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State Economy Grows in April: An Official Says Price Increases for Natural Gas and Oil Continue to Buoy Up Oklahoma.

Posted on: Thursday, 11 May 2006, 09:09 CDT

By Angel Riggs, Tulsa World, Okla.

May 11--OKLAHOMA CITY -- Oklahoma's economy continued to grow in April, helped along by major increases in oil and gas taxes.

Preliminary reports showed that the state's general revenue fund collections for April were $688 million -- $134.8 million, or 24 percent, above the same month last year.

That's also $106 million, or 18.2 percent, above the official estimate.

Collections again outperformed the previous year and the estimate, indicating the state's economy is continuing its expansion cycle, said State Treasurer Scott Meacham.

He attributed steady improvement in Oklahoma's economy since mid-2003 to price increases for natural gas and oil.

"Gross production numbers are off the charts in how much they exceed the prior year," Meacham said. And that, he added, also affects sales and income taxes.

In fact, the gross production tax on oil and gas generated $59.5 million in April, up 165 percent compared with the same time a year ago.

Of that, oil contributed $16.1 million.

And, at 37 percent above the estimate, the gross production tax was the strongest performing revenue stream.

A seasonal bump in collections for oil and gas taxes is to be expected from March through May, Meacham said. That's because winter months are reflected then.

However, this year the higher figures are surprising because Oklahoma had such a mild winter.

The increase, Meacham said, is likely due to higher prices spurring production at Oklahoma companies.

That creates job growth in the industry, and mineral owners receive more money in royalty checks, both of which affect income and sales taxes.

In fact, net income taxes produced $424.6 million in April -- up $73 million, or 21 percent, compared with the same month last year.

That figure was 20 percent more than estimated.

The state sales tax produced $128.6 million, up 12 percent compared with the same period last year. That's nearly 9 percent above the estimate for April.

"Consumers have more money and I think the economy is doing better," Meacham said.

Year-to-date, income taxes are up 13.5 percent; sales taxes are up 8.6 percent; and motor vehicle taxes are up 5 percent.

However, despite the good times, the gush of revenue creates a problem.

"If history is any indication, the high energy prices of today will not last forever, and we need to be prepared," Meacham said.

Now is a good time to begin an effort to lessen the state economy's dependence on the oil and gas industry, he said.

The state has a short-term problem because "revenues are very much exposed to the commodity prices of oil and gas," he said. The long-term issue is that oil and gas reserves are nonrenewable resources.

"Since we have this temporary wave we're riding," he said, "why don't we use some of that money and spend it on diversifying our economy?"

Angel Riggs (405) 528-2465 angel.riggs@tulsaworld.com

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Copyright (c) 2006, Tulsa World, Okla.

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Source: Tulsa World

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