Economic Update & Outlook

February 9, 2012

Oklahoma State TreasurerKen Miller

Office of the State Treasurer•The Treasurer is the state’s elected chief financial

officer, responsible for protecting taxpayer money, safeguarding the financial health of the state and promoting responsible fiscal policy.

•Oversees more than $22 billion deposited each year.

•Manages investment of more than $5 billion on a daily basis.

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Economic & Budget Outlook

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Oklahoma economic climate

•As reflected in gross receipts, Oklahoma’s economy showed growth for a 23rd consecutive month in January as all but one revenue stream improved over the same month of the prior year.

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Oklahoma economic climate

•The one source of revenue on the decline – the gross production tax – is a key driver of Oklahoma’s economy and could moderate growth going forward until natural gas supply is reduced and prices rebound.

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Gross Receipts: January 2012

•Total from all revenue sources up 8.5% compared to January 2011

•Gross income tax up 10.1%

•Sales tax up 10.2%

•Gross production down 7.4%

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Gross Receipts: January 2012February 2011 – January 2012

Percentage Variance

Feb.3.8%

June15.5%

Jan.8.5%

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Gross Receipts: 12 Months•12-month collections are $1.4 billion higher than in

February 2010.

•73% of the revenue lost from December 2008’s peak recovered.

• Income tax collections up 14% from trailing 12 months.

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Gross Receipts: 12 Months

$11,283Dec. 2008

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

(in millions)

$11,283Dec. 2008

$9,364Feb. 2010

$10,760Jan. 2012

Gross Receipts: Sources as percentage

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

February 2011 - January 2012

General Revenue Fund: Sources as percentage

Fiscal Year 2011

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

General Revenue FundComparison with Estimate - First Half FY-12

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

in millions

+9.7%

+18.3%+1.8%

+33.4% -1.1%-4.1%

Where your money is spent

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

FY-13 Outlook•Board of Equalization will set final certified estimate

February 21 for use by the Legislature for the FY’13 budget.

•Waiting to see if other sources of revenue will offset the decline in natural gas extraction revenue since the preliminary estimate in December.

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

FY’13 Balanced Budget

•FY’13 Certified Revenues: $6.5 billion

•Other revenues: $329.8 million

• Impact of tax cut: -$124.4 million

•Supplemental approps: -$88.7 million

•Total Budget: $6.7 billion

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Executive Budget FY’12 vs. FY’13

FY’12 Total Appropriations: $6.5 billion

FY’13 Proposed Appropriations:$6.6 billion

Difference: 1.9%

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

“Off-the-top” Funding

•Executive budget excludes money for specific purposes. Among them:

•$297.4 million taken from income tax for transportation

•$57 million for “Oklahoma’s Promise,” the Oklahoma Higher Learning Access Program

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Governor’s Tax Proposal

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Lower, Flatter, SimplerCurrently: 7 tax brackets

Rates from ½% to 5.25%Families owe tax from first dollarTop rate at $15,900

Proposed: 3 tax bracketsRates from 2.25% to 3.5%Families owe no tax below $15,000Top rate at $70,000

What’s driving our growth?

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Source: Bureau of Labor Statistics

20112010200920082007

Oklahoma

U.S.

Job growth outpacing the nation

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Unemployment rate relatively low

Source: Bureau of Labor StatisticsOKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

8.3%

6.1%

Oklahoma

U.S.

Solid corporate profitsTop 25 OK capitalized companies’ stock index

Feb ’09$20.47

Dec ’11$52.18

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Stable real estate pricesLos Angeles Metro

New York City Metro U.S. Average

OKC Metro

Tulsa Metro

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Increased drilling activity

Source: Baker Hughes & U.S. Energy Information Administration

Price

per b

blA

ctiv

e R

igs

West Texas Intermediate Crude

Active Oklahoma Rigs

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Must be doin’ something right

•7th best performing state says U.S. Chamber of Commerce (Up from 14th in 2010.)

•3rd lowest cost of living

•4th highest growth in Gross State Product

•6th highest growth in per capita income

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Must be doin’ something right

•13th best on Forbe’s annual “Best States for Business and Careers”

•OKC ranks 6th most favorable business community by Wall Street Journal

•Oklahoma had 3% year-over-year employment growth -- better than all neighboring states. (Texas is next with 2.2%)

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Bullish on Oklahoma

•Our fundamentals are strong:

•Energy & manufacturing

•Employment

•Corporate profits

•Banks & real estate prices

•Quality of life

OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov

Stay informed

www.treasurer.ok.gov OKLAHOMA STATE TREASURERKEN MILLERwww.treasurer.ok.gov