The leadership of the Oklahoma House of Representatives said the chamber will introduce several tax proposals this week in response to Gov. Kevin Stitt’s call for large-scale, growth-friendly tax cuts, but the indicated passage of tax cuts relies in part on cutting the governor’s office budget, citing the state’s requirement for a balanced budget.
This assertion is undermined by the mathematics involved.
The House’s proposed cut to the governor’s budget would free up less than $1.9 million, while the proposed tax cuts could involve $256 million. And House leaders seem to ignore the fact that Stitt has already freed up enough money to cover the cost of the tax cuts with the recent vetoes.
At the end of the 2022 regular session, Stitt vetoed measures that would have provided taxpayers with one-time $75 checks and repealed a 1.25% sales tax on auto purchases. Instead, the governor called on lawmakers to cut the state’s personal income tax by a quarter point to 4.5% and repeal the state’s commodity sales tax. groceries.
At the May 26 press conference where he announced he was vetoing the aforementioned bills, Stitt said the vetoes would free up enough money to meet his goal of lowering income taxes and reducing taxes. repeal the tax on food products.
“Basically, the two things I vetoed add up to — $181 million and $161 million — so they add up to $300 million as it stands,” Stitt said. “We can absolutely do these two reforms with the same calculations.”
Legislative tax documents indicate that Stitt is correct.
Among the measures tabled in the House for the special session on tax cuts are bills to cut income tax by a quarter point and repeal the state sales tax on groceries.
According to a House tax estimate, cutting the income tax rate by a quarter point would net taxpayers $88.7 million in the 2023 state budget year.
House Speaker Charles McCall indicated that lawmakers were unhappy working on tax policy on Capitol Hill rather than campaigning.
The House has yet to produce tax estimates for any of the four bills that would repeal the grocery sales tax in various forms. But tax analysis for the state food tax repeal tabled by Senate Pro Tempore Speaker Greg Treat during the 2022 regular session showed it would save Oklahomans $167.5 million. dollars in fiscal year 2023.
The combined impact of the two measures in the 2023 state budget year would be $256.2 million, which is less than the amount released by Stitt’s vetoes.
But when House leaders discussed the tax cut measures this week, they said passage of the tax relief hinged on cutting additional funding from three entities: the governor’s office, the Office of Management and Enterprise Services and the Oklahoma Health Care Authority.
“These bills are intended to offset some of the costs that the governor requested directly during his (special session) call,” said House Speaker Charles McCall, R-Atoka.
“If we go ahead and reduce income tax and grocery tax, you will now have an impact on general revenue in FY23,” said the president of appropriations and House Budget, Kevin Wallace, R-Wellston. “So there are three bills that fall into this category for an amount of approximately $240 million.”
HB 1018XXX would cut the Governor’s Office budget by more than half, cutting the Governor’s Office budget from $3.5 million to $1.6 million, freeing up just under $1.9 million.
At his May 26 press conference, Stitt said legislative leaders had pulled his office out of budget negotiations and noted that he had focused on fiscal restraint since the start of his term.
“I hammered in fixed budgets, don’t spend more than you earn — common sense things that all Oklahomans agree with,” Stitt said. “And I think at the end of the day, there are people who write these budgets who don’t like to hear that message anymore.”
McCall repeatedly referenced Stitt’s comments about fixed budgets and said House leaders believed Stitt was implying that he not only wanted to keep his office’s budget flat, but also cut it.
“It seemed to us that he said he would take a cut, and all of his agencies would,” McCall said.
However, state budget records show that funding for Stitt’s office remained stable for several years.
In the 2020 budget year, the governor’s office received an appropriation of $3.7 million. In 2021, the Governor’s office budget was reduced to $3.5 million. In 2022, it was maintained at $3.5 million, and the appropriation for the next fiscal year 2023 was also maintained at $3.5 million.
After Stitt vetoed and called a special session, House lawmakers lambasted the governor in public. One of the authors of the bill to cut the governor’s budget — State Rep. Ryan Martinez, R-Edmond — even called Stitt racist for vetoing a separate bill that required state highway patrol officers to serve as tribal court officers in some cases. Stitt is Cherokee. And a spokesperson for the Oklahoma Department of Public Safety said the agency opposes the bill because “there is still significant uncertainty about the jurisdictional reach and transparency of tribal courts.”
But McCall said the House’s decision to target Stitt’s office for budget cuts was unrelated to those backlash.
“It’s not retaliation,” McCall said. “That’s just what we heard him say in the communication at his press conference.”
However, McCall also indicated that House lawmakers are unhappy working on tax policy on Capitol Hill rather than campaigning.
“It’s not a good time for a special session,” McCall said. “To call the Legislative Assembly two weeks before the primaries when we have just come out of the constitutional session at the end of May, and our members are trying to reconnect with their constituents before an election cycle, the timing is not ideal.”