Wednesday, August 23rd 2023, 5:32 pm
Rumors of a special session on tax cuts are circling around the Capitol. Many lawmakers believe Governor Kevin Stitt will renew his push to eliminate the grocery tax and lower the personal income tax.
News 9 is digging into the state’s finances to see if that’s something that Oklahomans can really afford at this point.
“I think the people need to know where we are financially,” said Sen. Roger Thompson, (R ) Okemah. “Whenever we see numbers like $9 billion that are out there; that would be looking at every nickel in every revolving fund.”
While the state technically is sitting on billions of dollars, Senate budget chair Roger Thompson explained that money can’t be spent on just anything. One example is the rainy-day fund which holds a little over $1.2 billion.
“The only way we get to that is if bad things happen; the state revenue failures, board of equalization number comes in below last year's number, or a catastrophe happens,” said Thompson.
There’s also hundreds of millions set aside each year for education and medical expenses, including the FMAP fund, which has about $345 million.
“Now keep in mind we've also got to pay for Medicaid expansion, and that runs us about 168 million a year,” said Thompson.
The state does have the revenue stabilization fund that is statutory, which holds about $400 million.
When it’s all said and done, the state has just over $2 billion on hand to spend.
“That's a lot of money in your bank account and in my bank account, but keep in mind we're about a $30 billion a year business in Oklahoma, so having a little cash on hand is not a bad deal for us,” said Thompson.
Now, the big question looming: Do we have enough in the bank to cut taxes?
“Before we start looking at cutting our revenue, we need to say- what's our expenses for next year, what's going to happen going forward,” said Thompson. “We are still in uncertain times as far as our economy.”
There are still questions on the impact inflation will have in the next year, and the state is already looking at higher insurance rates. Thompson says the state is looking at a 34 percent increase on expenditures including the capitol, and college football stadiums.
Thompson has also been speaking with economics about inflation.
“Historically, we've been able to land about 30 percent of the time in a soft landing instead of a hard recession,” said Sen. Thompson. “The economists are saying we could be looking at a 3.5 percent inflationary rate for some time in the future.”
We also have no sure way of knowing how much extra cash the state will be sitting on in the years to come. So, while we have $2 billion in excess right now, Thompson says it’s not a good idea to spend that money on recurring expenses, like tax cuts.
“If you do a tax cut as an ongoing expense, you don't use one time money for ongoing expenses,” said Thompson.
If lawmakers are called in for a special session Thompson says they’ll look at all their options but want to make sure they’re making the best decision for Oklahoma taxpayers.
“We want to be methodical and very decisive as we move forward with our finances to make sure we're dealing with policy and not politics,” said Thompson.
Gov. Stitt has not made any plans for a special session, but many believe the announcement could be coming any week.
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