Law & Principles, Good Government

At CPAC, McCall touts Oklahoma school choice, tax cuts

February 23, 2024

Ray Carter

Addressing one of the nation’s largest gatherings of political conservatives on Feb. 23, House Speaker Charles McCall touted Oklahoma’s record as a leader on school choice and a model of fiscal governance where tax cuts are prioritized in policymaking.

“Oklahoma is a state anchored in bedrock conservative values from fiscal restraint to the faith in the Almighty,” McCall told attendees at the Conservative Political Action Conference (CPAC), a national convention of conservatives. “We believe in common sense, constitutional liberties, and the freedom to chart our own course.”

McCall highlighted Oklahoma’s standing as one of the first states to provide school-choice opportunity to all families, allowing parents the ability to receive refundable tax credits to pay for a private-school education for their children if the parents believe it appropriate.

“We believe our children are the most precious resource, that their education shapes our future and their future,” said McCall, R-Atoka. “We are a state where parents control their children’s education. They can now use their education dollars for public schools, private schools, charter schools, and homeschooling has been protected in our constitution since 1907.”

The state law that created the Oklahoma Parental Choice Tax Credit Act provides refundable tax credits of $5,000 to $7,500 per child to cover the cost of private school tuition with the largest credits going to families with the lowest incomes.

Families who choose to homeschool also qualify for a tax credit equal to $1,000 per child under the plan.

In 2024, the Oklahoma Parental Choice Tax Credit program is capped at $150 million in tax credits. In 2025, the cap will increase to $200 million and in 2026 the cap rises to $250 million.

According to recent figures from the Oklahoma Tax Commission, the majority of the $150 million in first-year school-choice tax credits will go to low-income and middle-class families. As of the start of February, $83.5 million in tax credits has been approved for children from families with incomes below $150,000, including $39 million in credits for 6,672 students from families with incomes below $75,000.

The number of tax-credit beneficiaries from families earning less than $75,000 exceeds the student count for all but 17 of Oklahoma’s more than 500 public-school districts, based on enrollment data for the current school year.

Some homeschool advocates worried that government regulations could be attached to the program, and have noted bills filed this year by three lawmakers to impose new regulations on private schools and beneficiaries of the school-choice program.

But McCall indicated those bills aren’t going anywhere.

“The Oklahoma plan keeps government out of homeschools, Christian schools, keeps private schools private, empowers parents—not bureaucrats—to make education decisions,” McCall said.

He also touted Oklahoma’s record on fiscal issues, including continued efforts to reduce Oklahoma’s personal income tax.

“We have a healthy economy, job growth, fewer regulations, and we continue to cut the personal income-tax rate in Oklahoma,” McCall said. “Under Republican leadership, we have grown to be the fifth-best economy in the nation.”

McCall’s comments came only one day after a state House committee approved legislation to gradually eliminate Oklahoma’s personal income tax.

House Bill 2949, by McCall, would create a flat-tax system in Oklahoma with a rate of 4.4 percent while significantly increasing the amount of a family’s income exempted from the tax.

Under current law, Oklahoma has multiple tax brackets with a top rate of 4.75 percent kicking in at $7,200 for single filers and $12,200 for joint filers (married couples).

Under HB 2949, the lower 4.4-percent income-tax rate would not kick in until single filers earn more than $10,000 and joint filers and heads of households earn more than $20,000.

HB 2949 would also put the personal income tax on the path to full elimination.

Under the bill, another 0.233333 percentage point would be shaved off every year that state government’s cumulative revenue growth is equal to or greater than $400 million.

After the sixth rate cut occurs and the rate has been reduced to 3 percent, it would be reduced further by 0.3 points each year until the rate is zero.

The measure also establishes a $1 per megawatt-hour tax on electricity produced by renewable power businesses to partially offset the tax change and address Oklahoma Senate Republicans’ objections to cutting the tax.

McCall noted that Oklahoma lawmakers have built up billions of dollars in state savings through prudent budgeting. Under the Oklahoma Constitution, Oklahoma lawmakers may spend up to 95 percent of certified revenue each year, but lawmakers have chosen to spend less than the 95-percent maximum allowed, producing billions in savings over several years.

In the 2021, 2022, and 2023 state budget years, lawmakers left more than $2 billion combined unspent. And the state also has $1.274 billion in the state’s Rainy Day Fund and $401 million in the Revenue Stabilization Fund, providing a combined $1.675 billion. The state also has $3.5 billion in agency revolving funds and $372.5 million in the Federal Medical Assistance Percentage (FMAP) Preservation Fund.

“We budget less money than we’re allowed to spend,” McCall said. “That fiscal discipline has given us our largest financial reserves in state history. In Oklahoma, we are prepared for the next Washington-created economic downturn.”