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What’s up this week at Oklahoma Policy Institute? The Weekly Wonk shares our most recent publications and other resources to help you stay informed about Oklahoma. Numbers of the Day and Policy Notes are from our daily news briefing, In The Know. Click here to subscribe to In The Know.
This Week from OK Policy
FACT CHECK: How would governor’s proposal to cut, eliminate personal income tax affect Oklahoma?: Gov. Stitt has proposed a 0.5% cut to the state’s individual income tax rate. This income tax cut would be his first proposed step to eventually eliminate the state’s personal income tax, which he calls a “path to zero.” The Institute on Taxation and Economic Policy has estimated how much this would cut taxes for Oklahomans by income level, and the results show that the proposed cut would would provide little relief to everyday Oklahomans who need it most. [OK Policy]
Statement: Facts and figures on federal grant dollars in Oklahoma (2024): The Trump administration announced on Jan. 27, 2025, that it would temporarily pause federal grant, loan, and other financial assistance programs. This would have enormous ripple effects in Oklahoma and elsewhere. A federal judge the following day temporarily blocked the policy. Here is an overview of how Oklahoma relies on federal grant dollars for programs and services that impact millions of Oklahomans. [OK Policy]
Policy Matters: We must stay engaged this legislative session: The Oklahoma legislative session kicks off Monday. And if you’re anything like me, you’re already bracing yourself for a four-month rollercoaster ride. Especially as we’ve seen too many lawmakers and state officials prioritize headline-grabbing, hot-button issues instead of tackling the challenges that actually affect everyday Oklahomans and their families. But here’s the truth: this is the moment when we need to stay engaged, not check out. [Shiloh Kantz / The Journal Record]
Lawmakers weighing agency needs, budget cuts, and $4.6 billion in state savings (Capitol Update): As the 2025 legislative session approaches, the appropriations and budget subcommittees continue to hear Fiscal Year 2026 budget requests from state agencies. Most of the agencies are asking for modest budget increases. Members and legislative leadership have some important decisions to make about how to move forward in a year when budget projections are down. [Steve Lewis / Capitol Update]
OK Policy in the News
Oklahoma Policy Institute measures impact of federal aid freeze: Amidst confusion over President Donald Trump’s unexpected move to freeze federal aid for grant and loan programs, Oklahoma Policy Institute released information measuring just how much the conservative state relies on federal funding for core services. [The Black Wall Street Times]
Oklahoma Governor’s Office disagrees with projections of tax cut impacts: An income tax cut heralded by the governor will cost state coffers hundreds of million less than an independent projection indicated, the Governor’s Office said Thursday. [Oklahoma Voice]
- From OK Policy: “OK Policy has high confidence in the revenue cost estimates that we shared. The governor’s office has typically shared more optimistic projections because that’s the nature of trying to sell something.”
Oklahoma governor plans to push Legislature to pass additional $660 million in tax cuts: Cutting the personal income tax cut by half a percent is expected to cost $660 million, according to David Hamby of the Oklahoma Policy Institute, a Tulsa-based think tank. Losing $660 million in revenue is equal to about 5% of the appropriations for the current fiscal year and more than the state allocated to the Department of Corrections this year. [Oklahoma Voice]
Stitt renews call for income tax cut, wants Legislature to eventually eliminate it: The Oklahoma Policy Institute said that based on modeling from the national Institute on Taxation and Economic Policy, the lowest 20% of Oklahoma households (those making up to $24,700) would get back about $15 from such a tax cut, the middle 20% (households earning between $46,300 to $79,700) would get back about $180, and the highest 1% (making $683,500 and above) would get back about $5,860. [The Oklahoman]
Weekly What’s That
The individual income tax is Oklahoma’s largest single revenue source for state government. Oklahoma first levied an income tax in 1915. The top income tax rate has been cut repeatedly since the late 1990s, and most recently was lowered to 4.75 percent as of 2022. Oklahoma has a graduated income tax, with multiple tax brackets; however, the top rate applies to all taxable income above just $7,200 for an individual or $12,200 for a married couple filing jointly or single head of household. Numerous deductions and credits can reduce state taxable income, including the standard deduction, personal exemption, earned income tax credit, child tax credit, and others.
The individual income tax is paid to the state in annual or quarterly payments or in withholdings from wages and other payments. Taxpayers file a return in April to settle the tax liability or credit for the previous year.
As of FY 2025, the lion’s share of individual income tax collections (85.41 percent) are apportioned to the General Revenue Fund, with the remainder divided between the 1017 Fund (8.34 percent), the Teachers’ Retirement Fund (5.25 percent) and the Ad Valorem Reimbursement Fund (1.00 percent).
Individual income tax collections totaled $4.511 billion in FY 2024.
Look up more key terms to understand Oklahoma politics and government here.
Quote of the Week
“Local governments must maintain the freedom to tackle homelessness in their communities. As most municipal funding comes from local sales tax, how those funds are used should also remain under local jurisdiction. Now is not the time to limit cities’ abilities to manage local issues by restricting control over resources.”
– Four Tulsa city councilors, writing about a proposed bill, SB 484, which prohibits communities, other than Oklahoma City and Tulsa, from providing programs or services to unhoused people. They urged exploration into other avenues to address housing shortages and homelessness. [Tulsa World]
Editorial of the Week
Editorial: Oklahoma lawmakers ought to prioritize people over savings accounts
Oklahoma lawmakers enter the legislative session Monday in a good position financially. Buoyed by higher revenue the past few years, federal emergency aid and largely flat budgets, the state has a record of savings, with at least $5 billion in various accounts.
While impressive sounding, not all is well with the level of services Oklahoma delivers. Salaries of state employees ranging from prosecutors and prison guards to teachers and social workers haven’t kept pace. Infrastructure remains lagging; child care is out-of-reach for many; and public education ranks 49th in per pupil expenditure — just to give a few examples.
Plus, revenue is expected to be slightly lower this year due to the elimination of the state grocery sales tax ($400 million) and implementation of private school voucher tax credits, costing $200 million this year and ramping up to $250 million next year.
Now is not the time for further tax cuts. If anything, now is the time to look at allocating some of that savings to shore up the failings and gaps in services.
Numbers of the Week
- 17.6% – The number of individuals in Oklahoma experiencing homelessness increased 17.6% in 2024 when compared to 2023. [The 2024 Annual Homelessness Assessment Report (AHAR) to Congress]
- 1 in 6 – The Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) is the nation’s most important anti-hunger program, reaching some 686,800 Oklahoma residents, or 17% of the state population (1 in 6). [Center on Budget and Policy Priorities]
- $14.269 billion – Oklahoma in 2024 received about $14.269 billion in federal grants that supported programs and services statewide, including child care, transportation, law enforcement, housing, food security, health care, and much more. [Federal Funds Information for States via OK Policy] | [Download: Spreadsheet providing overview of federal programs and services that received federal dollars in 2024]
- 42.8% – Oklahoma received 42.8%, or $14.5 billion, of its total revenue from federal grants in fiscal year 2022. Oklahoma was one of 30 states during the same period with a higher share of federal funds when compared to the prior year. [Pew Charitable Trusts]
- $68.8 billion – In 2022, Oklahoma received $68.8 billion in federal funding to support essential programs, services, and projects in the state. [Rockefeller Institute of Government via OK Policy]
What We’re Reading
- Gag order at health agencies a looming public health crisis: The Trump administration has told federal health agencies to stop communicating with the public for an undisclosed amount of time. The National Institutes of Health, the Centers for Disease Control and Prevention, the Food and Drug Administration, and the Health and Human Services Department were among those targeted by the blackout, which prevents sharing “health advisories, weekly scientific reports, updates to websites and social media posts.” This will impact agencies’ ability to share information with health care providers, send alerts on virus outbreaks, issue mortality reports, and more. [Freedom of the Press Foundation]
- Work requirements for safety net programs like SNAP and Medicaid: A punitive solution that solves no real problem: Proponents claim that adding more work requirements for programs like food stamps (SNAP) and Medicaid will lead to higher levels of employment among low-income adults. But EPI’s research shows that this will not address the underlying challenges these adults face in seeking employment. Such requirements will only curb access to food and health care for many benefit recipients. [Economic Policy Institute]
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Federal Grant Freeze Could Impact Tribal Programs, Treaty Obligations: The Office of Management and Budget on Tuesday directed all federal agencies to temporarily pause their grant, loan and financial assistance programs, a move that could affect tribal nations receiving billions in federal funding for economic development, housing, infrastructure, and other initiatives. While the memo states Medicare and Social Security benefits are exempt from the freeze, there’s no explicit exemption for funding tied to treaty obligations or federal trust responsibilities to tribes. [Native News Online]
- Statement from Native American Rights Fund: Tribal Nations disproportionately affected by federal funding freeze
- Lawmakers Face Budget Crunches, Tough Decisions to Close Expected Shortfalls: After two years of relative stability, 2025 marks an inflection point for many state budgets. Although tax revenue has declined nationwide since the record highs of 2021 and 2022, most states had large surpluses and leftover federal aid that helped lawmakers pass budgets with a minimum of fuss in 2023 and 2024. Now, however, lawmakers face tougher budget decisions as the post-pandemic transition period ends. [Pew Charitable Trusts]
- President Trump, Congressional Republican Proposals Would Shift Large Costs to States, Inflict Widespread Harm: Given the sheer scope of federal support for states, along with the fact that states’ own revenue collections have increasingly shown signs of strain, policymakers at the state and local level are highly unlikely to backfill all the federal funding lost. That would mean reductions in critical services and states likely choosing to cut other areas in order to find the resources to replace some of the lost funding. [Center on Budget and Policy Priorities]
