State of Oklahoma FY-2011 Revenue Certification March 31, 2010

Contents Economic Outlook Economic Outlook FY-2010 Projection Changes FY-2010 Projection Changes FY-2011 Estimate Changes FY-2011 Estimate Changes Budgetary Context Budgetary Context

Forecast of United States Real GDP Growth FY-2009FY-2011FY-2010 Source: Oklahoma State Econometric Model / Bureau of Economic Analysis Update 2/12/10

Comparison of United States vs. Oklahoma Employment Growth FY-2009FY-2011FY-2010 Source: Oklahoma State Econometric Model / U.S. Growth Update: Bureau of Labor Statistics OK U.S OK

FY-2010 General Revenue Fund Projection (December) vs. Projection (February) $ in millions $ in millions FY-2010 December Projection $4,415.0 FY-2010 December Projection $4,415.0 FY-2010 February Projection $4,475.8 FY-2010 February Projection $4,475.8 $60.8 million or 1.4% above December $60.8 million or 1.4% above December *For more detail, see Schedule 11, page 11.

Fiscal Year 2010 GR Projection (December) vs. Fiscal Year 2010 GR Projection (February) FY-2010 December ($M) FY-2010 February ($M) Difference ($M) Difference (%) Gross Production – Gas$195.2$273.5$ % Gross Production – Oil % Individual Income Tax1,652.61,647.2(5.3)(0.3%) Corporate Income Tax (18.9)(10.9%) Motor Vehicle Tax % Sales Tax 1, ,477.7 (34.3) (2.3%) Subtotal$3,744.8$3,808.0$ % Other (2.4) (1.4%) Total$4,415.0$4,475.8$ % *For more detail, see Schedule 11,page 11.

Fiscal Year 2010 GR Estimate (June) vs. Fiscal Year 2010 GR Projection (February) FY-2010 June ($M) FY-2010 February ($M) Difference ($M) Difference (%) Gross Production – Gas$427.5$273.5($153.9)(36.0%) Gross Production – Oil % Individual Income Tax2,044.11,647.2(396.9)(19.4%) Corporate Income Tax (153.7)(50.0%) Motor Vehicle Tax % Sales Tax 1, ,477.7(276.4)(15.8%) Subtotal$4,674.4$3,808.0($866.4)(18.5%) Other (73.2) (9.9%) Total$5,415.4$4,475.8($939.6)(17.4%) *For more detail, see Schedule 10, page 10.

FY-2011 GR Estimate (December) vs. FY-2011 GR Estimate (February) FY-2011 December ($M) FY-2011 February ($M) Difference ($M) Difference (%) Gross Production – Gas$225.1$320.1$ % Gross Production – Oil % Individual Income Tax1,661.41, % Corporate Income Tax (25.1)(13.7%) Motor Vehicle Tax % Sales Tax 1, ,542.9(13.0) (0.8%) Subtotal$3,804.2$3,926.6$ % Other % Total$4,448.6$4,580.0$ % *For more detail, see Schedule 12, page 12.

Contents Budgetary Context Budgetary Context

Comparison of Authority 2010 Session (December) vs. Proposed Authority 2010 Session 2010 Session Authority Dec. ($M) 2010 Session Authority Feb. ($M) Difference($M)Difference(%) Certified$4,306.9$4,431.6$ % 1017 Fund (5.7)(1.0%) GP – Oil Education Funds % Tobacco Fund % Judicial Revolving Fund % Prior Certified % State Transportation Fund % Bond Funds0.0 Cash % Total$5,294.9$5,415.2$ % *For more detail, see Appendix A-2, pages 16 & 17. Totals may differ, due to rounding.

Comparison of Actual Expenditures 2009 Session vs. Proposed Authority 2010 Session 2009 Session Actual($M) 2010 Session Authority($M)Difference($M)Difference(%) Certified$5,222.8$4,431.6($791.2)(15.2%) 1017 Fund (92.0)(14.5%) GP – Oil Education Funds % Tobacco Fund (6.0)(24.8%) Judicial Revolving Fund % Prior Certified % Transportation Fund % Bond Fund % Cash (361.7)(91.9%) Total$6,616.6$5,415.2($1,201.4)(18.2%) *For more detail, see Appendix A-1, pages 14 & 15. Totals may differ, due to rounding.

*FY-2011 data reflects February projections only.

NCSL REPORTS SHOW THAT STATES CLOSED BUDGET GAPS IN EXCESS OF $145 BILLION IN NCSL REPORTS SHOW THAT STATES CLOSED BUDGET GAPS IN EXCESS OF $145 BILLION IN ORIGINAL FY-2010 BUDGETS ONLY FOR A NEW ROUND OF SHORTFALLS TO OPEN TOTALING $28.2 BILLION 41 states reported new mid-year shortfalls in addition to gaps originally closed by FY-2010 enacted budgets. 41 states reported new mid-year shortfalls in addition to gaps originally closed by FY-2010 enacted budgets. 14 states reported additional mid-year cuts of 7% or greater. 14 states reported additional mid-year cuts of 7% or greater. Sources: Center on Budget and Policy Priorities; Article “Recession Continues to Batter State Budgets: State Responses Could Slow Recovery”, February 25, 2010 and the National Conference of State Legislatures

STATE GAP REPORTED ($) % OF BUDGET CUTS ENACTED OR PROPOSED ARIZONA$1.9 Billion19.7%7.5% + Targeted ARKANSAS$162 Million3.6%2.2% COLORADO$601 Million8.0%Targeted KANSAS$459 Million7.5%3.3% + Targeted MISSOURI$690 Million7.7%2.5% + Targeted NEBRASKA$155 Million4.4%2.5% + Targeted NEW MEXICO$650 Million11.8%10% + Targeted TEXAS$3.3 Billion7.6%Not Reporting

BUDGET AGREEMENT

FY-2011 Compared to FY-2010 If Budgeted at FY-2010 Levels (In Billions)