Those listening have heard Gov. Kevin Stitt repeat his mantra “the people of Oklahoma elected me to lay a fresh set of eyes on state government.” The implication is the people were looking for someone with new ideas. His latest “new idea” is to gradually eliminate the state income tax, the largest source of state revenues.
The governor must not have noticed in 2012 when his predecessor, former Governor Mary Fallin, in her second year in office proposed the same thing—gradually eliminating the state’s income tax. Her proposal would begin cutting income taxes for Oklahomans in all tax brackets, Fallin said in her state of the state address. If enacted, the reform was set to begin in January 2013. “It will give Oklahoma the lowest tax rate in our region, besides Texas, making us a more competitive state for job creation and retention,” Fallin said. “And over time, our income taxes would be phased out for every Oklahoman.”
The legislature adjourned in 2012 without phasing out the state income tax, although income taxes were later reduced. Since then, Oklahoma has suffered revenue failures in fiscal years 2016, 2017, 2018 and 2020. Some seasoned legislators remember those years and hope to avoid crippling budget meltdowns in the future. They know there are very few “new ideas,” only good ideas and bad ideas.
With the help of COVID and other federal funds and high oil prices, the state has enjoyed billions in increased funds in the past three years. Despite years of agency budget cuts, robbing various state revolving funds to cobble together state budgets, and revenue failures, the legislature recently has been able to respond to some needs in education and to fund what they hope to be transformational projects in economic development, workforce development and broadband expansion. But many state services have not recovered from past budget crises.
There will likely be no significant new federal funds, and Oklahoma’s oil economy is subject to periodic, lengthy downturns. With the governor pressing loudly for tax cuts, it’s difficult for legislators to make deliberate decisions. But they seem determined to try. President Pro Tempore Greg Treat, R-OKC, has asked the governor to explain his plan for cutting taxes, but the governor has yet to respond. According to news reports the governor says, “my job is to call a special session and explain to Oklahomans how much excess money we have.” Pretty simple.