It’s reassuring to hear Oklahoma’s top legislative budget leaders say they plan to go slow on more tax cuts.
Last week, House Appropriations and Budget Committee Chairman Kevin Wallace, R-Wellston, and Senate Appropriations Committee Chairman Roger Thompson, R-Okemah, spoke to the Tulsa Regional Chamber about their reservations on reducing more revenue.
Oklahoma last year lowered the corporate income tax from 6% to 4% and the individual income tax by a quarter point. It is expected to be a loss of about $340 million.
The expectation is that would be recouped with a more vibrant economy. But considering the rates went into effect Jan. 1, the state won’t have a clear view of that happening until next year.
Instead of waiting, lawmakers have been on a tax-cutting bender this session passing proposals that would slash more than half a billion dollars in revenue with no plan to make up the loss or reduce services.
Oklahoma has been down this road before to disastrous results.
The conservative approach would be to see if the economic uptick has staying power then be purposeful in the tax reductions.
Wallace and Thompson are embracing this fiscal responsibility and mentioned several reasons for their caution.
It includes complications on the grocery tax elimination, a possible economic slump and compliance with the Streamlined Sales Tax Agreement. That agreement is a compact among 24 states to simplify state and local sales tax laws to facilitate collection of taxes from online sales.
They appear more agreeable with measures that are temporary, expand sales tax credits or a one-time rebate sent directly to residents.
Still, the pressure to cut taxes permanently this session is strong.
A flurry of bills passed out the House and Senate that would cut the corporate franchise tax, suspend grocery taxes, reduce personal income tax and give property tax relief to higher-income older residents.
In total, this would take about $557.2 million from revenue for fiscal year 2024. A proposal to phase out personal and business income taxes would take out about $400 million annually and a measure to temporarily expand sales tax rebates would eliminate $185 million a year.
Another proposal would mail out $321 million in tax rebates before the November general election.
The last time Oklahoma approved this type of deep cut was in the late-1990s boom. A decade later, the Legislature faced four revenue failures and a deficit of $1.5 billion.
Core agency services were devastated. Highway patrol officers were limited in miles they could drive. Prison reintegration programs cut. Common education sank to almost last in teacher pay and per-pupil expenditure.
Oklahoma is bouncing back with the help of one-time federal pandemic money and one of the nation’s lowest unemployment rates.
We appreciate the deliberate and judicious way Wallace and Thompson view the tax-cut proposals, showing true conservative values.
[Tulsa World].