State Finance's first multi-year trend analysis shows expenditure, revenue growth
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Author :
Shawn Ashley
Date :
11/02/2007
News Director
(OK) The Office of State Finance released its first multi-year revenue and expenditure trend analysis Thursday, projecting continued growth in the state's top revenue sources and state spending.
The analysis examines actual revenue expenditure data for FY03 to FY08, the current fiscal year, and forecasts for FY10 to FY12. The analysis does not address FY09, which will be focus of the Board of Equalization when it meets in December to certify revenue for that fiscal year. The analysis, however, will be updated sometime after that meeting.
The analysis' comparison of income and expenditures for FY03 to FY08 shows spending exceeded actual revenue collections over the period. The difference between the two - which was at it highest in FY06, $772.8 million, before trailing to its lowest point in FY08, $293.4 million - has been made up annually by the legislature's appropriation of money from the Rainy Day Fund, Rainy Day spillover funds, and other cash reserves.
Over the six-year period, appropriations grew at an average annual rate of 4.4 percent, the report indicates. Revenue, meanwhile, grew at an average annual rate of 7.1 percent over the period.
Looking forward, the analysis anticipates certified revenue of $6.7 billion for FY10. Based on the 7.1 percent average annual growth rate experienced from FY03 to FY08, that amount is anticipated to increase to $7.7 billion in FY12. Appropriations, meanwhile, are expected to increase from $6.1 billion in FY10 to $6.6 billion in FY12, based on appropriations' 4.4 percent average annual growth rate of the recent past.
The analysis also examines future revenue trends in the General Revenue Fund's five major tax sources - personal income tax, corporate income tax, the gross production tax on natural gas and motor vehicle taxes - and projects moderate growth through FY14, ranging from 4.2 percent to 5 percent annually.
Individually, personal income tax receipts are forecast to grow at an average annual rate 8.3 percent from FY08 to FY12, while corporate income tax receipts will see an average annual growth rate of 7.9 percent, the analysis indicates. The gross production tax on natural gas is forecast to increase by 2.4 percent on average annually. Sales tax collections are projected to grow at a 4.0 percent average annual rate. Motor vehicle taxes are projected to grow at the slowest average annual rate, 3.2 percent.
The projections are based on Oklahoma State University's econometric model projections, which are used by the state and private businesses to forecast Oklahoma's economic activity.
The office is required to publish the report by SB 368, by Sen. Owen Laughlin, R-Woodward and Rep. Guy Liebmann, R-Oklahoma City, which took effect Nov. 1. The analysis will be available on the office's website - http://osf.ok.gov/ - no later than Monday.
SB 368 also calls for the Oklahoma Tax Commission to prepare to use dynamic revenue forecasting in the fiscal impact statements of proposed tax cuts the commission provides to legislators. Dynamic forecasting takes into account the expected economic impact of tax changes, particularly how they positively or negatively affect the state's economy and subsequent revenue collections.
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