Lawmakers’ FY 2027 state spending decisions did not put Oklahomans first

The legislative session ended early this year with a budget that was released April 1, 2026. Leadership touted this highly unusual early release of the state’s general appropriations bill (Senate Bill 1177) as a feat of transparency. However, simply releasing a budget early to vote on it within 24 hours after its release is not a transparent process. 

Tax policy and the state budget are closely tied: if lawmakers implement sweeping tax cuts without other revenue raising strategies, the budget can’t keep up. Following more than two decades of this strategy, today’s state budget is actually less than it was 25 years ago when adjusted for rising inflation and population growth. As a result, public budgets begin to tighten, which creates scarcity.  

How lawmakers choose to spend those taxpayer dollars via the state budget indicates their priorities. This session, lawmakers made their priorities clear: rather than adequately investing in education or healthcare, lawmakers chose to spend large sums of money on priorities that were less impactful but more politically popular. All the while, they are trying to severely restrict local revenue generation while simultaneously lacking sufficient revenue to meet the needs of everyday Oklahomans.

Proposed property tax ‘reform’ (SQ 847) will hurt communities, fail to deliver relief to homeowners

Property taxes are one of the core revenue sources for local governments, public schools, and critical public safety services. Yet, lawmakers successfully passed Senate Joint Resolution 39 to put a referendum – State Question 847 – to cut local funding by millions of dollars. Voters will decide this question during the Nov. 3 general election.

SQ 847 aims to severely restrict future revenue growth from property taxes and limits the funds cities, schools, counties, and emergency management services can collect. SQ 847 proposes two changes: reducing assessment caps, and creating a tiered assessment cap system for seniors. 

Assessment caps, introduced in 1996, are intended to protect homeowners from rapidly rising property taxes. These caps limit how much the assessed value of your home and land can increase each year. For example, in a given year, your home’s market value could hypothetically increase 10 percent. With Oklahoma’s current assessment caps, the assessed value of your house — used to determine your property tax — can only grow by a maximum of 3 percent year over year. This provides protection for homeowners while ensuring local services and public schools continue to receive necessary revenue that keeps up with inflation. SQ 847 would reduce the assessment caps from 3 to 1.75 percent for homesteads and agricultural land, and it would reduce the cap from 5 to 4 percent for all other property. This change alone is estimated to cut $42 million of local revenue in the first year, going up to $575 million by year ten compared to current law.

SQ 847 proposed changes to assessment caps – a constitutional protection

The second change SQ 847 proposes is to create a tiered system of assessment caps for seniors. This system proposes that as a senior’s household income decreases, their assessment cap also decreases until the senior freeze qualifications are met. (See the table below for details). The fiscal impact for this proposed change is uncertain. This is because county assessor’s offices do not collect homeowners’ age or income information, so accurate modeling would be impossible. This uncertainty makes it difficult for local services to prepare their budgets for the changes.

SQ 847 proposed changes to assessment caps for senior homeowners
(Current law highlighted in orange)

SQ 847 does not deliver relief to homeowners and could even increase annual property tax bill

People’s property taxes won’t go down under SQ 847. Seniors already eligible for the senior freeze won’t see any benefit. Instead, property taxes could increase across the board, including for seniors with the freeze. 

Even if a senior’s home’s assessed value was frozen, the amount that homeowners pay each year could still go up. This is because the freeze only stops the taxable value from rising. It does not freeze the tax rate. Local governments can still raise tax rates on all homes, including those with a senior freeze, if they need more money to pay off existing bonds. So, SQ 847 could be counterproductive to the intent of lowering property taxes and could, in fact, increase property tax bills across the board. 

These increases would happen if sufficient revenue is not collected to pay off existing bonds. Municipal and school bond measures voted on by the public are used to fund large infrastructure projects over the course of 10-20 years. The bond amount is based on projected growth of property tax revenue in the long term at the time of the bond issuance. Since SQ 847 reduces future property tax revenue, local officials could be forced to raise the levy rate to ensure sufficient revenue is collected to pay off the bonds. 

When city and county governments collect less revenue, public services suffer

Local entities will collect less money (compared to current law) to fund public services. This means slower ambulance response times, fewer dollars for public school operations, and fewer opportunities available at career techs across the state. In some counties, it may mean funding shortfalls for local law enforcement and county libraries. The impact on rural Oklahoma will be significant, as rural areas are already under-resourced.   

Compounding costs in the long-term, harmful for economic development 

The fiscal impact of this legislation compounds, with the assessment cap reduction alone costing communities across Oklahoma $42 million in year one, growing to $575 million in year ten. This restriction puts revenue growth for essential services below the rate of inflation, currently around 3 percent, while not addressing the root causes of housing unaffordability. Most concerning, however, is how SQ 847 may impact future bonding capacity. If insufficient revenue leads to a school or municipality failing to make a bond payment on time, the local entity’s bond rating could drop and negatively impact future bonding capacity. A reduction in the tax base, which is a criterion used to determine municipal credit ratings, can also reduce future bonding capacity. Limited bonding capacity reduces the bond size, which means fewer infrastructure projects and less economic development. 

SQ 847 will limit local communities’ ability to invest in public schools and essential local services, especially in rural areas. SQ 847 follows the triggered income tax cuts passed in the 2025 legislative session. When the trigger’s economic conditions are met, the income tax – Oklahoma’s largest revenue source – will gradually be eliminated. These two pieces of legislation alone – 2025’s pending income tax cuts and the property tax cuts in SJR 39 (SQ 847) would set in motion guarantees the state will be unable to deliver on basic functions of government.

Appropriations indicate Legislature’s misaligned priorities 

This session, the legislature chose to stash away tax dollars, now and in the future, rather than use available state revenue to address the urgent needs of Oklahomans struggling to stay afloat in an unaffordable economy.

The legislature passed House Bill 4072 which invests $200 million in a sovereign wealth fund –  known as the “Taxpayer Endowment Trust Fund” – by transferring money out of the Revenue Stabilization Fund. This new fund will be managed by the Invest in Oklahoma Board, which came under scrutiny this spring for questionable contracting decisions. The Revenue Stabilization Fund was created in 2016 to protect the state budget from shortfalls caused by the volatility of the gross production tax revenue.

The motivation to create the sovereign wealth fund is to have an investment fund, the proceeds of which would be intended to supplement the state budget. The statute does outline guidelines for withdrawals, including amounts and timeframes. The governor and lawmakers have said this would be a next step in their efforts to completely eliminate state income taxes. Lawmakers last year passed a provision that outlined eventual elimination of the state income tax using automatic tax cuts, which have a history of causing budget shortfalls while benefiting corporations, and the extremely wealthy. 

Typically, the State of Oklahoma has created savings funds with strict guidance on when and how the money can be used. However, in the case of the new sovereign wealth fund, these guidelines are lacking. Future legislators could use this money for any purpose, including corporate incentives or “economic development” projects — far from the original  intended purpose. 

Lawmakers also decided to increase the annual funding for the Parental Choice Tax Credit (private school voucher program) from $250 million to $275 million. This program uses public taxpayer dollars to help largely rich families afford private school for children already enrolled in private schools, while public schools remain inadequately funded.

Both of these decisions shed light on what lawmakers prioritize: stashing taxpayer money away for the future when current needs remain unmet. Further, it uses taxpayer dollars for private schools while ignoring the pressing needs of public education in Oklahoma.

Oklahoma’s state budget continues underfunding core services, eroding quality of life

When adjusted for inflation and population growth, the state’s budget is not keeping up with the needs of Oklahomans, especially in education and healthcare.

The legislature made some good investments in education this year, including teacher raises and targeted literacy programs. However, lawmakers left unaddressed other structural issues in Oklahoma’s education system: 

• Over the last decade, the amount of emergency, alternative, and adjunct certified teachers has doubled from 11 percent in 2016 to 23 percent in 2025. 
• The teacher retention rate in Oklahoma has progressively decreased with time, showing that long-term retention is an issue. Last year, 11 percent of teachers left the school system entirely. The type of teacher certification can impact retention, with traditionally certified educators having the highest retention rates.
• School funding equity in Oklahoma continues to be an issue. School districts with high poverty and higher numbers of students learning English as a second language get less funding per pupil compared to other school districts. These school districts require — but are not receiving — more monetary investment to meet the needs of these students. These disparities are caused by differences in local school funding through property taxes. The state is partly responsible for addressing funding inequities, but the state is not allocating enough money to ensure every student’s needs are met.

When it comes to making investments in education, some lawmakers point to the $358 increase— adjusted for inflation — in per-pupil funding from 2005 to 2025 as a sign of great investment. However, this is not the only important indicator. The increased reliance on emergency and alternative teacher certifications, low teacher retention, and stark differences in school funding equity are other metrics that showcase the inadequacy of the state’s educational system. 

Similarly, healthcare did not see the needed investment from the state:

• The Oklahoma Health Care Authority (OHCA) only received $185 million of the $345.2 million they requested for the SoonerCare (Medicaid) program. OHCA stated this funding was required to simply maintain the existing services, not extend the program. 
• As of January 2026, 20 rural hospitals are at immediate risk of closure. Expected Medicaid coverage losses for the Medicaid expansion population will only make the rural healthcare crises worse, as hospitals working on razor-thin margins lose more revenue. 
• New, harmful federal red tape will require more resources for SoonerCare administration, from more frequent eligibility verification checks to implementing work reporting requirements. In March 2026, OHCA reported having insufficient funding, time, and capacity to implement new work reporting requirements and possibly turning to untested AI solutions in lieu of sufficient resources. 

The state cannot afford to continue underfunding core services like healthcare and education. Key investments in these areas are needed and possible if lawmakers choose to prioritize these issues.  

Sustained investments help Oklahoma succeed, not tax cuts

Ultimately, this legislative session revealed a troubling disconnect between state leaders’ priorities and the everyday realities facing Oklahomans. Instead of using the state’s fiscal position to strengthen public education, stabilize healthcare systems, and invest in our people, most lawmakers chose to prioritize tax cuts, private school subsidies largely benefiting top earners, and long-term savings mechanisms with little accountability or immediate public benefit.

Budgets are moral documents that clearly demonstrate what leaders prioritize and value. This year’s budget made clear that the legislature is willing to sacrifice investments in working families, public services, and community well-being in pursuit of shrinking government revenue. The consequences of similar choices made in the last decade are visible now. Oklahoma’s future depends on the legislature’s willingness to make sustained investments in the people and communities that keep the state strong.