A prolonged oil slump will keep challenging Oklahoma, according to credit rating giant Moody’s.
In a new report, Moody’s analysts said they expect Oklahoma’s sharp decline in oil and gas tax revenue to continue. State Finance Secretary Preston Doerflinger said Oklahoma leaders agree with Moody’s outlook.
"We know we're in a challenging time, and we just have to do the things necessary to position the state in the best way possible," Doerflinger said.
Doerflinger said officials are committed to fixing structural deficiencies in the budget and finding new, recurring revenue.
Moody’s projects oil and gas taxes will make up just 2 percent of the state budget in 2017, as oil prices appear set to stay between $40 and $60 a barrel. Doerflinger said state officials would love to see oil at $50 a barrel by year’s end.
"But this is such a fluid situation and such a different situation than we've experienced internationally, we're just keeping our finger on the pulse the best we can of what's going on in that industry and monitoring its effects on our state coffers," Doerflinger said.
Oil is currently $44 a barrel, and Goldman Sachs believes it will trade between $45 and $50 for the next 12 months.
Moody’s report notes not only did Oklahoma’s oil and gas tax revenues drop sharply last year, but they also remained flat because of generous incentives during a drilling boom from 2011 to 2014. Oklahoma’s current credit rating is just Moody’s third-highest, with a negative outlook.
