Sept. 25 (UPI) — Lawmakers in shale-rich Oklahoma meet Monday in a special session to help address budget strains that the governor said are critical.
Gov. Mary Fallin said lawmakers are called on to find long-term solutions to budget woes. By her estimate, the state could face a $500 million shortfall next year because one-time funds were used to balance the books for the current fiscal year.
Oklahoma is home to about 4 percent of the total petroleum reserves in the country and accounts for as much as 5 percent of the total crude oil production. Its economy was battered after crude oil prices hit historic lows in recent years, forcing energy companies to spend less on exploration and production.
Oil prices have improved from last year’s historic lows, but remain stuck at about half the level from three years ago. State tax receipts from oil and natural gas production in August brought in $43.8 million, an improvement of 37.6 percent from last year. For the past 12 months, total gross production taxes were up 34.3 percent.
State Treasurer Ken Miller said in early September that “the energy sector remains the primary driver of the state’s economic expansion.”
Lawmakers in Oklahoma last week suggested budget gaps could be covered in part through a tax on cigarettes. The governor, however, said that’s not enough to address the issue because it would be implemented too late in the fiscal year.
“We will need to identify other revenue sources to make up the difference,” she said in a statement Friday.
Drilling services company Baker Hughes recorded 127 rigs actively exploring for or producing oil or natural gas last week, a loss of three from the previous week. Rig counts offer a loose gauge of sector confidence, with losses suggesting pessimism. Recent rig counts in the U.S. south may be skewed because of the market impacts from Hurricane Harvey. Weekly figures for Oklahoma are about twice what they were at this time last year.
Fallin in May modified a gross production tax on current producing wells in a step she said would add about $92 million to the 2018 fiscal budget.