Governor Kevin Stitt and a number of lawmakers are insistent on cutting the state income tax this year and eventually seeing it eliminated altogether.
Yet, he and those same lawmakers haven’t indicated they have come up with any new revenue stream to replace that income. Nor have they proposed specific cuts to balance that out.
Senate Pro Tem Lonnie Paxton told press members attending the OPALegislative Summit earlier this month that while he supports the governor’s plan in principle, he won’t be in favor of raiding the state’s Rainy Day or reserve fund in order to cut the income tax.
Paxton recalled when he first joined the Legislature several years ago of the budget deficits the state was facing. He said that while the Reserve Fund has more than $400 billion in it today, he doesn’t want to start dipping into it to balance the budget.
State lawmakers during the 2024 legislative session eliminated the state sales tax on groceries. That’s estimated to be about a $400 million hit on the current state budget. Since that took effect lastAugust, that’s not even a full year, meaning the loss in revenue over 12 months would be even more.
A question all lawmakers should be considering is with that elimination of the state sales tax already in place now, how is the revenue the state income tax is now producing going to be replaced?
No one likes to pay state income taxes. But we caution state legislators to examine the proposals out there closely and answer some of those questions.
The public may favor elimination of the state income tax over the years but the public enjoys a great manyservicesandhowwell will they enjoy it if some of those begin to disappear unless an additional funding source is found and what might that be?
To further illustrate the impact of eliminating the state income altogether, figures provided by State Treasurer Todd Russ show that state and corporate income tax during the period of February of 2024 to January of 2025 totaled $6.3 billion.
Now we would like for legislators to show us how they plan to replace that income stream. We don’t think it would be very easy and maybe that is the main reason we have’t seen anything from them at this point.
We think legislators are ill advised of passing any cut in the state income tax this year. For sure they shouldn’t be considering elimination of the state income tax altogether even if it’s gradual over a period of time until they develop a solid revenue stream to replace it.
Until then, Oklahomans should urge lawmakers to ensure the state income tax remains in place.