Approved: Equalization Board OK’s 2016 Tax Cut
For Immediate Release: December 18, 2014
Office of Management and Enterprise Services
First FY 16 revenue estimate approved
Trigger met for personal income tax cut
OKLAHOMA CITY — Revenues available for certification for the next appropriated state budget are trending flat but remain sufficient to trigger a personal income tax reduction in tax year 2016, according to projections approved Thursday.
The seven-member Board of Equalization on Thursday certified revenues Gov. Mary Fallin can use to build her FY 2016 executive budget proposal. Under state law, the governor must use the figure certified Thursday for the executive budget that will presented to the Legislature when it convenes Feb. 2.
The board also took action required under legislation enacted in April that will cause the state’s top personal income tax rate to drop from 5.25 percent to 5 percent beginning Jan. 1, 2016. The legislation authorized the income tax reduction if the FY 16 General Revenue Fund (GRF) estimate made by the board Thursday was equal to or greater than the FY 14 GRF estimate made by the board in February 2013. The FY 16 GRF estimate the board reviewed Thursday is $6,004,349,345, which is $60.7 million more than the FY 14 GRF estimate of $5,943,662,805 made in February 2013.
“Oklahomans are getting relief at the gas pump this year, and next year they’ll be getting more relief through a lower personal income tax,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger.
The board on Thursday approved an estimate of $6,914,776,463 in available revenue for the FY 2016 executive budget proposal. That amount is $43.3 million, or 0.6 percent, less than what was approved last December for the governor’s FY 15 executive budget, and $298.1 million, or 4.1 percent, less than the legislatively-approved FY 15 appropriated state budget of $7,212,855,361.
“There isn’t more money, but there is adequate money. We have a big enough pie and our job now is slicing it right to meet the needs of the day with the funds available,” Doerflinger said.
Despite the $298.1 million differential between FY 15 total appropriations and the preliminary FY 16 revenue estimate, revenues the board can certify as available for appropriations remain mostly flat. Theestimate the board approved Thursday of revenue available for the FY 16 executive budget proposal is $25.6 million, or 0.3 percent, less than the $6,940,352,735 the board approved in February 2014 as available for FY 15 appropriations. However, the enacted FY 15 budget appropriated more than was certified by the board due to its use of $291.7 million in additional funds from various government accounts.
“As is the case most every session, revenues certified by the board do not represent all revenues available for appropriation,” Doerflinger said. “We were well-intentioned in using additional resources to meet needs last session, but next session we’ll have to rely more on cuts to most areas if we’re going to put additional resources anywhere else. We’ll have to prioritize and make tough choices.”
The board will meet again in late February to make a second estimate that will be used in negotiations between the governor and legislators to determine FY 16 appropriations levels for state agencies.
“As always, February’s certification matters way more than this December estimate,” Doerflinger said. “If oil prices continue sliding and the energy sector shrinks, there may be less revenue in February than there is today – we’ll see. In any event, the challenge is not insurmountable and we can and will manage it.”
Doerflinger is director of the Office of Management and Enterprise Services, which works with the Governor’s Office to build the annual executive budget. OMES, in conjunction with the Oklahoma Tax Commission, prepares the revenue estimates that are presented to the Board of Equalization.
The packet the board reviewed Thursday can be accessed on the OMES website.