March 8 (UPI) -- Tax collections from oil and gas production last year were more than 10 percent off the previous year, though the Oklahoma state treasury expressed optimism.
S&P Global Ratings lowered its credit rating for Oklahoma by one notch to AA- last week, but kept its outlook stable. The ratings agency said the state economy is diversifying away from oil and gas, but some metrics show a state of contraction against growth in the national economy.
The state government reported taxes on oil and gas production in February were up 32.4 percent year-over-year and 14.7 percent higher than from January. For full-year 2016, tax collections brought in $367.3 million, down 12.4 percent from the previous 12-month period.
Oklahoma is among the U.S. states rich in shale oil and natural gas. A recovery in crude oil prices has led to more spending, and state exploration and production activity in February was up 26 percent year-over-year, though still lower than 2015 levels by 42 percent.
With the state facing a budget crisis in 2017, the Oklahoma Oil & Gas Association called for an overhaul of state regulations that stand in the way of more oil and gas drilling. Trade group President Chad Warmington said drilling more would bring more money to state coffers, a solution he said was "a no brainer."
Activities associated with oil and natural gas production in Oklahoma have been tied to seismic activity. The U.S. Geological Survey recorded four tremors in the state in the last 24 hours, the largest of which was a magnitude-3.5 event Tuesday afternoon local time.
The government in the shale-rich state is expecting modest expansion over the next three to six months. Gross receipts to the treasury are expanding and the state is taking in more revenue in sales tax. Overall, the state economy is facing a fiscal crisis, though State Treasurer Ken Miller said positive factors were evident.
"The revitalized economic activity might take some time to filter down into the state budget, but we have good reasons to remain cautiously optimistic," he said in a statement.