OKLAHOMA CITY (AP) — Low natural gas prices are pushing gross production tax collections below expectations and could slow the growth of state revenue in spite of rising income tax, sales tax and motor vehicle tax collections, Oklahoma Treasurer Ken Miller said Thursday.
The gross production tax comprises only 10 percent of the overall state budget, but declining collections could force the Board of Equalization to roll back its estimate of the amount of revenue lawmakers will have to appropriate next year, Miller said.
“So much of our economy is tied to the energy industry,” Millers said as he released his revenue report for January. “That has to be a cause for concern.”
Miller said the state tax on oil and natural gas production generated $68.7 million in January, a decline of almost $5.5 million from January 2011. The reason, he said, is natural gas prices that are consistently lower than the estimates the state budget is based on.
Preliminary estimates for the budget for the fiscal year that begins July 1 are based on natural gas prices of $4 per thousand cubic feet. But the current price is $2.50 per thousand cubic feet, and Miller said little improvement is expected next year.
Gas prices have remained low because of a plentiful supply and an unusually mild winter. Miller said gas prices are dropping with demand for the fuel as the warmest winter in years exacerbates the supply glut.
Last month, Oklahoma City-based Chesapeake Energy Corp. announced plans to cut drilling and production of the fuel in the U.S due to plentiful supplies.
Chesapeake, the nation’s second largest natural gas producer, said it plans to cut daily production by 8 percent, meaning it will produce the same or slightly less natural gas in 2012 than it did in 2011. Chesapeake produces about 9 percent of the nation’s natural gas.
Meanwhile, Miller said low gas prices will likely force the Board of Equalization to lower its revenue estimate for next year when it meets on Feb. 21. He said the updated estimate for natural gas prices will likely be between $2.50 and $3.50 per thousand cubic feet.
“I think that we’ll see a pretty significant decrease in the certification,” he said. “I anticipate we’ll be pretty conservative.”
Miller said other segments of the state’s economy performed well in January and the economy showed overall growth for the 23rd consecutive month.
“The economy is continuing to do well,” he said.
January receipts from all revenue sources grew by 8.5 percent from the prior year and collections for the past 12 months were up by 9.6 percent, the treasurer said. Collections for the past 12 months are almost $1.4 billion higher than when the state’s economy hit bottom during the nationwide recession in February 2010.
“We have recovered 73 percent of the revenue lost from the peak of the expansion cycle in December 2008,” Miller said.
Total collections last month were almost $996 million, up $78 million from January 2011.
Personal and corporate income tax collections totaled $376 million, up 10 percent over January 2011. Sales tax collections totaled $362 million in January, another 10 percent increase, and motor vehicle taxes collected $55.3 million, a rise of about 2 percent over last year.
