By Conrad Dudderar
Oklahoma’s elected leaders are exploring tax reduction proposals in part because the state is “flush with money” right now, a Yukon lawmaker said at a recent breakfast.
District 18 State Sen. Jack Stewart (R-Yukon) told attendees at October’s Yukon Legislative Breakfast that legislators were getting ready to return for a “second” special session at the Oklahoma State Capitol.
“It is designed purely to look at tax relief, tax cuts of some sort,” Stewart explained. “The governor, as you all know, has been wanting one for a long time.”
After a summer break, the Yukon Chamber of Commerce presented its October Legislative Breakfast hosted by Archery Traditions, 328 Elm.
The State of Oklahoma now has about $1.25 billion in its “Rainy Day” fund, with some $400 million in a Revenue Stabilization Fund and another $370 million in a Rate Preservation Fund.
“And we’ve still got a $145 million unspent from fiscal year ’21,” the freshman state senator said. “From FY22, there’s $64.2 million remaining and last year, $1.3 billion.”
Compare that to the mid- to late-2010s when the state was “desperate for finances” and faced multi-million-dollar budget shortfalls, Stewart noted.
Legislation previously was proposed to eliminate Oklahoma’s state sales tax on groceries.
“I don’t think that will be on the table at all,” Stewart told Yukon Legislative Breakfast attendees.
Getting rid of the municipal portion of the tax on grocery purchases would devastate cities like Yukon, according to Mayor Shelli Selby.
“If they take the state tax (on groceries) away, they’re coming for us next,” Selby said. “Jack has assured me that will not happen.”
Oklahoma municipalities are opposed because they rely heavily on sales tax revenue to fund day-to-day operations.
Sen. Stewart is confident there is sufficient “extra” revenue to provide Oklahomans with tax relief without impact the grocery tax.
About a third of Oklahoma’s revenues comes from personal income tax – and the state would be facing a government shutdown if that “went away,” he added.
“The Tribes are pushing for sovereign immunity on about everything and the courts, for the most part, seem to be agreeing with them,” the District 18 senator related.
“The governor is saying if a certain group of people do not have to pay the (income) tax, then nobody’s going to have to pay it.”
With Oklahoma’s recent history of budget shortfalls, some state senators and representatives are very cautious about making large tax cuts.
“We’ve got so many legislators – especially those I’m aware of in the Senate – that were there back in ’16, ’17, ’18,” Stewart said. “Once you drop those taxes, it takes a super-majority vote to ever bring it back – which is very, very difficult.”
2024 will be the second year of the 59th Oklahoma Legislature. Legislative sessions last two years.
Bill filing will begin in November. The regular session reconvenes early next February then ends in late May.
Sen. Stewart suggested the possibility of dropping the personal income tax ½ or 1% this session and having a new interest-bearing “super” reserve fund to carry the state budget in the future.
‘BE VERY CAREFUL’
District 60 State Rep. Rhonda Baker (R-Yukon) referred to another special session that Gov. Stitt called last summer to cut taxes.
“The House went in, we voted and sent to the Senate a reduction in the personal income tax of ¼ percent and a reduction in corporate income taxes,” Baker told the Legislative Breakfast audience. “So, those (bills) are sitting in the Senate. They can be acted upon, if the Senate chooses.”
This session, Gov. Stitt has suggested eliminating the personal income tax.
“For those of us who were elected in 2016, we want to be very careful with how we go down that road,” Rep. Baker said. “Because we don’t want to ever be in that situation to where we’re trying to figure out how we’re going to get funding.
“No one ever wants to be in a situation where they’re having to raise gross production taxes and all of that – like we were.”
State House members frequently hear from their constituents concerned about inflation.
“That’s why the conversation went to grocery tax,” Baker pointed out. “The only problem with the grocery taxes – if you eliminate it on the state side, people still go to the grocery store that don’t come and listen to their elected officials and understand the issue.
“They’ll still see there’s a tax on their groceries. They don’t understand that, then they’ll get upset. They’ll be calling (the municipality).”
Oklahoma’s House members will see what tax-slashing legislative proposals their caucus can rally around that the Senate and Gov. Stitt might like.
Rep. Baker, a former teacher, chairs the House Common Education committee. She is preparing for interim legislative studies to discuss property insurance for Oklahoma schools.
“Schools are really dealing with the high cost of covering the insurance,” Baker said. “Here we are, trying to put more money toward education. Then, a lot of that funding is having to cover those higher costs.
“We’re trying to figure out what we can do to help the schools with this – and is there a solution? That’s something that’s going to take a while.”