Oklahoma’s $ 8.3 billion budget deal includes tax cuts, increased education funding
Top lawmakers and Oklahoma Governor Kevin Stitt on Thursday unveiled their plans for the state’s budget for the next fiscal year, which begins July 1.
The new budget deal for fiscal year 2022 would amount to $ 8.3 billion. Leading Republican lawmakers say the deal would maintain all funding for basic state services while also providing tax relief for individuals and businesses.
Corporate income tax would drop from 6% to 4%, while personal income tax would drop from 5% to 4.75%.
Oklahoma House President Charles McCall said he was optimistic about what may result from the tax cuts.
“We will see more dollars in the state of Oklahoma, we will see more business, more people, and we will be able to operate at a lower threshold of tax burden on all entities in the state of Oklahoma.” , McCall said.
Lawmakers say the deal will also reinstate the earned income tax credit and provide funding to expand broadband internet across the state.
Democrats embittered over final form of deal
Oklahoma House Democrats say that while both sides of the aisle fought for tax breaks and savings, they are unhappy with the end result. They criticized the reduction in the corporate tax burden 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 over $ 250 million a year,” said Emily Virgin, chief of the parliamentary minority, in a press release. “We could do that and restore and increase the Working Income Tax Credit, which puts money right into the pockets of working people in Oklahoma.”
Democrats have also slammed the $ 50 million increase in the cap for the equal opportunities scholarship program, including the $ 25 million that will go to private schools.
“We cannot in good conscience vote for a budget that sends hard-earned taxpayer dollars to private schools,” Virgin said.
The education system is getting stronger
The deal also represents a record $ 3.2 billion in state funding to the education system, with pooled education funding increasing nearly 6 percent, or more than $ 171 million.
State Superintendent of Public Education Joy Hofmeister called the education allowance great news for students, teachers and all Oklahomians.
“An additional $ 137 million for the school funding formula and $ 60 million for textbooks will go a long way in ensuring that our children are on the right track academically,” said Hofmeister.
Higher education also saw an increase, to the tune of $ 42 million or 5.5 percent. The allocation of $ 812 million is the highest level of higher education funding in more than five years.
Medicaid expansion facilitated with pandemic funding
Oklahoma lawmakers answered one of their most daunting questions ahead of this year’s session: how to pay for the expansion of Medicaid. Federal pandemic funding made the early years a little easier.
When Oklahoma voters approved State Question 802 last year, they mandated the legislature to pay for the expansion of Medicaid. This policy opens the state and federal funded health coverage program to approximately 200,000 low-income adults. The state’s share of the cost is approximately $ 160 million.
When key lawmakers and Stitt unveiled their budget deal, they noted Congress had allowed higher federal matches on Medicaid due to the pandemic. This infusion of cash will cover the costs of expansion for a few years.
For future costs, Oklahoma will spend the next three years gradually increasing the fees they charge hospitals to fund Medicaid.
What a difference a year makes
This budget deal was a far cry from the process of last year, when a drop in oil prices and an economic shutdown caused by COVID-19 was a double whammy to state revenues.
Last spring, Stitt discussed with legislative leaders how to close a budget deficit of more than $ 400 million between April and June 2020. He wanted to cut many basic services by one to two percent, while the lawmakers preferred to use the state’s Rainy Day Fund to shore up the state’s needs.
Stitt accused lawmakers of excluding his office from the budget process, while lawmakers said Stitt’s lack of transparency about how he planned to spend federal relief funds was a hindrance in the process.
The legislature passed his budget proposals totaling $ 7.7 billion, which Stitt then vetoed. The Senate took just 21 minutes to overturn the veto, followed by the House several hours later.
A summary of the state budget for fiscal year 2022 can be found below.
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