Weekly Wonk: IRS-ICE agreement breaks public trust | State budget deal announced | This is a bad time for a tax cut | Capitol Update

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This Week from OK Policy

IRS-ICE tax data deal betrays public trust and endangers immigrants (Commentary): Contrary to popular rhetoric, undocumented immigrants pay billions of dollars in federal, state, and local taxes. Nearly three decades ago, the Internal Revenue Service created the Individual Taxpayer Identification Number so individuals ineligible for a Social Security Number could comply with U.S. tax law. This system was built on trust — immigrants were told their personal information would remain protected. Now, the Trump administration is moving to weaponize that trust by using the IRS to target immigrants who followed the law. [Gabriela Ramirez-Perez / OK Policy]

OK Policy Statement on FY 26 Budget Process and Proposed Tax Cuts: While the governor says he wants to make Oklahoma more “pro-business,” his rhetoric doesn’t match what business leaders call for. Instead of investing in these areas, this proposal includes poorly designed tax cuts that will strip hundreds of millions from state revenue — making it even harder to deliver on the basics Oklahomans expect. [OK Policy]

A bad time for a tax cut (Commentary):  I’ve seen 12 Oklahoma legislative sessions, and I am at this point pretty well accustomed to the mounting drama at 23rd and Lincoln as sine die draws near. However, this spring has been even wilder than usual. Topped off by Wednesday’s surprise announcement that the governor and legislative leaders had, behind closed doors, struck a deal with both an immediate tax cut and a triggered tax cut. [Carly Putnam / OK Policy]

Policy Matters: The high cost of Oklahoma’s tax cuts: Many Oklahoma lawmakers love to talk about fiscal responsibility. They say they’re safeguarding taxpayer dollars, reining in government spending, and making wise, disciplined choices for the future. But look beyond the press releases and soundbites, and you’ll see their actions tell a different story — one that shifts responsibility to future generations while ignoring the real needs of today. [Shiloh Kantz / The Journal Record]

Building better paths: Oklahoma pilots new domestic violence reform (Capitol Update): A lot of good things happen in state government that most of us citizens have never heard about. We tend to hear about some bill being introduced in the legislature that we think (or know) is downright stupid or the governor taking some action we think (or know) is crazy, and we become cynical. [Steve Lewis / Capitol Update]

OK Policy in the News

Gov. Stitt, legislative leaders announce budget deal including tax cuts, tort reforms: What we know: According to an analysis by the Oklahoma Policy Institute, a nonpartisan Tulsa-based think tank, cutting income taxes by a quarter of a percentage point would reduce state revenues by $306 million annually. That analysis showed such a cut would save Oklahomans who make $79,700 or less between $9 and $95 annually, and would save those in the top 1% of incomes — making $683,500 or more — $2,936 annually. [The Oklahoman]

  • Republican legislators announce state budget deal, democrats respond [News 9]

Stitt Vetoes Bill That Would Have Slowed Eviction Process: A measure that would have slowed Oklahoma’s eviction process and given struggling tenants five additional days to avoid being pushed out of their homes cleared both Houses of the Oklahoma Legislature. Then Gov. Kevin Stitt vetoed it. [Oklahoma Watch]

Oklahoma Hispanic Day at the Capitol realigns with its celebratory mission amidst immigration enforcement rollout: Rep. Alonso-Sandoval took various opportunities throughout the day to recite statistics proving Latinos are an essential piston in the state’s economic engine. Citing data he collected from the state and studies by the center-left think tank The Oklahoma Policy Institute, he pointed out immigrants, not just Latinos, make up 7.9% of the state’s entire workforce. That’s around 151,000 workers, the data shows. [KOSU]

For the first time since the 80s, the Census Bureau won’t conduct the biennial American Housing Survey this year: This year, the US Department of Housing and Urban Development won’t fund a biennial Census Bureau survey on the nation’s housing stock, disrupting more than 50 years of data collection and breaking a decades-old federal law. Anthony Flores, research director for the Oklahoma Policy Institute, said the nonprofit uses the survey to determine which communities in the state have housing shortages, high costs or poor conditions. [Streetlight]

Sewage Happens: Twice-Neglected Section 8 Tenants Live in Squalor: Recent legislative efforts to address Oklahoma’s housing crisis are a mixed bag, according to a recent article by Sabine Brown of the Oklahoma Policy Institute. On the one hand, valiant efforts to extend eviction timelines and create a workforce housing commission offer the potential for systemic change. On the other hand, Oklahoma remains one of just six states that do not protect tenants against retaliatory actions by landlords, and legislators have failed to address the state’s exponentially rising homelessness problem. [Oklahoma Watch]

Weekly What’s That

JCAB (Joint Committee on Appropriations and Budget)

JCAB (Joint Committee on Appropriations and Budget) is a committee governed by separate rules from most legislative committees. It is typically used as a way for House and Senate leadership to introduce and approve new bills in the final weeks of the legislative session.

The committee, which is co-chaired by the Chairs of the House and Senate Appropriations committees, is not subject to regular legislative deadlines. Only bills authored by the Appropriations Chairs or by the House Speaker and Senate President Pro Tem can be referred to JCAB. House and Senate JCAB can meet together, but most often meet separately. Most appropriation bills are assigned to JCAB, but substantive bills can also be heard. Bills are required to have a fiscal impact statement to pass out of JCAB. Bills that pass out of JCAB are placed on a separate Joint Calendar to be heard by their full chambers for Third and Final Reading.

Look up more key terms to understand Oklahoma politics and government here.

Quote of the Week

“It’s not focused on working families. It’s not about solving the real problems that we have for our public schools, and then we don’t hear solutions around health care and mental health care and people having the access they need to those things.”

– Oklahoma Senate Minority Leader Julia Kirt responded to Governor Kevin Stitt’s newly unveiled $12.6 billion budget proposal for fiscal year 2026, criticizing it for prioritizing tax cuts and corporate giveaways while providing little meaningful support for everyday Oklahomans. [The Oklahoman]

Op-Ed of the Week

Opinion: Oklahoma’s leaders chase another bad tax dream

They just can’t help themselves.

Despite a sputtering economy, slowing tax revenues and unprecedented uncertainty about federal funding, Oklahoma’s legislative leaders are hellbent on cutting the state income tax.

Old dreams die hard? Perhaps. After all, generations of Republicans were raised on the supposed genius of Supply-Side economics – the theory that slashing state revenues actually increases them … to overflowing.

Except, of course, it doesn’t.

Less than a decade ago, a series of state income tax cuts left Oklahoma in fiscal crisis when the economy soured – something that happens periodically in an economy overly-dependent on two industries: agriculture and oil/gas.

Things got so bad, in fact, the GOP-controlled statehouse presided over a statewide teacher walkout that helped produce the once-unthinkable: a legislative supermajority (required by State Question 640) hiked gross production taxes to get the state out of the red.

Alas, in the age of term limits, few lawmakers who endured the political pain of displeasing Harold Hamm and other carbon barons are around to warn the current crop against the tax-cutting folly. So, off go Gov. , House Speaker Kyle Hilbert and Senate President Pro Tem Lonnie Paxton, positioning Oklahoma on the edge of the fiscal cliff again by moving to cut the state’s largest single revenue source, the income tax … which also happens to be the state’s fairest tax, because it’s based on ability to pay.

There’s no reason to think the Legislature‘s Republican supermajority won’t fall in line on the tax cut – from 4.75% to 4.5% – which sets in motion additional future cuts if the state hits certain targets. And there’ll be all sorts of cheering in the session’s final hours about how meaningful the cuts are to Sooners of modest means.

The reality: A Senate analysis suggests a family of four with an income of $50,000 would save about $137 a year – the equivalent of two McDonald’s Happy Meals a month. OKPolicy concludes Oklahomans earning less than $79,700 a year would save between $9 and $95 annually in taxes.

So, if the quarter percentage point cut reduces state revenues by $306 million, who’s cashing in? Not surprisingly, it’s the state’s highest income earners: the top 1% will save $2,936 annually, according to OKPolicy.

That’s chicken feed for anyone earning $683,500 or more annually. But $306 million in lost revenue is serious coin when considering Oklahoma’s bottom-of-the-barrel investments in vital services translate into abysmal socioeconomic rankings in things like public education and public health.

This isn’t lost on state business leaders, by the way – only 18% support using state savings for tax cuts, according to an annual State Chamber survey. How should the money be spent? Business leaders are clear: investments in education, health and infrastructure.

What makes prioritizing an income tax cut even more preposterous is that Oklahoma already is a low tax state … which is one of the reasons it ranks so poorly in so many of the aforementioned categories.

How l-o-w? A recent WalletHub analysis found Oklahoma with the nation’s 42nd lowest tax burden – just 7% – which translates into about 2% on income tax and 3.6% on sales and excise taxes.

Still, some of the state’s uber-conservative fat cats, including the governor, insist eliminating the state income tax is Oklahoma’s best path forward. It’s the old we-must-be-more-like-Texas canard.

It’s true Texas doesn’t have a state income tax, but that doesn’t mean Texans are getting off easier: They pay significantly higher property and sales/excise taxes. According to WalletHub, Sooners pay $1,520 annually on homes priced at the median state value, compared with Texans’ $4,111.

Truth is, cutting the state income tax is a fool’s errand. It will cost lawmakers and taxpayers alike … eventually.

[Arnold Hamilton / The Journal Record]

Numbers of the Week

  • 1 in 5 – Only five of the 148 current legislators in the House and Senate were in office in 2014 when the state last implemented a triggered cut to the state’s income tax; only 27 current members – fewer than 1 in 5 – were in office when lawmakers overturned the last tax trigger because of the enormous financial problems it created. [OK Policy]

  • 88 – A worker in Oklahoma earning minimum wage ($7.25 per hour) would need to work 88 hours per week to afford a modest one-bedroom rental at Fair Market Rate in the state. [National Low Income Housing Coalition]

  • $313 billion – Estimated federal income and payroll tax losses over the next decade if tax compliance drops due to fear from the Internal Revenue Service’s agreement with Immigration and Customs Enforcement to allow immigration officials to use tax data to confirm the names and addresses of people suspected of being in the United States illegally. [The Budget Lab]

  • $338 million – A 0.25% cut to the state’s income tax rate is expected to cost about $338 million annually, more than twice what the governor said during Wednesday’s press conference. [OK Policy]

  • 24.8% – Share of women in Oklahoma of childbearing age who had Medicaid (SoonerCare) coverage. Oklahoma had the 16th highest rate in the nation and was above the national share, which was 23.3%. [Georgetown Center for Children and Families]

What We’re Reading

ABOUT THE AUTHOR

Annie Taylor joined OK Policy as a Digital Communications Associate/Storybanker in April 2022. She studied journalism and mass communication at the University of Oklahoma, and was a member of the Native American Journalists Association. She earned her bachelor’s degree in Strategic Communications from the University of Central Oklahoma. While pursuing her degree, she worked in restaurant and retail management, as well as freelance copywriting and digital content production. Annie is an enrolled member of the Choctaw Nation, and holds a deep reverence for storytelling in the digital age. She was born and raised in southeast Oklahoma, and now lives in Oklahoma City with her dog, Melvin.