Gov. Stitt, legislative leaders announce budget deal including tax cuts, tort reforms: What we know

Yahoo

14-05-2025

Gov. Kevin Stitt has joined Oklahoma legislative leaders in announcing a sweeping agreement on a nearly $12.6 billion state budget for the next fiscal year, one that features an income tax cut Stitt long has hoped for during his six-plus years in office.
The deal, which the governor said was designed to make Oklahoma more business friendly, will cut the state's highest income tax rate by a quarter of a percentage point, Stitt said. The agreement also covers tort reforms and the creation of specialized business courts, which have been a priority for Stitt.
"We're signaling to the world and the country that Oklahoma is open for business," Stitt said at a news conference Wednesday, May 14.
He was joined by House Speaker Kyle Hilbert, R-Bristow, and Senate Pro Tempore Lonnie Paxton, R-Tuttle, as well as other Republican lawmakers.
For years, Stitt has been a vocal advocate of reducing Oklahoma's income tax, which now stands at 4.75% for those earning more than $7,500. Before the current legislative session started, he rolled out his 'half and a path' plan to cut that tax by a half-percentage point and create a path toward a day when the state might completely eliminate income tax.
In a year when projections show state revenues would be slightly down, and with most executive agencies asking for funding increases – not to mention the uncertainties regarding the state Department of Mental Health and Substance Abuse Services, which has an estimated financial shortfall of about $27.4 million for the current fiscal year – it was thought a tax cut would be unlikely.
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But that changed in recent days. On May 7, Stitt posted a video on X praising 17 senators — all Republicans on the more conservative side of the 39-person GOP caucus in that chamber — who had pledged to support a tax cut. The next day, Paxton said a tax cut remained a possibility. The day after that, Sen. Brian Guthrie, R-Bixby, filed Senate Concurrent Resolution 11, expressing the intent to enact a 0.25 percentage point income tax cut.
While it's not the half-percentage point cut requested by Stitt, the governor seemed pleased with the deal, which he said gets Oklahoma closer to the tax rates of neighboring states.
"We compete in a regional and also a national market, and we have to stay up with our competition," he said.
According to an analysis by the Oklahoma Policy Institute, a Tulsa-based think tank, cutting income taxes by a quarter of a percentage point would reduce state revenues by $306 million. That analysis showed such a cut would save Oklahomans who make $79,700 or less between $9 and $95 annually, and would save those in the top 1% of incomes – making $683,500 or more – $2,936 annually.
The tax cut deal has landed a year after the Legislature approved, and Stitt signed, a bill that eliminated the state grocery tax.
Last year, thanks to a transparency initiative led by the Senate, most of the budget negotiations between House and Senate leaders – and sometimes the governor – were done in meetings that were open to the public. Paxton, however, has said those meetings often had a circus-like atmosphere, and didn't want to repeat that process this year.
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Instead, he promised that legislators would have ample time – multiple days, preferably – to consider any budget agreement before having to vote on it. The deal reached Wednesday seems to fit those parameters.
Paxton said at the news conference that he was focused during budget negotiations on making sure economic opportunities would be available to young Oklahomans.
"This budget gets us a long ways down the road to make sure that happens," he said.
Hilbert said he thought budget talks between the House, Senate and governor's office went as smooth as he had seen in his seven years being involved in the process.
"We've figured out ways without being disagreeable and really move the state forward," he said.
As Republican legislative leaders touted their collaborative efforts to reach a budget deal, Senate Minority Leader Julie Kirt, D-Oklahoma City, said Democrats in her caucus were left out of final discussions.
'We did not get details about this budget before this announcement was made,' Kirt said during a news conference following Stitt's announcement. 'We actually still don't have details because nothing was handed out.'
While she was awaiting full details on the budget, Kirt said what her caucus had seen so far leads her to believe it doesn't go far enough to address key issues for Oklahomans.
'It's not focused on working families,' she said. 'It's not about solving the real problems that we have for our public schools, and then we don't hear solutions around health care and mental health care and people having the access they need to those things.'
(This story was updated to add new information.)
This article originally appeared on Oklahoman: Stitt, Oklahoma lawmakers reach budget deal with income tax cut, more