Oklahoma's economic health: A look at the state's tax revenue in August

Oklahoma tax revenue rose in August by $24.2 million compared to the same month last year, despite downward trends overall in annual gross receipts, according to the latest report.

A fall in oil and gas profits hit the state's economy significantly over a 12-month period ending in July, while a decrease in income tax impacted monthly gains. Business conditions improved since the previous month mostly due to a growing manufacturing sector.

"The state's revenue's been pretty close to expectations, maybe dropping 3 to 5%, depending on how much you take off each quarter or month," said state Treasurer Todd Russ. "But, that's a relatively small budget than what we're working with now. Different things have affected us, too. When oil and gas tax revenue drops 30 to 40% but we're still that close to expectations, that's pretty amazing."

The state's total revenue in August amounted to $1.27 billion, a 1.9% increase over August 2023, according to the latest gross receipt report from the state treasurer. Tax revenue sources included individual, corporate, sales, use, gross production and motor vehicle taxes. It also came from other revenue sources, which are not specified. Sales and use tax contributed the most, totaling $605.9 million in tax revenue combined. Sales taxes amounted to $502.4 million, and use tax amounted to $103.5 million.

More: How healthy is Oklahoma's oil and gas industry? A look a production, revenue

'It's just that time of the year'

All sources of revenue increased in August, except for individual income tax, which totaled $349.5 million, a $2.1 million loss. Compared to August of last year, it fell by 0.6%. Corporate income taxes made up for the losses, however.

Income taxes in general, which encompass both individual and corporate taxes, made the second-largest contribution to August gains. Income taxes generated $367.4 million with $17.9 million coming from corporate taxes alone. Corporate taxes also showed the greatest revenue change, up $2.8 million, increasing by 18.4%.

"It's just that time of the year," said Russ. "Local sales taxes on merchandise for back to school impacted revenue, even with tax breaks. That's the tax you pay at the counter. But, a lot of online back-to-school stuff still applied the use tax. The online activity has just gone up dramatically."

He added that use taxes, which are included in online purchases, generate around $1 billion per year compared to $25-$35 million pre-COVID.

Meanwhile, state tax revenue fell over a 12-month period ending in July, which totaled $16.95 billion. Losses amounted to $304.4 million, a 1.8% drop. Oil and gas gross production taxes contributed most to overall tax revenue losses. The state lost profits in the industry, with totals of $1.1 billion, which was down $515.1 million since July 2023. The loss shows a 31.9% decrease in industry tax revenue.

While profitable taxes dwindled in the fossil fuel industry, the state gained momentum in exports through an up and coming manufacturing sector, which has seen major investments since 2021. Exports totaled $5.5 billion this year compared to $2.8 billion the same time last year, according to the report. The increase showed a 96.2% gain, making the manufacturing sector a leading industry in the state. Oklahoma's Business Conditions Index, which provides information on future business developments using a confidence indicator, rose to 49.3 in July from 47.5 in June. Outlooks for growth in the sector look positive.

"We've had a lot of different manufacturing companies come along in Oklahoma," Todd said. "It's grown dramatically this year."

This article originally appeared on Oklahoman: Oklahoma's economic health: A look at the state's tax revenue in August