteworthy, considering that during the same time period, millions of Oklahomans experienced increased payroll taxes and federal income taxes, increased health insurance premiums due to Obamacare, new taxes and fees created by Obamacare, and depressed consumer demand. These record-high tax collections are also noteworthy, given that energy prices were low and the state had to pay back an interest-free loan incurred from the private sector at a time when state spending was not reduced to reflect actual revenue during the recession.
Total taxes collected by the state in FY-2013 reached $7.86 billion, an all-time high. This is $2.1 billion more than the $5.73 billion collected in FY-2003.
One particular revenue source, sales taxes, deserves special mention. In fiscal 2003, net state sales tax collections were $1,404,275,613. In fiscal 2013, the most recent fiscal year, net state sales tax collections were $2,275,444,163, an increase of $871 million—or 62 percent in just 10 years. Comparatively, inflation over this same period was 27 percent, state population growth was 9 percent, and state personal income growth 39 percent.
Oklahoma’s top personal income tax rate was 7 percent in 2004. Since 2004, the top rate has been lowered periodically over the last 10 years to its current top rate of 5.25 percent, a total reduction in the rate of 25 percent. Changes to Oklahoma’s personal income tax requirements during this period have also included increases in the standard deduction and the addition of a child tax credit, which all served to lower the portion of personal income taxes owed by hundreds of thousands of Oklahomans. During this period, Oklahoma also eliminated its death tax.
According to OMES, net state sales tax collections are poised to set another record for the current fiscal year ending June 30, 2014. Despite the significant obstacles facing Oklahoma families’ wallets as mentioned above, net state sales tax collections to date for the state general fund exceed the prior year by $16.3 million.
And of course, what the politicians collect they also spend. As you can see, total state spending is also at an all-time high.
As my OCPA colleague Andrew Spiropoulos has correctly noted, too many Republican lawmakers “seem to have been uninformed that conservative legislators are expected to cut taxes and spending.”
Jonathan Small, C.P.A., is the vice president for policy at OCPA. He previously served as a budget analyst for the Oklahoma Office of State Finance, a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department.