OKPOLICY.ORG
The governor and some legislators have been itching to pass a tax cut for a while now. They finally were able to scratch the itch last Tuesday when the Senate passed House Bill 1955 eliminating the state sales tax on groceries by a vote of 42-2. The bill had lain dormant since last year when the House passed it by a vote of 88-7. It is scheduled to go into effect sometime in September, ninety days after the sine die adjournment of the legislature.
The bill is estimated to cost about $312 million in revenue Fiscal Year 2025 (which starts on July 1, 2024) and $418 million when fully implemented in FY 2026. In answer to a question by Sen. Roger Thompson, R-Okemah, whether passage of the bill would mean mostly flat budgets for state agencies, Senate President Pro Tempore Greg Treat, R-Oklahoma City, acknowledged that yes, the loss of revenue “eats up the vast majority of new recurring revenue going forward.”
After the State Board of Equalization had certified an increase in revenue of about $455 million over last year’s appropriation certification, state agencies had hoped their requests for additional funding could be met by the legislature.
For example, the Regents for Higher Education asked for an increase of about $122.3 million, which included $71 million for institutional excellence and student success initiatives, $41.5 million for critical workforce development, including a health care workforce development program, adult degree completion initiative, and STEM-related degrees, $8.5 million for the Inspire to Teach program, and $1 million for the current enrollment waiver program.
The Board of Career Tech had requested about $37 million additional funding, including $10.5 million for health careers for growth in 28 health care programs and the addition of 19 programs; $8.1 million for construction trades, including growth in 21 programs and the addition of 17 programs; $7.6 million for manufacturing, including growth in 21 programs and the addition of 17 programs; and $10.8 million for the addition of 37 other new programs. Career Tech had a waiting list of about 7,500 students last year.
A spattering of other increase requests were: the District Attorney’s Council, $4.3 million for recruitment and retention of assistant district attorneys; the Attorney General’s Office, $4 million to combat organized crime; $2 million to fund the pharmacy benefit manager unit passed by the legislature, $2.5 million for combating human trafficking required by a bill passed previously, $1.5 million to fight cybercrime including identity theft, data breaches and other scams; and the Office of Juvenile Affairs, $4 million for Youth Services Agencies for prevention services and $2.5 million for juvenile detention facilities and $3.5 million for OJA group homes.
Some of these and the other millions in agency requests may be called aspirational, an effort to create a better Oklahoma future. Others are to catch up for previous needs the state has been unable to meet. But even those requests considered aspirational are to meet real needs that, going unmet will move the state further backward.
Oklahoma has been able to make progress in the past couple of years in a good economy and with federal help. But it seems that two steps forward call for one step back. Legislators decided to take a break for this year and cut taxes while they can. Not paying taxes on groceries will feel good. But some of the state’s urgent unmet needs will go unmet for another year while this year’s aspirational requests will become a future unmet need.
Finally, after being a rallying cry by politicians of all stripes for decades, the sales tax on groceries issue is off the table. Eliminating the income tax may be right around the corner.
