OKPOLICY.ORG
The State Board of Equalization met recently and certified $190 million less in revenue available for appropriation for Fiscal Year 2024, which begins this week on July 1. The state constitution requires the board to meet in June each year to increase or reduce the funding available for appropriation as the result of measures passed affecting the state’s revenue during the session just ended. Anticipating the loss of revenue, legislators have already taken this reduction in funding into account as they finalized the budget last month.
There were several measures passed that affected revenue in a small way, but the lion’s share of the anticipated revenue loss was caused by two bills. The first and most expensive is House Bill 1934, which created the Oklahoma Parental Choice Tax Credit Act. The Act provides a refundable tax credit for taxpayers who spend money either enrolling their children in eligible private schools or for eligible expenses homeschooling their children. The private school credit is capped in FY 2024 at $150 million and the homeschool credit is capped at an additional $5 million. The credit is forecast to reduce state revenues for FY 2024 by $132.9 million according to information provided to the board.
The other bill is HB 1039, which eliminates the state franchise tax. It is expected to reduce General Revenue Fund collections by $55.9 million in FY 2024, according to the information provided to the board. The franchise tax is a business tax on corporations and other business associations of $1.25 for each $1,000 in capital invested in the business in exchange for the right granted by the laws of Oklahoma to exist as such organization and enjoy, under the protection of the laws of the state, the powers, rights, privileges, and immunities derived from the state by reason of the form of such existence. Business interests have tried to repeal this tax for years, and they finally got it done this year. Very few Oklahomans will see a benefit from repealing this tax.
The name given to the Oklahoma Parental Choice Tax Credit Act is misleading. Parents in Oklahoma already have the choice to enroll their children in private schools or to homeschool their children, and a relatively small number of families already do so. HB 1934 rewards them handsomely with a tax credit for making that choice and, as the Board of Equalization recently certified, eliminates that funding from being available to the hundreds of thousands of taxpayers in the state who enroll their children in public schools.
It seems obvious why the “parental choice” tax credit got its name. Most people would agree that it’s a good thing for parents to have some choice about where their kids go to school. On the other hand, most people would oppose spending public tax money on private schools, which is exactly what HB 1934 does. Given the choice of where to spend $132.9 million in public tax money next year, few Oklahomans would likely choose to give it to a few families in the state, nearly all of whom already send their children to private school. Roads, bridges, public safety, childcare, mental health, or public education might come to mind first.
