OKLAHOMA CITY –Taxes, transparency and trade-offs all played a role in wrapping up legislative budget negotiations for the new fiscal year, which begins July 1.
The deal is hammered out after weeks of back-andforth scenarios between Senate Pro Tem Greg Treat (R-Oklahoma City), House Charles McCall (R-Atoka) and Governor Kevin Stitt, but not final as of press time. Legislators worked through the Memorial Day holiday weekend to wrap up budget bills before sine die adjournment of the regular session on Friday, May 31. Hearings for the Joint Appropriations and Budget Committee were held on Monday.
“It’s often said that successful negotiation is not about getting to yes, it’s about mastering no and understanding what the path to an agreement is. During this negotiation process, neither chamber got every item they would have liked, but what we did get was a good budget for the people of Oklahoma,” said House Speaker Pro Tem Kyle Hilbert (R-Bristow) in a press release.
Potential tax cuts were a major issue throughout the session, which began in February. After presenting his Executive Budget Summary, which showed that the state’s revenue position had fully recovered since a revenue failure was declared in FY2020, Stitt was determined to pass tax cuts on to the people. Taxes The Summary showed record state tax collections over the last few years with the Oklahoma Tax Commission reporting a record $13,401,926,174 in FY2022.The next year, FY 2023, receipts surpassed that record with a total of $14,176,086,119 in total state tax collections for a 5.78% increase.
Out of the session starting gate, leaders agreed on eliminating the state portion of the grocery tax. Before the cut, Oklahoma was one of only 13 states that imposed a grocery tax. House Bill 1955 was approved by the governor on Feb. 27 and will become effective in August. The measure eliminates the 4.5% state sales tax on groceries, aims to address the economic challenges faced by many Oklahoma residents and ensures greater financial stability for families across the state, said a legislative press release. By removing this tax burden, Oklahoma families are expected to save an average of $700 per year, providing much-needed relief during inflationary pressures.
“Oklahomans have waited for this day for years, and I’m proud to be the governor that Oklahomans chose to eliminate the state portion of the grocery tax,” Stitt said at the time. “I’ve called for tax cuts every year since I’ve been in office – and when we see such broad bipartisan support for a bill like this, we know we’re doing something right. I’m proud of Pro Tem Treat and Speaker McCall for their hard work and dedication to returning money to our fellow Oklahomans.”
Stitt and McCall also sought to reduce the state personal income tax. Even after multiple budget negotiation hearings this month, Treat contended that the state could not afford any further tax cuts. Transparency After a contentious budget process last year, Treat called for a transparent budget process. Legislative disagreements centered mainly on education issues and frustrating last-minute backlogs led to a concurrent special session.
“My goal with this is to provide more transparency and more accountability for agencies who are funded through taxpayer dollars,” Treat said in a December press release. “The meetings will be public, and Senate members will have input.”
By early April, budget negotiations stalled when Treat announced the Senate would stop hearing House bills in the appropriations committee until that chamber participated in the transparency process and released their numbers in a spreadsheet. The Senate had passed Senate Resolution 31 on March 18 that outlined the upper chamber’s proposed budget. A few weeks later, the House rolled out their online Budget Transparency Portal, which can be viewed at okhouse.gov. Trade-offs Frustration with the budget negotiations led Stitt to remove himself from the table. The agreement, reported Oklahoma Watch reporter Paul Monies, was reached in the eighth meeting of a budget summit that sta rted May 6. It was the first time legislators held negotiations for all to experience in an open process.
The wheeling and dealing began with the governor proposing trade-offs for dropping the additional tax cut. S titt promised not to veto the budget, Monies reported, if lawmakers agreed to add $20 million to the Quic k Action Closing Fund—an economic development tool used at the governor’s discretion to close business expansion or relocation deals.
Stitt also wanted concessions in the a rea of smaller salary increases for district court judges and for money to stay in a tribal litig ation fund. He also wanted lawmakers to begin a framework for what is referred to as b usiness courts—a specialized court to handle corporate disputes, Monies wrote. An agreement was made and the budget draft could progress to committee. Budget highlights The tentative deal appropriates $12.47 billion to fund the state g overnment in FY 2025, reported Oklahoma Voice reporters Barbara Hoberock and Nuria Martinez-Keel. House staff reported the current fiscal year appropriation is $13.18 billion. The National Association of S tate Budget Offices reported that when Stitt released his recommended FY 2025 budget on Feb. 8, it totaled $11.84 billion. This represented an 8.7% decrease, or $1.1 billion, fr om FY 2024.
In addition to s pecific line-item appropriations in education, health and public safety, the following miscellaneous appropriations were tentatively approved:
• $350 million f or the new Oklahoma Capital Assets Maintenance and Protection Fund to cover deferred maintenance at state pr operties, state parks and public colleges and universities;
• $308 million to cov er the cost of e liminating the state por tion of the gr ocery tax;
• $45 million in disaster r elief to help tornado- impacted counties; and
• $20 million f or the Governor’s Quick Action Closing Fund.