OKLAHOMA CITY – Oklahoma’s budget looks better than it should because of the $1.26 billion in federal CARES Act money the state received because of the COVID-19 pandemic, a leading Senate Democrat said.
“If we didn’t have that money, we would have been in dire straits,” said Senate Minority Leader Kay Floyd, who represents District 46 in Oklahoma City. “In normal times, we would have relied on revenue from oil and gas, personal income taxes and corporate income taxes. We won’t have this federal money in the future.”
In addition, Oklahoma will reportedly receive $1.9 billion from the American Rescue Plan Act approved by Congress and signed into law by President Joe Biden last month.
Republican lawmakers praised the recently approved state budget as one of the best in Oklahoma history. While approving the $8 billion budget, the legislature also reduced personal income and corporate taxes which drew criticism from Floyd. The move to cut taxes was approved along party lines.
“They (Republicans) cut one of our main revenue sources,” she said. “That’s a loss of $236 million from the personal income tax reduction alone.”
According to Floyd, research shows the personal income tax cut won’t have much impact on Oklahomans. For example, a person who earns $40,000 a year will receive another $100 a year in tax cuts, she said. A person who earns $100,000 will receive $250 from the tax reduction. Floyd said the research also indicates the overall state economy loses $1.50 for every $1 in tax cuts.
The bills to cut the personal income and corporate taxes originated with Speaker of the House Charles McCall.
“From a practical standpoint, it didn’t make any sense to us,” Floyd said.
When the federal stimulus money goes away, Floyd said she’s concerned about paying for the essential services Oklahomans rely on such as Medicaid, public education, public safety and roads and bridges.
Republicans, when in control of the House and Senate, have previously initiated tax cuts prior to economic downturns. In those instances, lawmakers were forced to cut agency services the next year, Floyd recalled.
“After (former governor) Mary Fallin and her people in the Legislature cut taxes, it took two cycles before oil and gas tanked,” she said.
Floyd said she voted against this year’s budget because of the lack of transparency in the budget process.
“We received amended (budget) bills during a committee meeting, which meant the public did not have time to access those bills and have input,” Floyd said. “A budget is a very big part of what the government is supposed to do.”
Floyd, who has been in the legislature since 2014, said lawmakers have been cutting the state’s revenue base since 2000 with tax reductions.
“We have reduced the state budget by 25% in those 20 years,” she said. “You’re seeing that we’re not taking care of the state’s infrastructure, which is obvious by the problems with roads and bridges, prisons, health care, but the best example is education. We hurt the services offered to Oklahomans when revenue is cut.”