OKLAHOMA CITY — The ripple effects of depressed oil and natural gas prices are still dragging down Oklahoma's economy, and the state's condition is expected to worsen before it starts improving, Treasurer Ken Miller said Wednesday.
Miller released revenue figures that show for the first time in five years, 12-month gross receipts to the treasury were below the level of the previous annual period.
"The last time 12-month receipts showed contraction was in October 2010 as the state was still shaking off the remnants of the Great Recession," said Miller, who is also an economist. "As has been the case in all but two months of the past year, collections from oil and natural gas production taxes shrank, which of course was the main reason for the downturn in September."
For the fifth straight month, overall collections to the treasury were less than those from the same month a year earlier.
The price of West Texas Intermediate crude closed at about $48 per barrel on Wednesday, compared to about $87 per barrel a year ago. Natural gas has dropped from nearly $4 per 1,000 cubic feet a year ago to $2.474 on Wednesday.
"Revenue growth from the past year has been erased and indications are the situation is going to get worse before it gets better," Miller said.
Miller said it's too early to predict how much next year's revenue shortfall will be, but acknowledged that the state already is facing a budget hole of somewhere between $350 million and $500 million based solely on the amount of one-time money that lawmakers used to plug gaps in the current budget.
"Clearly there is a revenue problem in this fiscal year and the next fiscal year," Miller said. "And their options are rather limited ... they've either got to cut spending or find ways to enhance revenue to meet budget allocations."
Exacerbating the financial crisis for lawmakers will be a reduction in the individual income tax rate from 5.25 percent to 5 percent that takes effect on Jan. 1 and is expected to cost the state about $57 million for the last six months of the fiscal year. The tax cut has been a longtime goal of Gov. Mary Fallin and conservatives in the Legislature, and Miller said there's no chance it will be repealed.
"You're not going to have the political will to do that," Miller said. "Frankly, I'm not even sure they could, legally, at this point."
Despite being just three months into the current fiscal year, Fallin, her Finance Secretary Preston Doerflinger and legislative budget leaders already are meeting with the heads of state agencies to prepare them for budget cuts.
"Don't come to the Capitol this year asking for increased funding," Fallin said she told agency leaders. "Prioritize your spending and look for ways to make government leaner and more efficient.
"We'll get through this. It's not the first time we've had an energy downturn, and it's certainly not the first time we've had a budget shortfall."
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