january 31, 2017 oklahoma economic report - … › treasurer › documents ›...

A publication of the Office of the State Treasurer • Treasurer Ken Miller, Ph.D.

Economic Report TM

Oklahoma

News and analysis of Oklahoma’s economy

State Capitol Building, Room 217 • Oklahoma City, OK 73105 • (405) 521-3191 • www.treasurer.ok.gov

Volume 7, Issue 1 • January 31, 2017

SEE CORE FOUR PAGE 3

State government has four core responsibilities – education, health care, public safety and transportation. It is those fundamental services on which the people depend to have productive lives. For businesses, those services done right provide an environment in which they can thrive.

Analysis of data released this month by the U.S. Census Bureau, along with the most-recent data from the Bureau of Economic Analysis, Federal Highway Administration, and the Centers for Medicare and Medicaid Services, shows that, even when adjusted for Oklahoma’s relatively low cost of living, funding for

core services still lags the region and the nation.

No one will argue that funding alone ensures success, but comparing Oklahoma’s spending to the rest of the states provides a relative measure of where we stand.

Common education funding

Adjusted for price parity, or cost of

living differentials between the states, Oklahoma spends less per pupil than 44

other states and the District of Columbia.

At $8,689, Oklahoma’s per pupil common education spending is 14.5 percent less than the $10,163 average of its six border states. State school spending is 21 percent below the

$11,009 national per pupil average.

Getting to the core

Inside

• Guest commentary by Senate President Pro Tempore Mike Schulz

• Year-to-date General Revenue trails estimate by 2.7 percent

• Gross Receipts to the Treasury in 2017 show ongoing impact of energy sector contraction

• Oklahoma unemployment set at 5.0 percent in December

Editor

Tim Allen, Deputy Treasurer for Communications and Program Administration

“When adjusted for Oklahoma’s relatively low cost of living, funding for core services still lags the region and the nation.”

Sources: Price parity adjusted FY-14 per pupil common education spending, all sources, U.S. Census Bureau, BEA

Core Four: Per Pupil Spending on Common Education

$0

$5,000

$10,000

$15,000

$20,000

NY

AK VT

WY

CT

DC NJ RI

PA MA DE

NH

ND

ME IL NE

OH

MD

WV WI

IA MI

LA MN

MT

MO

US

Avg KS A

RSC VA H

IKY IN A

LN

M SD OR

GA

WA TN MS

NC TX FL

CO OK

NV

CA AZ ID UT

Oklahoma: $8,689Border State Average: $10,163U.S. Average: $11,009

www.treasurer.ok.gov

http://www.facebook.com/OKTreasurer

http://twitter/OKTreasurer

http://twitter.com/OKTreasurer

Guest CommentaryBy Senator Mike Schulz,

Oklahoma Senate President Pro Tempore

Oklahoma Economic Report TM January 31, 2017

www.treasurer.ok.gov •

Oklahoma is already a great state blessed with natural resources

and hardworking, industrious people. As the new leader of the Oklahoma Senate, it’s my intention to keep our chamber focused on ideas that create a business climate in Oklahoma that allow existing businesses to grow and thrive and invites new businesses and industry to set up shop.

I’ve been a lawmaker for 10 years, and I will be the first to admit that at times the Legislature gets bogged down in political fights.

It’s the nature of representing the state and your constituents and there’s nothing wrong with it – unless it takes your attention and focus away from economic issues and ensuring our economy provides opportunities for Oklahomans to start a business with ease or find good-paying jobs to help them take care of their families.

In Proverbs, the Bible teachers us “Where there is no vision, the people perish …” That is our challenge as senators: remaining focused on our long-term vision for economic growth and success in Oklahoma.

In the Oklahoma Senate, we’re going to focus on ideas that not only will help us meet the challenges of today,

but will help our state grow and prosper in the future. That means keeping our eyes set on growing and diversifying our economy. It means creating an economic environment that allows businesses to create more and better-paying jobs.

It means eliminating red-tape to ensure state regulations don’t stand in the way of job-creators and entrepreneurs.

And it means embracing our role as guardians of Oklahomans’ tax dollars – making sure nothing is lost to waste or fraud, but also making sure Oklahomans get the best return on their investment.

Keeping our eye on the long-term

economic picture will go a long way in helping us solve the budget challenges Oklahoma faces in other policy areas like education, public safety, health care, transportation.

A thriving and growing economy means more revenue flowing to the state – without raising taxes. More revenue from increased economic activity means more resources to fund the core functions of government such as education, public safety, transportation and health care, among others.

The Oklahoma Senate is home to many talented men and women, with a broad range of experience and expertise that will serve our state well.

As the Senate leader, I’m optimistic about the future of our state, and I’m proud to work alongside my colleagues in mapping out an even brighter future for the great people and the great state of Oklahoma!

“In the Oklahoma Senate, we’re going to focus on ideas that not only will help us meet the challenges of today, but will help our state grow and prosper in the future.”

Helping Oklahoma businesses thrive



Opinions and positions cited in the Oklahoma Economic ReportTM are not necessarily those of Oklahoma State Treasurer Ken Miller or his staff, with the exception of the Treasurer’s Commentary, which of course, is the viewpoint of the treasurer.

Health care safety net

In addition to data showing Oklahoma’s relatively low ranking in numerous measures of public health, including smoking rates, obesity and the number of people with health insurance, the state ranks low in spending per Medicaid enrollee.

Oklahoma ranks 41st in price parity-adjusted spending per Medicaid patient.

In this category, after adjusting for cost-of-living differences, Oklahoma spends less than the six border states’ average and the national average. The state’s $5,307 average spent per Medicaid enrollee is 14 percent below the border states and 8.3 percent below the national average.

Transportation

For the past several years, Oklahoma policymakers have made a concerted effort to boost transportation funding. Progress has been made, as deficient bridges have been repaired and significant highway construction has been undertaken, but compared to the rest of the nation, Oklahoma’s ranking still trails most states.

Only 10 states spend less per lane mile on transportation than Oklahoma, after accounting for price parity.

The state’s adjusted spending of $11,250 per lane mile is 39 percent below the national average, but less than one-half

FROM PAGE 1

Core Four


Sources: Price parity adjusted FY-11 spending per Medicaid enrollee, Centers for Medicare and Medicaid Services, BEA

Core Four: Per Enrollee Spending on Medicaid

$0

$2,500

$5,000

$7,500

$10,000

RI

ND AK

MA PA NY

MN

OH

MT

DC AZ

MO NJ

WV

NH CT

KY KS MD NE

WY

SD VT

MS

ME

NM ID IA VA AR

OR

DE

WI

US

Avg IN TN NC

CO TX M

ILA SC O

K UT

WA AL HI

FL ILG

AC

AN

V


Sources: Price parity adjusted FY-14 state and local spending per lane miles, U.S. Census Bureau, Federal Highway Administration, BEA

Core Four: Per Lane Mile Spending on Transportation

$0

$17,500

$35,000

$52,500

$70,000

HI

NJ

DE

AK

MD NY

MA RI

PA CT

CA FL VAIL VT

WA

OH

NH

NC TX ME

KY WI

US

Avg LA WV

MN

CO M

IA

ZG

A IN TN NV

WY

OR AL

MS IA UT

OK

SC ND

MO ID AR

NM NE KS MT

SD




FROM PAGE 3

Core Four

of one percent below the average of Oklahoma’s six border states.

Police and corrections

At first glance, Oklahoma’s relative ranking in per capita spending on police and corrections might appear to be positive news. The state ranks 25th in the nation and ahead of four of its border states in cost-of-living adjusted spending on this category.

But when one considers Oklahoma’s high incarceration rate and the reported status of state correctional operations, the ranking seems less impressive.

Oklahoma’s $511 cost-of-living adjusted per capita spending on police and corrections is 7.8 percent less than the national average and 2.9 percent less than the average of the border states.

Poor state?

While some might argue Oklahoma’s low ranking in core service funding is because “we’re a poor state,” the latest figures on per capita personal income (PCPI), not even adjusted for cost of living, say otherwise.

Oklahoma incomes have improved in recent years, ranking 30th in the nation in the third quarter of last year. State PCPI lags the national average by 8.8 percent, and is higher than the average of its border states by 0.5 percent.

Relative comparison

The data used for the core funding comparisons, while the most recent available, are from FY-14 for education, transportation and public safety. The


Sources: Price parity adjusted FY-14 state and local per capita spending for police and corrections, U.S. Census Bureau, BEA

Core Four: Per Capita Spending on Public Safety

$0

$275

$550

$825

$1,100

DC AK

WY

CA NY

NM DE

NV

MD LA WI

OR FL RI

MT

US

Avg A

ZC

O IL PA VA NJ

NC VT

MI

OK TN MN

GA

OH

MA

MO TX ID NE KS CT

SD AR

MS

WA

ND AL

WV UT

SC IA NH HI

KY IN ME

Oklahoma: $511Border State Average: $526U.S. Average: $554

Sources: BEA, State Per Capita Personal Income, 2016-Third Quarter

Per Capita Personal Income

$0

$20,000

$40,000

$60,000

$80,000

DC CT

MA NJ

NY

NH

MD

CA AK

WY

ND VA WA IL

MN

CO R

IPA V

T HI

U.S

. Avg N

ED

E KS SD TX WI

IA FL OR

OK

OH

ME

MI

MO IN LA TN NV

MT

NC

GA UT

AZ

KY SC AR ID AL

NM

WV

MS





Year-to-date General Revenue trails estimate by 2.7 percentMidway through FY-17, allocations to the General Revenue Fund (GRF) trail the estimate by $66 million, or

2.7 percent, according to the Office of Management and Enterprise Services (OMES).

Through December, two of the GRF’s four major revenue streams – net income tax and gross production tax – exceed the estimate.

Net income tax allocations are ahead of the estimate by $16 million, or 1.7 percent, while gross production tax collections top the estimate by $1.5 million, or 2.3 percent.

The primary reason for the underperformance of revenue to the GRF is the sales tax. Allocations for the first six month of the fiscal year are below the estimate by $63 million, or 6.4 percent.

Motor vehicle collections are also below the estimate by $5.1 million, or 5 percent.

Other sources of revenue for the GRF failed to meet the estimate, falling below expected allocations by $15.5 million, or 4.3 percent.

Projections presented to the State Board of Equalization in late December show GRF allocations for the full FY-17 are expected to fail to meet the official estimate by some $231.4 million, or 4.4 percent.

Source: Office of Management and Enterprise Services

FY-17 YTD General Revenue Collections Actual vs. Estimate

-$70

-$35

$0

$35

Total GRF Net Income Gross Prod. Sales Motor Veh. Other

(in m

illio

ns)

-2.7%

+1.7% +2.3%-6.4% -5.0% -4.3%

PRELIMINARY

6-Month YEAR-TO-DATE6-Month YEAR-TO-DATE SUMMARY December 2016Variance from OMES Estimate

SUMMARY December 2016Variance from OMES Estimate

PRELIMINARY

FY-2017 Estimate FY-2017 Actual



PRELIMINARY Estimate thru 12-16 Actual thru 12-16 $ %

TOTAL GEN REVENUE $2,457.9 $2,391.9 -$66.0 -2.7%

Net Income Tax $954.2 $970.2 $16.0 1.7%

Gross Production $66.3 $67.8 $1.5 2.3%

Sales Tax $978.3 $915.3 -$63.0 -6.4%

Motor Vehicle $101.0 $95.9 -$5.1 -5.0%

Other Sources (1) $358.1 $342.7 -$15.5 -4.3%

FROM PAGE 4

Core Four

Medicaid numbers date to FY-11.

Compared to an analysis conducted last year, with numbers from FY-13 and FY-10, the updated figures show only minor changes from state to state and no significant change in Oklahoma’s rankings.

Even though the figures used are a few years old, there is little reason to believe the relative status of Oklahoma’s funding of core services has improved appreciably. If anything, the relative position has worsened due to multi-year budget cuts.

We can do better

The people and businesses of Oklahoma

deserve quality education, affordable health care, safe neighborhoods and good roads.

Investing more money in those services doesn’t guarantee they’ll yield the desired results, but it helps if spending is adequate. It takes more than just dollars to ensure success, but sufficient spending would be a good start.




Gross Receipts to the Treasury in calendar year 2017 show ongoing impact of energy sector contraction(Original release date: January 7, 2017.) Gross Receipts to the Treasury during the 2016 calendar year are less than receipts from 2015, marking a second consecutive calendar year of contraction, State Treasurer Ken Miller announced today.

Annual Gross Receipts to the Treasury shrank by 7.4 percent compared to calendar year 2015, and – at $10.78 billion – is the lowest 12-month total since January

2012. During the 2015 calendar year, gross receipts fell by 3 percent.

“Gross Receipts to the Treasury show the ongoing impact of the prolonged downturn in the energy industry on all four major revenue streams,” Miller said. “However, the overall rate of decline has slowed during each of the past three months as oil and gas gross

production collections have shown moderate increases.”SEE REVENUE PAGE 7

“The overall rate of decline has slowed as gross production collections have shown moderate increases.”

December Gross Receipts to the Treasury totalled $901.8 million, while the General Revenue Fund (GRF), as reported by the Office of Management and Enterprise Services, received $419.6 million, or 46.5%, of the total.

The GRF received between 29.7% and 52.8% of monthly gross receipts during the past 12 months.

From December gross receipts, the GRF received:

• Individual income tax: 66.3%

• Corporate income tax: None

• Sales tax: 44%

• Gross production-Gas: 65.8%

• Gross production-Oil: 10.5%

• Motor vehicle tax: 27%

• Other sources: 41.4%

December GRF allocations are below the estimate by $58.8 million, or 12.3%. Year-to-date GRF revenue trails the estimate by $66 million, or 2.7%.

December insurance premium taxes totaled $57.7 million, an increase of $6.7 million, or 13.1%, from the prior year.

Tribal gaming fees generated $10.9 million during the month, down by $428,249, or 3.8%, from last December.

December Gross Receipts & General Revenue

compared

Source: Office of the State Treasurer

Monthly Gross Receipts vs. Prior Year

Dollar change (in millions) from prior year

-$125

-$100

-$75

-$50

-$25

$0

$25

$50

Jan-16Feb-16

Mar-16Apr-16

May-16Jun-16

Jul-16Aug-16

Sep-16Oct-1

6Nov-16

Dec-16

Income TaxSales Tax

Gross ProductionMotor Vehicle Other

PRELIMINARY Dec-15 Dec-16 Variance From Prior Year Variance From Prior YearIncome Tax $353.37 $318.98 -$34.39 -9.7%Gross Production $37.71 $39.36 $1.65 4.4%Sales Tax (1) $367.02 $363.35 -$3.67 -1.0%Motor Vehicle $62.41 $56.99 -$5.42 -8.7%Other Sources (2) $128.39 $123.07 -$5.31 -4.1%TOTAL REVENUE $948.89 $901.76 -$47.14 -5.0%




RevenueFROM PAGE 6

Gross Receipts to the Treasury for December are $901.8 million, down by more than $47 million, or 5 percent, from December 2015. It is the smallest December bottom line since 2010.

Following almost two years of steady decline, collections from oil and natural

gas gross production taxes are higher than the same month of the prior year for a third consecutive month. December gross production receipts total $39.4 million, up by $1.7 million, or 4.4 percent, from December 2015. Monthly receipts are based on production activity from October when the average price of benchmark West Texas Intermediate

crude oil was $49.78 per barrel.

In December, the three other major revenue streams – income, sales, and motor vehicle taxes – show collections less than the same month of the prior year.

About Gross Receipts to the Treasury

Since March 2011, the Treasurer’s Office has issued the monthly Gross Receipts to the Treasury report, which provides a timely and broad view of the state’s macro economy.

It is provided in conjunction with the General Revenue Fund allocation report from the Office of Management and Enterprise Services, which provides important information to state agencies for budgetary planning purposes.

The General Revenue Fund receives slightly less than half of the state’s gross receipts with the remainder paid in rebates and refunds, remitted to cities and counties, and placed into off-the-top earmarks to other state funds.

Oklahoma unemployment set at 5.0 percent in DecemberOklahoma’s seasonally-adjusted unemployment rate shrank by one-tenth of one percentage point in December, but still remains above the U.S. jobless rate, figures released by the Oklahoma Employment Security Commission show.

December marks the sixth consecutive month the Oklahoma jobless rate has been higher than the national rate, which was set at 4.7 percent. The state unemployment rate is 0.9 percentage points higher than one year ago.

Source: Oklahoma Tax Commission

Gross Production Tax CollectionsJanuary 2014 – December 2016

$0

$20

$40

$60

$80

$100

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

One year priorCurrent 12 months Two years prior

(in m

illio

ns)

Source: OESC

Oklahoma Unemployment ReportDecember 2016

OKLAHOMA Unemp. rate Labor force Employment UnemploymentUnemploymentDec ’16 5.0% 1,832,693 1,741,152 91,541Nov ’16 5.1% 1,823,299 1,730,184 93,115Oct ’16 5.2% 1,815,813 1,720,781 95,032Sept ’16Sept ’16 5.3% 1,815,694 1,720,369 95,325Aug ’16Aug ’16 5.1% 1,821,459 1,729,204 92,255

Dec ’15Dec ’15 4.1% 1,847,602 1,771,229 76,373

United States Dec ’16 4.7% 159,640,000 152,111,000 7,529,000

Data adjusted for seasonal factors



Oklahoma Economic Report TM

Economic Indicators

January 31, 2017

U.S.Oklahoma

1.0

3.0

5.0

7.0

9.0

11.0

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

Source: Bureau of Labor Statistics

Unemployment RateJanuary 1980 – December 2016

Shaded areas denote U.S. recessions

U.S.-4.7%OK-5.0%

U.S.Oklahoma

1.0

3.0

5.0

7.0

9.0

11.0

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

Gross Receipts vs. Oil & Gas EmploymentJanuary 2008 – December 2016

Shaded area denotes U.S. recession Sources: Bureau of Labor Statistics & State Treasurer

35.0

42.5

50.0

57.5

65.0

08 09 10 11 12 13 14 15 16 17 18$9.25

$10.00

$10.75

$11.50

$12.25

Oil

& G

as

Emp

loym

en

t

12-Mo

nth

Gro

ss Re

ce

ipts 12-Month Gross Receipts (in $ billions)

Oil & Gas Employment (in thousands)

Oklahoma Oil Prices & Active RigsJanuary 2011 – January 2017

Sources: Baker Hughes & U.S. Energy Information Administration

Price

pe

r BBLAc

tive

Rig

s

0

50

100

150

200

11 12 13 14 15 16 17 18$0

$30

$60

$90

$120

Active Rigs

Price

Sources: Baker Hughes & U.S. Energy Information Administration

Oklahoma Natural Gas Prices & Active RigsJanuary 2011 – January 2017

0

50

100

150

200

11 12 13 14 15 16 17 18$0

$2

$4

$6

$8

Active Rigs

Price

Price

pe

r MM

Btu

Ac

tive

Rig

s

Oklahoma Stock IndexTop capitalized companies

January 2009 – January 2017

Shaded area denotes U.S. recession Source: Office of the State Treasurer

$10

$30

$50

$70

09 10 11 12 13 14 15 16 17 18

Avg. = $42.77$45.66

Leading Economic IndexJanuary 2001 – December 2017

Source: Federal ReserveShaded areas denote U.S. recessions

This graph predicts six-month economic movement by tracking leading indicators, including initial unemployment claims, interest rate spreads, manufacturing and earnings. Numbers above 0 indicate anticipated growth.

-5.0

-2.5

0

2.5

5.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

U.S.Oklahoma


january 31, 2017 oklahoma economic report - … › treasurer › documents ›...

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