Budget & Tax
Ray Carter | December 22, 2023
With surging state revenue, Stitt, McCall push for tax cuts
Oklahoma lawmakers will have nearly $457.9 million more to spend in the 2024 legislative session than in the 2023 session, providing around $11 billion in recurring revenue to appropriate, according to figures certified this week by the State Board of Equalization.
At the same time, the Oklahoma state government maintains historic levels of savings for any potential future downturn.
Gov. Kevin Stitt said those conditions make a tax cut easily achievable in the 2024 legislative session.
“Revenue has gone up again. We’re $457 million up,” Stitt said. “A quarter-of-point tax cut, year one, is about $88 million; year two is about $250 (million). So we need to do a quarter-of-a-point back to the consumer.”
In recent months, Stitt has called for reducing Oklahoma’s top personal income-tax rate from the current rate of 4.75 percent and putting the tax on the path to gradual elimination by using growth revenue to offset rate reductions in future years.
A recent poll showed that Oklahomans overwhelmingly support cutting the state income tax and gradually eliminating the tax.
According to the survey, conducted by WPA Intelligence (WPAi) on behalf of the Oklahoma Council of Public Affairs (OCPA) and Americans for Prosperity (AFP), 65 percent of Oklahoma voters support cutting the state income tax, while only 22 percent oppose income-tax cuts.
The survey also found that 67 percent of voters support the elimination of Oklahoma’s income tax.
Earlier this year, Stitt’s office announced that state government was poised to have $4.82 billion in combined savings in the state’s Constitutional Reserve Fund, Revenue Stabilization Fund, Federal Medical Assistance Percentage (FMAP) Rate Preservation Fund, unspent reserves from prior years, and projected additional deposits to two of those funds.
House Speaker Charles McCall, R-Atoka, has also called for tax cuts and has already filed several bills to cut taxes in the 2024 session, which begins in February.
“Everyday Oklahomans continue to feel the effects of destructive federal economic policies on their wallet, and they desperately need relief,” McCall said. “The House has passed numerous tax cut bills to the Senate during multiple regular and special sessions throughout the last three years, and these new bills represent our latest attempt to get meaningful tax cuts passed and to the governor’s desk. Our state is in a strong position both economically and in regards to savings, so now is the perfect time to pass tax cuts and let the citizens of Oklahoma keep more of their hard-earned money.”
Among the measures filed by McCall is House Bill 2949, which would provide for a flat income-tax rate of 4.25 percent effective Jan. 1, 2024, and House Bill 2950, which would lower the rate to 4.5 percent.
In addition to cutting taxes, the governor said he wants to keep a tight rein on state spending in 2024.
“I’m literally for flat budgets,” Stitt said. “I don’t want to grow the government, right? So when I think about the actual recurring expenses, that needs to stay flat.”
The governor said he is open to discussions about appropriating money for “one time” expenditures but noted that nearly $2 billion was spent on one-time items in the most recent state budget, and that figure doesn’t include billions in federal American Rescue Plan Act (ARPA) funds that government agencies received.
“I just think it’s really important that we continue to slow the growth of government and have an efficient government,” Stitt said.
The governor noted that tax cuts provide significant statewide benefit through increased economic activity, which ultimately produces more tax revenue for the state.
“When you take $250 million out of this (state government) budget right here, it doesn’t leave and disappear,” Stitt said. “It just stays in your pocket, and they get to spend it and they get to go to restaurants and buy their kids a bicycle and go spend more money at the grocery store and go on vacation. The money is still in the economy, which basically still turns. That’s why we have these record revenues continue to go up is because we are a business-friendly climate right now, and I just think we want to keep that going.”
Director, Center for Independent Journalism
Ray Carter is the director of OCPA’s Center for Independent Journalism. He has two decades of experience in journalism and communications. He previously served as senior Capitol reporter for The Journal Record, media director for the Oklahoma House of Representatives, and chief editorial writer at The Oklahoman. As a reporter for The Journal Record, Carter received 12 Carl Rogan Awards in four years—including awards for investigative reporting, general news reporting, feature writing, spot news reporting, business reporting, and sports reporting. While at The Oklahoman, he was the recipient of several awards, including first place in the editorial writing category of the Associated Press/Oklahoma News Executives Carl Rogan Memorial News Excellence Competition for an editorial on the history of racism in the Oklahoma legislature.