Oklahoma revenue projected under $300 million due to tax breaks

Yahoo

07-02-2025

OKLAHOMA CITY (KFOR) — Senate Pro Tempore Lonnie Paxton announced on Thursday that the revenue projections showed Oklahoma under by around $300 million.
This comes during a year when a possible income tax cut is fresh on the mind. At Governor Kevin Stitt's State of the State, he announced his .05% Half and a Path income tax cut proposal.
'If we don't act fast then we're going to be left behind and be considered a high tax state,' said Stitt on Monday.
The governor listed off several states who have gotten rid of their income tax but those states have also found other revenues to make up for that loss. Governor Stitt has hinted at reaching into savings, that there is so much it would make up for whatever loss could come from cutting the income tax.
That's something that previous Senate Pro Tem Greg Treat said he would not do.
'So we either have to do cut agencies to make up for that or we have to go pool from some type of state savings to make up for that number,' said Paxton on Thursday at the Oklahoma Press Association event.
However, Pro Tem Paxton pushed Thursday that he is not for reaching into savings to make up for it. He said though, that he is open to having a recurring income tax cut.
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'Yes, I do want a tax cut. I want it to be a permanent tax cut. But I also don't want to impact much if we can't find those cuts. We will have that discussion about how we do it. But it makes it difficult to justify because then if you don't do it, you've got to pull from savings. And I can't do that,' said Paxton.
On Thursday the Tax Commission presented the rough estimates going into the new year with the next fiscal year budget. The numbers showed that the Grocery Sales Tax cut and the Parental Choice Tax Credit were the big reasons revenue is projected to be under.
According to OTC estimates for an entire year, the Grocery Sales Tax cut would take out around $411 million from the revenue and the Parental Choice Tax Credit, which at its year cap is $250 million.
'I'm not going to say yes or no. Overall, what I'm going to say is to show me the money. Show me what we have and what our priorities are. What I hear from people is that they want a great education, they want good health, etc.,' said Senator Julia Kirt (D-Oklahoma City) who sits on the Senate Appropriations Committee.
'That's going to create, potentially can create a problem,' said Senator Chuck Hall (R-Perry) about being under $300 million and thinking about a potential state income tax cut.
'We're a balanced budget state. That number has to be balanced. And we either do that with agency cuts or finding revenues, or we balance some of that with some of the cash that we have. I'm not a fan of taking one-time dollars which we refer to as cash and using that to fund recurring expenses,' said Paxton.
Another issue Democrats and others have brought up is that Stitt's latest proposal seemingly gives more to those with higher incomes.
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'I think taking a half-percent out of everyone's income tax, that's mainly going to benefit the wealthy and I think that's been the governor's priority in the past. I think that's going to take a huge chunk out of what we need to do as a state,' said Senator Kirt.
During the Thursday Paxton availability, a man seemingly frustrated asked why tax cuts are so popular when there are other issues at hand. He mentioned roads in his county are degrading and deadly and needs to be taken care of.
'Is there a better way to do this instead of simply continuing to do tax cuts? Instead of improving our failing infrastructure that we have,' the man asked Pro Tem Paxton.
This follows many others who voiced concerns that the money could be used for improving education, health, etc.
'I share your concern about safe roads. I do want to see a tax cut, but I also want to see safe roads. We've got to hear what that balance is and how that works,' said Pro Tem Paxton.
Last year the conversation of potential income tax cuts was a divisive one. This year the Senate seems more open to discussing it further with Governor Stitt.
They have decided to extend this legislative session by over a week, spending this last week or so having open meetings surrounding the potential budget and appropriations.
News 4 reached out to Governor Stitt's office on Thursday for a response to the concerns surrounding the state expecting to be under $300 million in revenue. We did not hear back.
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