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Oklahoma's $8.3B Budget Agreement Includes Tax Cuts, Increased Education Funding

Oklahoma Gov. Kevin Stitt (center) announces a budget agreement for Fiscal Year 2022, alongside House Speaker Charles McCall (left), Senate Pro Tem Greg Treat (right) and other legislative leaders on May 13, 2021.
Oklahoma Gov. Kevin Stitt (center) announces a budget agreement for Fiscal Year 2022, alongside House Speaker Charles McCall (left), Senate Pro Tem Greg Treat (right) and other legislative leaders on May 13, 2021.

Top Oklahoma lawmakers and Gov. Kevin Stitt on Thursday unveiled their plans for the state budget next fiscal year, which begins July 1.

The new budget agreement for Fiscal Year 2022 would total $8.3 billion dollars. Top Republican lawmakers say the agreement would maintain all state core service funding while also providing tax relief to individuals and businesses.

The corporate income tax would be cut from 6 percent to 4 percent, while personal income tax would be cut from 5 percent to 4.75 percent.

Oklahoma House Speaker Charles McCall said he's optimistic about what can come from the tax cuts.

"We will see more dollars in the state of Oklahoma, we will see more business, more people, and we can operate at a lower threshold of tax burden on all entities in the state of Oklahoma," said McCall.

Lawmakers say the agreement will also restore the earned income tax credit and provide funding to expand broadband Internet across the state.

Democrats Sour On Agreement's Final Form

Oklahoma House Democrats say that while both sides of the aisle fought for tax breaks and savings, they're unhappy with the final result. They criticized the lowering of tax burdens on corporations and said the Republicans' drive to save the state $800 million comes at the expense of taxpayers.

"With this money, we could end the state sales tax on groceries, which would save Oklahomans more than $250 million per year," House Minority Leader Emily Virgin said in a statement. "We could do this and restore and increase the Earned Income Tax Credit, which puts money directly back into the pocket of Oklahoma workers."

Democrats also blasted the increase of $50 million to the Equal Opportunity Scholarship program cap, notably the $25 million of which will go toward private schools.

"We can not in good conscience vote for any budget that sends $25 million of hard-earned taxpayer money to private schools," Virgin said.

Education System Gets Boost

The agreement also accounts for a record $3.2 billion dollars from state appropriations into the education system, with common education funding seeing an increase of nearly 6 percent, or more than $171 million dollars.

State Superintendent of Public Instruction Joy Hofmeister called the education allocation tremendous news for students, teachers and all Oklahomans.

"An additional $137 million for the school funding formula and $60 million for textbooks will go a long way toward ensuring our children are on track academically," Hofmeister said.

Higher education also saw an increase, to the tune of $42 million or 5.5 percent. The $812 million allocation is the highest level of funding higher education has seen in more than five years.

Medicaid Expansion Made Easier By Pandemic Funding

Oklahoma lawmakers answered one of their most daunting questions headed into session this year: how to pay for Medicaid expansion. Federal pandemic funding made the first few years a little easier.

When Oklahoma voters approved State Question 802 last year, they mandated the Legislature to pay for Medicaid expansion. That policy opens the state and federally funded health coverage program to about 200,000 low income adults. The state’s portion of the cost is about $160 million.

When top lawmakers and Stitt unveiled their budget agreement, they noted that Congress authorized higher federal matches on Medicaid because of the pandemic. That cash infusion will cover expansion costs for a few years.

For future costs, Oklahoma will spend the next three years incrementally raising the fees they charge hospitals to fund Medicaid.

What A Difference A Year Makes

This budget agreement was a far cry from last year's process, when a drop in oil prices and an economic shut down brought on by COVID-19 were a double whammy for state revenue.

Stitt butted heads with legislative leaders last spring over how to fill a budget shortfall of more than $400 million between April and June 2020. He wanted to cut many core services by one to two percent, while legislators favored using the state's Rainy Day Fund to shore up the state's needs.

Stitt accused legislators of cutting his office out of the budget process, while lawmakers said Stitt's lack of transparency over how he plans to spend federal relief funding was a barrier in the process.

The legislature passed their budget proposals totaling $7.7 billion, which Stitt then vetoed. The Senate took just 21 minutes to override the veto, followed by the House several hours later.

A summary of the state budget for Fiscal Year 2022 and a video of Thursday's press conference can be found below.

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Kateleigh Mills was the Special Projects reporter for KOSU from 2019 to 2024.
Catherine Sweeney was StateImpact Oklahoma's health reporter from 2020 to 2023.
Ryan LaCroix is the Director of Content and Audience Development for KOSU.
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