By TIM TALLEY

Published: Feb 2, 2012

OKLAHOMA CITY (AP) – Low natural gas prices are pushing gross production tax collections below expectations and could slow the growth of state revenue in spite of rising income tax, sales tax and motor vehicle tax collections, Oklahoma Treasurer Ken Miller said Thursday.

The gross production tax comprises only 10 percent of the overall state budget, but declining collections could force the Board of Equalization to roll back its estimate of the amount of revenue lawmakers will have to appropriate next year, Miller said.

“So much of our economy is tied to the energy industry,” Miller said as he released his revenue report for January. “That has to be a cause for concern.”

Miller said the state tax on oil and natural gas production generated $68.7 million in January, a decline of almost $5.5 million from January 2011. The reason, he said, is natural gas prices that are consistently lower than the estimates the state budget is based on.

Preliminary estimates for the budget for the fiscal year that begins July 1 are based on natural gas prices of $4 per thousand cubic feet. But the current price is $2.50 per thousand cubic feet, and Miller said little improvement is expected next year.

Gas prices have remained low because of a plentiful supply and an unusually mild winter. Miller said gas prices are dropping with demand for the fuel as the warmest winter in years exacerbates the supply glut.

Last month, Oklahoma City-based Chesapeake Energy Corp. announced plans to cut drilling and production of the fuel in the U.S due to plentiful supplies.

Chesapeake, the nation’s second largest natural gas producer, said it plans to cut daily production by 8 percent, meaning it will produce the same or slightly less natural gas in 2012 than it did in 2011. Chesapeake produces about 9 percent of the nation’s natural gas.

Meanwhile, Miller said low gas prices will likely force the Board of Equalization to lower its revenue estimate for next year when it meets on Feb. 21. He said the updated estimate for natural gas prices will likely be between $2.50 and $3.50 per thousand cubic feet.

“I think that we’ll see a pretty significant decrease in the certification (of gross production tax revenue),” he said. “I anticipate we’ll be pretty conservative.”

Miller said other segments of the state’s economy performed well in January and the economy showed overall growth for the 23rd consecutive month.

“The economy is continuing to do well,” he said.

January receipts from all revenue sources grew by 8.5 percent from the prior year and collections for the past 12 months were up by 9.6 percent, the treasurer said. Collections for the past 12 months are almost $1.4 billion higher than when the state’s economy hit bottom during the nationwide recession in February 2010.

“We have recovered 73 percent of the revenue lost from the peak of the expansion cycle in December 2008,” Miller said.

Total collections last month were almost $996 million, up $78 million from January 2011.

Personal and corporate income tax collections totaled $376 million, up 10 percent over January 2011. Sales tax collections totaled $362 million in January, another 10 percent increase, and motor vehicle taxes collected $55.3 million, a rise of about 2 percent over last year.

Jerrod Shouse, state director of the National Federation of Independent Business, says a new report comparing state business-tax climates shows that Oklahoma still has room for improvement.

The report, released this morning by the nonpartisan Tax Foundation in Washington, D.C., ranks Oklahoma 33rd overall in terms of business taxes, down slightly from 30th a year ago. According to this year’s report, Wyoming boasts the nation’s best business-tax climate; New Jersey, the worst. (Download the full report at www.taxfoundation.org.)

“Clearly, we have an opportunity in this year’s Legislature to pass tax reforms that help attract businesses to the state and make it easier for existing businesses to grow and create jobs,” Shouse said.

“There’s a real danger that we could lose potential jobs and even existing jobs to states with a better tax climate, but what concerns me more is what our current tax rates mean for small business,” he said. “Small, mom-and-pop businesses can’t easily pack up and move someplace where the rates are better, like Texas, which is ranked at No. 9.

“We’re fortunate to have a governor and a Legislature that understands the vital role small business plays in our economy,” Shouse said. “We’re looking forward to working with them on legislation that eases that tax burden so businesses can grow and create jobs.”

If you are a business owner or executive in Oklahoma, go take the survey found at FallinForBusiness.com. It’ll be well worth your time.

Created by Governor Mary Fallin, the survey asks Oklahoma business owners and executives to provide data and their opinions that will be used to shape the state’s economic development policy and identify the issues that are important to creating jobs and strengthening our business climate.

According to Dave Lopez, Oklahoma secretary of commerce and tourism, the project has several objectives, including understanding the specific needs of businesses, identifying ways to help them, and to benchmark economic development strategies and business-friendly policies.

I recently took the survey, and it was time well spent. It’s very thorough, and it focuses on Oklahoma’s business climate, challenges, and issues. It asks a wide variety of questions, ranging from infrastructure, quality of the business climate, quality of our schools and colleges, business incentives, workforce availability and challenges, and your suppliers, customers, and markets.

It took me about 15 minutes to complete. At the end of the survey I was able to provide additional comments on what I think would strengthen Oklahoma’s business climate.

The goal is for as many Oklahoma businesses as possible to participate. Over 2,900 surveys have been completed so far. To take the survey, simply go to the FallinForBusiness.com website and click Take the online survey.

According to this article from the Wall Street Journal, state budgets are expected to be 2.9% higher this fiscal year as total revenues for all 50 states are expected to reach nearly $667 billion. This is compared to $648 billion in general fund spending the previous fiscal year.

But increased revenues may not necessarily mean that states will have more money to appropriate going into their upcoming legislative sessions. After a couple of years of spending federal stimulus dollars, employing temporary taxes, and using one-time funds to plug budget holes, states must first use the new revenue to backfill their budgets to break even for the coming fiscal year.

Here in Oklahoma, state revenue is up a whopping 20 percent thanks to our booming energy industry. Revenue is up across all major tax categories, but the surge was led by gross production taxes on oil.

State revenue is up 13 percent over the same time period last year, and over 8 percent above estimates. However, state officials warn that our next state budget could be flat, as we make up for the use of one-time funds that were used to negate cuts made during the last legislative session.

This editorial appeared in The Oklahoman on December 13, 2011

BY TOM WALKER

Oklahoma is home to an amazing economic resource — and I’m not talking about oil.

The Oklahoma School of Science and Mathematics (OSSM) is a two-year public, tuition-free, residential high school created and funded by the Oklahoma Legislature. This school is open to all Oklahoma students who wish to apply during their sophomore year.

OSSM isn’t some elite, ivory tower place. Certainly, the school is academically competitive — all outstanding schools are. Applicants need to be smarter than average with good grades and test scores.

But they don’t need to be rocket scientists to learn about rocket science. OSSM students are regular kids with strong abilities who are curious and want to learn. OSSM is a school that teaches bright young people how to think, focus and stretch their natural abilities to solve problems.

If equity capital is the life blood of entrepreneurship, talented and technical entrepreneurial teams are the heart. Engineers, mathematicians and scientists are absolutely critical to an innovation economy. It is impossible to extend the economic benefit of new companies if there aren’t enough qualified applicants to fill the new jobs those new companies create.

Between 1989 and 2000, the number of engineering degrees granted in the U.S. decreased more than 11 percent. We had fewer graduates in engineering and engineering technologies in 2009 than in 1989.

While the decline in students seeking engineering degrees is going on in other places, OSSM is working to reverse that trend among Oklahoma’s young people.

OSSM has produced 300 practicing engineers, 94 medical doctors, and 53 Ph.D.s. Ten OSSM graduates have started their own businesses in Oklahoma.

These days cutbacks in education may be the norm. Unfortunately, cuts at OSSM have been severe, with a 23 percent reduction in funding and 25 percent fewer employees than three years ago. This has forced the elimination of courses and made furlough days a necessity for the remaining teachers and staff.

More of us should be champions of OSSM.

I’ll continue to write about OSSM to emphasize how important this school and its mission are to Oklahoma.

Tom Walker is president and CEO of i2E, Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology. Contact him at i2E_Comments@i2E.org.

by Jerrod Shouse

The following opinion editorial appreared in the Oklahoman on Thursday, December 8. To see it, click here: http://newsok.com/article/3629789

Small Business Saturday has come and gone, but shoppers should support small businesses all year long.

When you support small business, any small business, you’re supporting Main Street, not Wall Street. You’re supporting your friends and neighbors, the entrepreneurs and families who have put everything on the line to run their own businesses, be their own bosses.

You’re also supporting the local economy. The chain stores are owned by big corporations based someplace else, but small businesses are usually owned by people who live in the community. When you shop at a small business, you’re supporting your hometown, your neighborhood.

Small businesses represent about 97 percent of all Oklahoma employers, and they employ about 54 percent of the state’s private-sector workforce, according to government figures.

We can’t have a strong economy unless our small businesses are doing well — and right now they’re not doing well. They’re hurting.

The recession may be over, but according to the National Federation of Independent Business’ latest Small-Business Optimism Index, the outlook among small-business owners is still grim. Owners say their No. 1 concern is still “poor sales,” followed by crushing government regulations and taxes.

Small businesses aren’t going to hire new employees if they’re worried about keeping the lights on. They aren’t going to grow if they’re worried about the torrent of new regulations coming out of Washington or a health care package that’s going to jack up costs without doing much to increase competition and improve access to affordable coverage.

Shopping small, then, is a good opportunity for people to support the establishments that mean so much to America’s economic well-being.

Small businesses also offer better service than you’ll find at the chain stores. When you shop at a small business, there’s a good chance you’ll be dealing with the owner or with someone else who also knows something about the products or services offered and will still be there after the holidays to personally serve you.

Small-business owners and their employees will do everything they can to keep you satisfied because their livelihoods depend on you coming back.

Finally, there’s the value that small businesses bring to the community.

Small businesses are usually owned by people who have a vested interest in the community, in its schools, in the quality of life. It’s no accident that small-business owners are among the most generous supporters of civic groups, local charities, youth sports, schools and virtually every other form of community activity.

That’s why I urge you to support small businesses over the holidays and the rest of the year, too.

State Treasurer Ken Miller

Oklahoma’s economy continues its upward trend as the state enters the Christmas season, State Treasurer Ken Miller said today as he released the state’s monthly gross receipts report.

From Oklahoma Watchdog

By Peter J. Rudy On December 1, 2011

Attorney and CPA Ron Barber told the task force that eliminating some or all of the tax credits and incentives in the tax code in order to lower rates for everyone would be a good idea.  He says tax credits, “lend themselves to gamesmanship and are targeted towards special groups and are inherently distasteful to people.”

Shouse agrees that tackling the tax credit and exemptions would generally help small businesses.  ”You may do away with some deductions over here that we use, but if that results in a lower income tax rate, it may be very neutral for us and make it easier which would be welcome.”

There has been discussion during previous meetings about whether eliminating the income tax would help attract businesses from out of state, but Shouse says he’s more concerned about the small businesses that are already in Oklahoma and trying to grow.  Small businesses are often set up in a way that they are taxed using the personal income tax rate, so Shouse believes that any tax relief small businesses get will be put back into the companies through hiring more workers and expanding the number of locations.

Shouse, Barber and the third speaker at the meeting, CPA Bill Lohrey, all told task force members that online sales should be taxed at the same rate as purchases in brick and mortar stores, if possible.  Shouse called it an issue of fairness.  Barber told the task force that online sales are only going to grow, so it’s time to tackle the situation.  He believes it’s probably better to have the seller pay the tax rather than the buyer, but added that it’s something that probably has to be done on a federal level or in cooperation with other states.

The task force must present a report with suggestions to Governor Fallin and legislative leaders by the end of the month.

From 23rd & Linclon: The JRLR Insiders’ Report

If there was any point of agreement among speakers appearing before the Senate Business and Commerce Committee Monday morning, it was that currently unscrupulous contractors who do not properly register, pay taxes and carry workers’ compensation insurance have a substantial advantage over contractors that follow the law.