Budget & Tax

Stitt vetoes budget; Legislature overrides

May 14, 2020

Ray Carter

Gov. Kevin Stitt vetoed the state’s “general appropriation” bill and several associated measures on Wednesday, but lawmakers voted to override those vetoes within hours.

Stitt’s most significant veto was of Senate Bill 1922, the general appropriation bill for all of state government.

“This proposed budget does not reflect the values of Oklahoma or the clear directive voters gave elected officials at the ballot box of living within our means and making hard decisions when times get tough,” Stitt said. “Instead, Senate Bill 1922 reflects misguided policies that conservative Republicans have spent the past decade reversing. It is propped up with one-time funds that will not be available for Fiscal Year 2022.”

Senate Bill 1922 appropriates around $7.7 billion for state agencies in the next year, a cut of 3 percent compared to the current year state budget. Although lawmakers faced a $1.3 billion shortfall, this year’s budget plan cut far less thanks to the use of savings and redirection of funding currently provided to various state entities outside the appropriation process. Overall, lawmakers filled $886 million of the $1.3 million gap with those sources.

Even so, most agencies will have their appropriation reduced by around 4 percent under the plan, although school funding is cut by a smaller amount and a handful of agency budgets saw budget increases.

In his veto message, Stitt warned the budget plan “is going to back the state into a financial corner, which leaves us with very few options in FY 2022—we will either have to raise taxes or implement draconian cuts. As Governor I am here to protect the taxpayer—not harm them.”

Amidst the debate over state budget practices and priorities, questions also abound about how federal COVID-19 funds may ultimately backfill many state budget cuts, which was a source of contention between the Legislature and Stitt.

Senate Appropriations Chairman Roger Thompson, R-Okemah, objected to Stitt’s veto comments when he moved for an override vote. Thompson said the budget plan “represents the core values of Oklahoma” because it does not cut government spending by a larger amount in areas like education, health care, and the court system.

Without debate or extensive questioning, the Oklahoma Senate voted to override Stitt’s veto of SB 1922 on a 35-11 vote.

Several hours later, the Oklahoma House of Representatives voted 79-20 to override Stitt’s veto of SB 1922.

As he had promised to do earlier this week, Stitt also vetoed several other measures: House Bills 2741, 2742, and 2743.

House Bill 2741 takes $73.1 million currently earmarked for the Teachers’ Retirement System of Oklahoma and redirects it to public school funding.

House Bill 2742 similarly redirects $38.8 million to public schools and away from the Oklahoma Law Enforcement Retirement System, Oklahoma Police Pension Retirement System, and Oklahoma Firefighters Pension and Retirement System.

House Bill 2743 takes $180 million from the Rebuilding Oklahoma Access and Driver Safety (ROADS) Fund, which pays for bridge and road repair, and redirects that money to public schools.

“While I understand the importance of a balanced budget, it is improper to do so at the expense of the solvency of the Teachers’ Retirement System, which has been greatly improved through the legislature’s commitment to fiscally conservative policies,” Stitt’s veto message for HB 2741 stated. “It is important we do not go backwards on the meaningful gains we have made.”

Stitt said the bill would increase the unfunded liability of the teachers’ retirement system and could also negatively impact the state’s credit rating.

The governor’s veto message for HB 2742 was almost identical.

In his veto message for HB 2743, Stitt wrote that the legislation “would force” the Oklahoma Department of Transportation “to unnecessarily take on additional debt through the use of bonds.”

Noting that he has supported use of bonds in the past, Stitt said he “cannot support the use of bonds to plug budget holes.”

House Appropriations and Budget Committee Chairman Kevin Wallace, R-Wellston, said Stitt’s veto message on the bill redirecting teachers’ pension funding was filled with “inaccurate statements” and “false communications.”

“There’s really hardly even anything that I can even agree with in this veto message,” Wallace told House lawmakers. “A lot of misrepresentation, misinformation, inaccurate statements.”

House lawmakers argued the redirection of pension money will not increase the system’s unfunded liability because that cash was provided in addition to the state’s employer contribution—so the redirection instead impacts the rate of improvement in pension solvency.

The budget plan also did not eliminate all additional payments, but did reduce their size.

“Yeah, we’re not able to put in as much extra money, but we are still going above and beyond our obligations to the retired teachers of the state of Oklahoma,” said Rep. Chad Caldwell, R-Enid.

The bill also calls for lawmakers to restore the redirected pension funding in future years, although that provision can be amended by future legislatures.

Some lawmakers stressed that a veto override was a major act.

“What we’re contemplating doing today is pretty serious,” said Rep. Charles Ortega, R-Altus. “And I don’t know of anybody in this room that takes any delight on having to do what we’re contemplating doing.”

“This vote today is not a vote against the governor,” said Rep. Kyle Hilbert, R-Bristow. “We want him to be successful.”

Lawmakers had already voted separately to replace the diverted road funding through bond financing. Stitt did sign that legislation—House Bill 2744—a fact noted by House and Senate lawmakers as they voted to override Stitt’s veto of the bill that diverted road funding.

Late Wednesday, the Oklahoma House of Representatives voted 94-4 to override Stitt’s veto of HB 2741, 95-5 to override Stitt’s veto of HB 2742, and 95-5 to override Stitt’s veto of HB 2743.

The Senate later took up override votes on those bills late Wednesday. Senators voted 34-12 to override the vetoes of both HB 2741 and HB 2742, and 44-2 to override the veto of HB 2743.

Prior to the override votes, House Minority Leader Emily Virgin, D-Norman, released a statement.

“Last week, our caucus was asked to vote on a budget that borrowed money from Oklahoma retirees to pay the bills of the state. We said ‘no,’” Virgin said. “Now, the vote in front of us is to support that budget, which we voted against, or uphold the governor’s veto and cut more than a hundred million dollars to public education.

“In the name of public education, members of the Oklahoma House Democratic Caucus will vote to override Governor Stitt’s veto,” Virgin continued.

In his veto message, Stitt warned that this year’s budget sets Oklahoma on track to face tax increases next year. Democrats in both chambers have already called for tax increases, and Virgin reiterated that stance as she announced her caucus would support the override attempts.

“Oklahoma Democrats have been vocal for years about the need to diversify state revenue streams,” Virgin said, “and we will continue to call for stable, recurring revenue that can support public education and other core services without relying on one-time funds and taking money from pension systems.”