As we transition into March, there are quite a few things that we need to monitor as we move into the next fiscal year. As we have pointed out several times over the past few months, we see a continuing recovery in sales and income taxes and gross production. The February 20 Board of Equalization meeting opened with a discussion of Oklahoma’s economic recovery. A point was made that we're in a position where the petroleum industry will help in recovery, but we cannot count on it to push the recovery to unprecedented levels. This is probably a fairly good description due to the percentage growth that the market will bear.
That brings us to the question of what to expect in the next fiscal year. If you asked this question in spring 2015, optimism would have been high, and we would not have foreseen the issues that would unfold in the following three years. Prognostication is tough, and there doesn’t seem to be any absolutes. However, here are a few things that we might look toward:
- Ad valorem has grown at an average of 3.5% since 2010. This trend will probably not slow down without a legislative change. The most amazing fact in ad valorem growth is that it's pretty much statewide, with only three counties showing losses since 2010.
- School land seems to continue paying out, although there is controversy about how much should be paid out. Then the question arises of why some schools lose school land money even though they are growing. This is a place holder problem that occurs due to ADA rises and falls. This is very similar to the issues we see with motor vehicle in a low-revenue collection month.
- The amount of WADM will be extremely interesting on its effects for FY19. A large number of schools are on their highest three years and will exit that number this year.
- The most important thing to remember is that FY16, FY17 and now FY18 have all declined in State Aid after the mid-term allocation. This is a hard item to budget for and is frustrating when we get into the second semester. The question is will this trend continue?
As always, if we can help you plan for the coming year, please don’t hesitate to contact us.