Revenue is the money collected by governments. Government cannot provide services we expect without money to pay employees, hire contractors, build facilities and infrastructure, and make payments to people in need. Since state and local governments cannot operate at a deficit (spending more than they take in), the decisions we make about how to collect money have a direct effect on what public services we get. They also affect who shares in the effort of providing public service and how economic decisions are made. This section describes the taxes and other revenue sources of Oklahoma's governments.

State and local governments rely on a wide range of revenues to finance services. When we think of government revenue we usually think of taxes, but they are far from the only important revenue. Services that benefit all citizens are financed at least partly from taxes. Most services, though, generate other revenue sources, like federal funds, insurance trust revenues for retirement and insurance systems, fees or user charges, and utility charges. Each government and each service is financed differently. The mix of revenue depends on service demands, citizens' desired level of taxes, and whether governments provide services that can be funded through federal grants, user charges, or other generated revenue. The mix of revenue changes over time based on dozens of policy decisions we make each year.

Overall, state government collected about $19.7 billion in 2006, while local governments collected $10.9 billion. The figure does not show that local governments received over $3 billion in state aid each year, mainly for education. As a result, spending by state and local governments is much closer to equal than is revenue.

This graph shows the importance of different revenue sources to Oklahoma state and local governments. Both levels of government use a number of different revenue sources, though local governments are more dependent on taxes, user charges, and utilities.

• Taxes are the largest source of revenue for state government and second for local governments. The state collected nearly $8 billion in taxes and local governments raised over $3 billion in 2006.
• Federal funds are important to both levels of government, with the state receiving over $5 billion and local governments about $4 billion.
• State and local governments collected about $1.8 billion each in user charges-fees paid by people and businesses who benefit directly from a service-in 2006. This is a larger share of local revenue than state.
• Insurance trusts, which collect payments for unemployment insurance, workers compensation, and employee retirement systems, are an important source to state government, which collected almost $3 billion for this purpose. Local insurance trusts are limited to retirement systems, which collected less than $100 million in 2006.
• Utility revenues are charges to customers of water, electric, gas, and public transit systems. They are somewhat more important to local governments, which use these fees to pay all costs of the utility and often to help fund other public services.
• Other revenues include interest, sale of property, fines, and various licenses and permits. These generated nearly $1.5 billion for the state government and about $600 million for local governments in 2006.

• An Overview of Our Tax System

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