Two years ago, as COVID-19 spread around the globe, state and local governments braced themselves for what they feared would be a steep and protracted downturn in tax revenue.
They’ve been half right.
Revenue did fall precipitously — more than $100 billion nationally in the first year of the pandemic. In Oklahoma, state and local sales and use tax revenue were $117.5 million less for February through May 2020 compared to the same period a year earlier. Total receipts to the state treasury, including the sales and use taxes collected on behalf of local governments, were $610.3 million less from February 2020 through January 2021.
Those months were particularly tough for Oklahoma’s towns and cities, whose operating budgets rely heavily on sales and use taxes. The city of Tulsa’s tax revenue for May 2020 was off 15% from the previous year, and down 19% in June. That prompted a round of furloughs and other budget measures that lasted until the end of the calendar year.
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The downturn, however, has not been as long or as deep as many expected. While the COVID-19 pandemic continues to kill and cause long-term consequences for many thousands of Americans, state and local tax revenue recovered quickly and has even surpassed pre-COVID levels.
Gross receipts to Oklahoma’s state treasury for 2021 — including local sales and use taxes — were $15.2 billion, a calendar-year record, apparently making the recession of the early 2020s, in terms of its impact on state and local governments, much steeper but much less long-lasting than the crash of 2007-2008.
Many believe a major reason for that is the trillions of dollars pumped into the U.S. and Oklahoma economy by the federal government.
The state’s Republican political leadership might disagree, at least to some extent, and leadership tends to credit Gov. Kevin Stitt and others for keeping the state “open” for most of the pandemic, a strategy that helped keep Oklahoma commerce moving. But it’s hard to dismiss the effects of the largest injection of adrenaline into the U.S. economy since World War II.
And it isn’t over.
The American Relief Plan Act — ARPA — makes available $1.87 billion to the state of Oklahoma. That doesn’t include $315.8 million to the state’s 10 largest cities, $238.4 million to the rest of the state’s cities and towns, and $768.6 million for its 77 counties. It also doesn’t include $1.4 billion set aside for education, or money allocated to the state’s tribal governments.
All told, a November estimate puts Oklahoma state and local government’s total from all COVID-related relief at nearly $14 billion — about the equivalent of a year’s state and local tax revenue, or 7% of a year’s gross state revenue.
Unlike with earlier rounds of assistance, state and local governments have several years to spend ARPA funds. That’s allowed them to be more deliberate; the state, in fact, has committed virtually none of its allocation, although legislators have made a few recommendations.
And there have been a lot of them. The legislative committee charged with sorting applications to the state fund reported in mid-November it had received more than 300, with requests totaling three times the amount of money available.
The city of Tulsa is scheduled to receive $87.8 million and Broken Arrow $13.8 million from ARPA. Tulsa County will receive a total of $126.6 million.
All ARPA funds are distributed in two payments, one last May and one this May.
Of the almost $18 million in ARPA funds spent or obligated by Tulsa to date, the biggest chunk was $9 million for firefighting equipment, including trucks. No. 2 on the list is $8.6 million for city employee retention bonuses.
Other allocations include $7 million for a new Tulsa International Airport control tower, $6.5 million in grants to 73 nonprofit agencies, $3.6 million for Tulsa Police Department body cameras and $3.5 million for a TPD air support hangar, and $6.5 million for municipal courts.
Tulsa County’s allocation includes $4 million for the new downtown Veterans Administration/Oklahoma State University medical complex, $4 million for the Crossover Community Center expansion, $3 million to incentivize direct airline flights, $2 million for the OKPOP Museum and $2 million for Family Safety Center expansion.
Broken Arrow recently spent a little over $1 million from its allocation to buy three new ambulances for its fire department.
