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Mazzei Minute: 03/01/24

I like numbers. Assuming the numbers aren’t fraudulent, they always tell a story that reflects reality– and these days, when the radical left is advancing strange narratives, it’s nice to know what reality is and what isn’t.

I have been looking at the annual Proposed FY 2025 Revenue Certification by the State Board of Equalization, and I’m starting to wonder if their numbers reflect reality. There have been occasions in the past when the numbers were far off the mark, and the current projections give me an eerie reminder of past mistakes.

The revised projections for FY 2024 indicate a drop of $115 million for natural gas production taxes, which is down 24% from the official estimate. The tax collections for individual income taxes also drop $137 million for a 4% negative change. So, if two major components of tax collections have dropped by $252 million, it seems counter intuitive that overall estimates for FY 2025 are indicating growth in revenue.

Looking at natural gas a little bit more tightly, prices since December 2023 have dropped over 30%. However, the change in the revenue report for natural gas production, from last December to the release of the new revenue report on February 15, indicates an increase of $27 million. Something doesn’t jive, as if the analysts had to either raise production or price estimates in their assumptions, which does not reflect the reality out at the rigs.

Consider the most recent Gross Receipts to the Treasury Report by the Oklahoma State Treasurer’s Office: overall tax collections have turned south by $555 million for a 3.2% decline, and the Business Conditions Index just sank below the “Growth Neutral” level. But page 7 of the state’s new Revenue Certification Report highlights that “Recurring Revenue”– a fanciful term at best– will increase $542 million above the previous year. This makes even less sense and strains credulity.

I know I tend to be a skeptic, but these projects seem to reflect the mistakes that were made back in 2015 and 2016 when the budget fell completely apart. Hopefully I’m wrong, but I was not wrong back then. State Legislators just passed a $400 million tax cut based on these troubling numbers. They better reduce spending or get rid of some special interest tax giveaways to be safe.  


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