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Oklahoma Economic Report
Oklahoma Oil and Gas AssociationNovember 14, 2014
Oklahoma State TreasurerKen Miller
KEN MILLEROKLAHOMA STATE TREASURER
www.treasurer.ok.gov
Essential to Oklahoma
• The oil and gas industry is vital to the Oklahoma economy
• The industry comprises one-third of the state’s GDP through direct and indirect impact
• Annually contributes some $50 billion to the state’s $150 billion economy
Funding government
• The Gross Production tax has always been a significant source of revenue for state government
• Through earmarking and other factors, GP contributions to the General Revenue Fund (GRF) have decreased over the years
• For example, in FY-99, almost 88 percent of GP oil went to the GRF. In FY-14, the percentage was less than 47 percent
KEN MILLEROKLAHOMA STATE TREASURER
www.treasurer.ok.gov
Current situation
• During FY-14, Gross Production from both oil and natural gas amounted to 7% of Gross Receipts to the Treasury (GRT) -- $860.1 million.
• During that same time, GP provided 5.9% of the GRF -- $333.2 million.
• Just last month, GP provided 7% of GRT and 2.4% of GRF
• Following months of double-digit increases, GP rose by 0.1% over the prior year in October’s GRT report
KEN MILLEROKLAHOMA STATE TREASURER
www.treasurer.ok.gov
Nothing is simple
KEN MILLEROKLAHOMA STATE TREASURER
www.treasurer.ok.gov
• This apportionment chart from the tax commission shows current allocations of Gross Production collections.
• Starting next fiscal year, the new 2% rate will be allocated 25% to County Highway Fund, 25% to schools and 50% to GRF
2010 fiscal challenges
• With the state, national and world economies seemingly in free fall, changes in GP collections were made in the waning days of the 2010 legislative session
• For FY-11 and 12, payment of horizontal and deep drilling incentive payments were delayed. The delay added $300 million in state revenue
• For FY-13, 14 and 15, the state is repaying the delayed incentives at a rate of $100 million per year
KEN MILLEROKLAHOMA STATE TREASURER
www.treasurer.ok.gov
Incentive payment changes
• The same legislation changed the exemption period for horizontal wells by removing cost-recovery language
• It also changed how the incentives were paid – from a post-production rebate to the front end
KEN MILLEROKLAHOMA STATE TREASURER
www.treasurer.ok.gov
Moving forward• The Kansas lesson: “Sometimes ideological experiments bring
unintended outcomes. I think Kansas is seeing that, and it serves as a reminder for the rest of us.” – Wall Street Journal, June 10, 2014
• Closer to home: “The ideal tax structure would generate a stable and diversified revenue stream that sufficiently funds core services while retaining the profit motive that drives entrepreneurship. It would not unfairly burden property owners, discourage consumption or reward idleness.” – Oklahoma Economic Report, May 31, 2012
KEN MILLEROKLAHOMA STATE TREASURER
www.treasurer.ok.gov
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