My fingers are crossed hoping with oil settling in (for now) in the upper $40's-mid 50's how much these prices help with our state budget.
Does anyone know a formula used to determine oil prices, per barrel, and how it impacts the state budget?

It won't make much difference to the state budget. If tax revenues are up in 2018, Republicans will treat it as time to resume making another cut to the state income tax. Their goal is to eventually get rid of it.

By "it," you mean the state.

My fingers are crossed hoping with oil settling in (for now) in the upper $40's-mid 50's how much these prices help with our state budget.
Does anyone know a formula used to determine oil prices, per barrel, and how it impacts the state budget?

I can't imagine one could come up with a useful formula given all the factors the impact the situation. Also remember, regarding the energy sector it's not as simple as oil price: natural gas is also a key component as well, especially for some of our larger players, and a bitterly cold winter throughout the country could do wonders for the OK economy, even if oil doesn't average even $60/bbl in 2017.

Im not sure oil even in the $90+/barrel range will balance our budget. Remember, we had to make cuts to state departments even when oil was $100+/barrel, and we have even decided to reduce our revenues more since then.

The line that our leaders like to spout, that our budget problems are strictly from oil prices is bogus. Its from thinking they can cut all kinds of different revenue sources (income tax, gross production tax, franchise tax) and then not do a thing about our growing tax credits and giveaways, and then just think our budget will magically get better.

Without new revenues, you will see budget holes continue beyond 2017, regardless of the price of oil.

I went to the Public Affairs forum on December 1st and there was a round table discussion on what was most important for the state. They had four state senators and reps on the panel, one of which was Scott Inman, whose comments I found rather intriguing. He said North Dakota had an oil and gas tax structure (production and extraction taxes) of a minimum of 10% and a max of 11%. Texas is at 4.6% for oil and 7.5% for gas. Oklahoma, on the other hand is at 7% of the price is equal to or above $17/bbl, 4% when it is less than $17/bbl, but greater than $14/bbl and 1% if the average price is less than $14/bbl. So, that means when it got really bad, ND was still collecting at least 10%, Texas was collecting at least 4.6% and Oklahoma was collecting 1%. This caused a budget shortfall in Oklahoma, but not in Texas or ND, because they had collected a lot more when the price of oil was much higher.

Very helpful information! Thanks.


I went to the Public Affairs forum on December 1st and there was a round table discussion on what was most important for the state. They had four state senators and reps on the panel, one of which was Scott Inman, whose comments I found rather intriguing. He said North Dakota had an oil and gas tax structure (production and extraction taxes) of a minimum of 10% and a max of 11%. Texas is at 4.6% for oil and 7.5% for gas. Oklahoma, on the other hand is at 7% of the price is equal to or above $17/bbl, 4% when it is less than $17/bbl, but greater than $14/bbl and 1% if the average price is less than $14/bbl. So, that means when it got really bad, ND was still collecting at least 10%, Texas was collecting at least 4.6% and Oklahoma was collecting 1%. This caused a budget shortfall in Oklahoma, but not in Texas or ND, because they had collected a lot more when the price of oil was much higher.

A cold winter will help bring in more tax revenue on natural gas.

Kind of has to do with this:

Fallin says cigarettes, services likely targets for taxes

By: Sean Murphy Associated Press December 21, 2016

OKLAHOMA CITY – As state leaders look for ways to raise revenue to help close an estimated $868 million hole in next year’s budget, they should consider broadening Oklahoma’s sales tax base to include some services, like tattoos and car washes, that are currently exempt, Gov. Mary Fallin said Wednesday.

The Republican governor said modernizing Oklahoma’s tax code to reflect a more service-based economy is one of several ways she hopes to ease cuts to state agencies, many of which have endured deep cuts over the last three years.

“Once again this session we’ll put some ideas on the table and try to get our Legislature to see the different funding needs we have in our state,” Fallin said.

She specifically mentioned the Oklahoma Highway Patrol limiting the number of miles troopers can drive, overcrowded prisons, overloaded child welfare workers and schoolteachers leaving the state because of low pay.

“There is a point you reach that you do harm to the services that we provide to our citizens,” she said.

The governor made the comments after the State Board of Equalization met to certify that the Legislature will have about $6 billion to spend on the fiscal year that begins July 1. Fallin will use that figure to create her executive budget that will be released to lawmakers when the legislative session begins in February.

A final revenue estimate will be certified in February.

Fallin and her chief budget negotiator, Preston Doerflinger, have been urging lawmakers for years to consider limiting the amount of non-recurring revenues, like agency revolving accounts and the state’s Rainy Day Fund, they use to fund state government.

In her last executive budget, Fallin suggested lawmakers could generate about $200 million by eliminating some of the estimated $8 billion in current sales tax exemptions in the tax code.

“We have about 150 different items that we exempt from sales tax, and when you compare that number to other states, like Texas, Kansas and surrounding states, we exempt a lot of things, like car washes, tattoos, pet grooming, sports tickets,” Fallin said. “They don’t pay sales taxes on those things, and thus we lose revenue.”

Kind of has to do with this:

Fallin says cigarettes, services likely targets for taxes

By: Sean Murphy Associated Press December 21, 2016

OKLAHOMA CITY – As state leaders look for ways to raise revenue to help close an estimated $868 million hole in next year’s budget, they should consider broadening Oklahoma’s sales tax base to include some services, like tattoos and car washes, that are currently exempt, Gov. Mary Fallin said Wednesday.

The Republican governor said modernizing Oklahoma’s tax code to reflect a more service-based economy is one of several ways she hopes to ease cuts to state agencies, many of which have endured deep cuts over the last three years.

“Once again this session we’ll put some ideas on the table and try to get our Legislature to see the different funding needs we have in our state,” Fallin said.

She specifically mentioned the Oklahoma Highway Patrol limiting the number of miles troopers can drive, overcrowded prisons, overloaded child welfare workers and schoolteachers leaving the state because of low pay.

“There is a point you reach that you do harm to the services that we provide to our citizens,” she said.

The governor made the comments after the State Board of Equalization met to certify that the Legislature will have about $6 billion to spend on the fiscal year that begins July 1. Fallin will use that figure to create her executive budget that will be released to lawmakers when the legislative session begins in February.

A final revenue estimate will be certified in February.

Fallin and her chief budget negotiator, Preston Doerflinger, have been urging lawmakers for years to consider limiting the amount of non-recurring revenues, like agency revolving accounts and the state’s Rainy Day Fund, they use to fund state government.

In her last executive budget, Fallin suggested lawmakers could generate about $200 million by eliminating some of the estimated $8 billion in current sales tax exemptions in the tax code.

“We have about 150 different items that we exempt from sales tax, and when you compare that number to other states, like Texas, Kansas and surrounding states, we exempt a lot of things, like car washes, tattoos, pet grooming, sports tickets,” Fallin said. “They don’t pay sales taxes on those things, and thus we lose revenue.”

So keep with the income and gross production tax cuts that largely benefit the wealthy and out of state share holders and then make the average person pay more in sales taxes. What a great plan for such a poor state :rolleyes:

This is probably a dumb question, but if they remove the sales tax exemption for various purposes and expand the sales tax to services currently not taxed, wouldn't that also be a revenue boon to OKC (and other cities)?

So keep with the income and gross production tax cuts that largely benefit the wealthy and out of state share holders and then make the average person pay more in sales taxes. What a great plan for such a poor state :rolleyes:

I remember the governor telling legislators that the income tax cuts were necessary so Oklahomans could have more money in their pockets. Now she wants to reach into our pockets to collect sales taxes on services. What a two faced governor. But I wouldn't be surprised, if the people who voted for her both times still love and adore her.

This is probably a dumb question, but if they remove the sales tax exemption for various purposes and expand the sales tax to services currently not taxed, wouldn't that also be a revenue boon to OKC (and other cities)?

Yes, but I would think it would be minimal compared to what we could get if the corporate tax rate were higher.

This is probably a dumb question, but if they remove the sales tax exemption for various purposes and expand the sales tax to services currently not taxed, wouldn't that also be a revenue boon to OKC (and other cities)?
Of course, but new or increased taxes require at least a 75% majority vote in the state senate and house to pass. (With that hard to get around obstruction in mind, over a year ago, State Senator Jim Halligin said raising state sales tax by a penny was the only way possible to find more funding for education.) I may be wrong, but raising taxes will probably be next to impossible, until some really bad news incident or problem is blamed on lack of funding. Until then, I assume state bureaucracies will be expected to make do with less.

If Republicans want to stay true on their stand for smaller government, they're in no position to do much of anything significant to enhance tax revenues. State officials expect an effort to rework or eliminate the trigger that allows an income tax cut. So some of them want to cut the income tax even when tax revenues are down. As some state leaders would say what we really have is a problem with spending, not with tax revenues.

Yes, but I would think it would be minimal compared to what we could get if the corporate tax rate were higher.

Yes, for the state, but my point was about its benefits to cities and cities don't directly receive corporate tax revenue.

So keep with the income and gross production tax cuts that largely benefit the wealthy and out of state share holders and then make the average person pay more in sales taxes. What a great plan for such a poor state :rolleyes:

It's truly baffling.

Not baffling .... pragmatic.
One group regularly funds the political process. The other does not, or to the extent it does participate, does so at a significantly lesser level.

Not baffling .... pragmatic.
One group regularly funds the political process. The other does not, or to the extent it does participate, does so at a significantly lesser level.

Investors who bought stock in Chesapeake a year ago have now done quite well, so I don't think state government needs to help them out further by me having to start paying sales taxes on haircuts, car washes, whatever, so their energy company won't have to pay higher income taxes.

From the Journal Record today:

Hamilton: No easy fix for state budget hole
By: Arnold Hamilton Guest Columnist December 29, 2016

Barring a philosophical about-face in her final two years in office, Gov. Mary Fallin seems destined to be remembered as Oklahoma’s 21st-century version of Marie Antoinette.
On almost every consequential decision of her governorship, Fallin has sided with the state’s wealthy elite – at the expense of the vast middle class and poor.
She endorsed income tax cuts that disproportionately benefited the rich. She signed legislation that gave Oklahoma the nation’s lowest oil and gas drilling taxes, leading to deep cuts in vital state services. And she approved slashing the Earned Income Tax Credit that served as a lifeline to the working poor.
Now, with state lawmakers facing an estimated $869 million budget hole next year, Fallin is at it again – arguing the gap can be filled by eliminating some of the 150 or so sales tax exemptions in the tax code.
Guess who would disproportionately foot that bill? It would certainly a working stiffs far more than Larry Nichols or Harold Hamm if the state suddenly expanded the sales tax to haircuts, dry cleaning or cable television.
Let them eat cake, indeed.
I’m not arguing that sales tax exemptions are sacrosanct and don’t deserve serious scrutiny. There is no question many are creations of, by and for the special interests that wield outsize influence at the Capitol – think: agriculture and advertising, railroads and newspapers.
And the governor is correct when she notes that Oklahoma’s estimated $8 billion in sales tax exemptions far exceed those of surrounding states.
But it’s also worth pointing out that her default position on revenue-raising always seems to involve the most regressive taxes – burdening the middle class more than the country club set?
As state Rep. Eric Proctor, D-Tulsa, put it in a Facebook post, “The middle class and working poor pay a disproportionate amount of tax compared to the most wealthy corporations in our state.
“Want to raise revenue? I’m for your deal, governor. Eliminate the insane tax cut trigger, tax oil companies as much as we tax teachers, mechanics and janitors and repeal tax credits that are icing on top of icing.
“We do not have another budget shortfall because the poor don’t pay taxes on haircuts or because a single mom working two jobs doesn’t pay an extra $1.50 in taxes to wash her car. Give me a break.”
The simplest way to solve the state’s budget crisis – and to more fully fund state services – is to sharply curtail corporate welfare (tax incentives) and roll back income tax cuts imposed over the last decade (6.65 percent down to 5 percent).
That’s also the most difficult way. The Legislature’s Republican supermajority is a supermajority because of the financial support of those who benefit most from tax breaks and tax cuts.
As Fallin well knows, it won’t be any easier to convince lawmakers to expand sales taxes to currently non-taxed services. Those special interests will squeal like stuck pigs if their exemptions are threatened.
A former longtime lawmaker, ex-Sen. Jerry Ellis, D-Valliant, suggests an alternative: imposing a “modest” tax on soft drinks.
Recently, in California, Colorado, Illinois and Pennsylvania, voters and/or local governments imposed a per ounce tax on sugary drinks – including sweetened iced tea and some fruit drinks.
The taxes not only generate new revenue for government services, but also can help improve overall public health.
According to Harvard research, a 1-cent-per-ounce tax in 15 large U.S. cities could cut consumption by 6 percent, helping, for example, reduce incidences of diabetes and lower health care costs.
There is no easy fiscal fix for the 2017 Legislature. Lawmakers clearly need more outside-the-box thinking, like Ellis’, if they are going to solve the revenue problems they and the governor created.

Once again, I clearly recall Gov. Fallin telling legislators on their floor that the income tax cuts were needed so that Oklahomans could have more money in their pockets to spend. Now she wants to reach into those pockets to collect sales taxes on some services. In her greed, she is wondering which ones to claim out of $8 billion dollars worth. What a damned, two faced governor.