State Government Asset Management Ken Miller Oklahoma State Treasurer.
Oklahoma Economic Report Oklahoma Oil and Gas Association November 14, 2014 Oklahoma State Treasurer...
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Transcript of Oklahoma Economic Report Oklahoma Oil and Gas Association November 14, 2014 Oklahoma State Treasurer...
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