Governing is finding a way to say ‘yes’ to solving problems (Capitol Update)

Last week, Gov. Stitt opened the legislative session with his State of the State address as required by the Constitution. He also submitted his proposed state budget for Fiscal Year 2025, which begins on July 1, 2024. The governor’s budget, as he said in his speech, proposes a flat budget for the state agencies together with an income tax cut of .25 percent.

His budget estimates the income tax cut, which would take effect beginning January 1, 2025, would cause a $96.4 million reduction in state revenue for FY 2025. According to this estimate, the full-year revenue loss of the tax cut would be $192.8 million. 

However, the fiscal impact statement provided by the Oklahoma Tax Commission for the .25% income tax cut passed by Speaker Charles McCall in the recent special session showed an “unknown decrease in income tax collections expected to be between $284.1 million and $345 million” for FY 2025. So, the discrepancy of $91.3 million to $152.2 million in annualized revenue loss between the tax commission estimate and the governor’s budget should be reconciled.

The governor’s budget cites the State Equalization Board’s December estimate of a $418.2 million, or a 5.03% increase in new funding available for appropriation in the General Revenue Fund — the main fund from which the legislature appropriates to state agencies, including schools. So, if the agencies are to receive a flat budget, meaning no increases in funding, what does the governor propose for the $418.2 million? 

It’s difficult to answer that question precisely because the budget is not laid out in that manner. But, apparently, the only additional money the governor wants to spend is to pay for the estimated $96.4 million for the first half-year of his income tax cut. After that he calls for an $80.6 million appropriation to the Revenue Stabilization Fund, which is a cash “holding” account, simply a way of not appropriating the money all. Then, as best I can tell, he calls for “an ongoing surplus” of $286.3 million meaning it would be carried over as cash, likely in anticipation of future tax cut proposals.

In the meantime, legislators during appropriations hearings — or in private conversations in the hallways or in their offices — hear from state agencies anxious for funding to do their jobs and to provide services to Oklahomans. The governor’s budget would lead one to believe that Oklahoma has arrived, that we are near the top on measurements of quality of life. In fact, the opposite is true — from mental health to education to health care. 

Referring to programs for state services in his speech, the governor said “in politics, you are only criticized for saying no.” But governing is about finding a way to say “yes” to solving problems. Don’t be surprised if legislators consider the governor’s FY 2025 budget a political document rather than a governing budget.  


Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.