By Chris Day
STILLWATER, Okla. —
Oklahoma’s economy will continue to grow. Legislators will lower the state income tax from 5.25 percent to 5 percent or less, and discuss pension reform this session, Treasurer Ken Miller said.
Miller spoke to Stillwater Chamber of Commerce members Friday at the Chamber’s monthly Business@Lunch educational program.
“To date, we have collected about 90 percent of the revenues we have lost since before the contraction — what we now call the great recession — took hold,” Miller said.
Income tax receipts and sales tax collections are up, he said. Gross production taxes — the tax energy companies pay to extract oil and natural gas — are down. Production taxes are one of the state’s four largest revenue streams, he said.
“It’s due primarily to low prices for natural gas and a payback that we have going with the industry because we took a timeout on the incentives for horizontal and deep well payments over the three-year rough patch,” he said.
Oklahoma’s Rainy Day Fund dropped to $2.03 during the recession. It has rebounded to $578 million, Miller said. It will receive another large influx of money in June.
Energy, manufacturing and agriculture have been driving Oklahoma’s recovery, Miller said. Oklahoma has recovered all the jobs it lost during the recession. Its unemployment rate is 5.1 percent, compared to 7.9 percent for the United States.
“Things in Oklahoma are going well. I’m very bullish on Oklahoma. I tell you what, I feel lucky to go to work every single day. ... It is much better to be the treasurer in Oklahoma than it is to be the treasurer in California,” he said.
Income tax reductions
Legislators couldn’t agree on a tax cut in the 2012 session, Miller said. He predicted the legislature will approve a 0.25 percentage point reduction this year.
“I suggested if you are going to drop it by .25 to go ahead and drop it by .3 and get to 4.95 (percent) and get the psychological benefit of that,” he said.
Oklahoma’s pension plan has $11 billion in unfunded liabilities, Miller said. Two years ago, state statutes were changed to prevent legislators from scheduling unfunded cost of living adjustments. That change trimmed unfunded liabilities from $16.5 billion to $11 billion, Miller said.
More reform is needed. The state must move toward a 401K pension plan in which the state matches employee contributions to a retirement plan, he said. It also must consolidate the state’s seven separate plans into one.
“We expect that will be a very tough battle,” he said.