Tax cuts being considered in special session among Oklahoma lawmakers

The Oklahoma Legislature returned to the Capitol on Monday for a special session to consider tax cuts the governor wants and how to allocate federal COVID-19 relief funds that were part of the American Rescue Plan Act.

Republican Gov. Kevin Stitt wants lawmakers to eliminate the state sales tax on groceries and reduce the top individual income tax rate from 4.75% to 4.5%.

“Oklahoma is one of just 13 states that taxes groceries, and it most affects the people who can least afford it. Our strong fiscal discipline over the years has given us the ability to eliminate this tax and now is the right time to do it,” Stitt said when he announced last month that he planned to ask lawmakers to return.

It’s not clear whether the GOP-controlled House and Senate have the votes to approve both of those items. Democrats support eliminating the grocery tax, but they oppose reducing the individual income tax.

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A package of tax cuts was introduced in the House on Monday that would reduce the rate on individual income and groceries; suspend the franchise tax; and phase out the corporate income tax over eight years. Some of the bills would temporarily suspend the state tax on groceries and personal income, rather than permanently reduce them. Proposals were also introduced to cut the budget of the governor’s office, the Office of Management and Enterprise Services and the Oklahoma Health Care Authority.

“We expect some combination of these bills, but not all of them, to reach the finish line and become law,” House Speaker Charles McCall said in a statement. “The House is presenting options to, once again, start and lead a thoughtful conversation on the best path forward for inflation relief.”

Some Republicans, particularly in the Senate, also have urged caution about cutting taxes, since it takes a three-fourth’s vote from the Legislature to increase them in times of a budget downturn.

Senate President Pro Tempore Greg Treat said it could be particularly difficult to cut taxes this year given lawmakers already have allocated $700 million in incentives to lure an electric-vehicle manufacturer to the state.

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“I am always interested in reducing the tax burden on Oklahomans, but those decisions have to be made in a thoughtful manner as to how they will effect the state’s budget on a going forward basis,” Treat said in a written statement.

The Legislature, meanwhile, has called a special session of its own to determine how best to distribute the $1.8 billion allocated to Oklahoma by the federal government. According to a joint House and Senate news release, among the proposals they’re expected to consider on Monday are:

— $15 million to complete a School of Optometry at Northeastern State University in Tahlequah.

— $8.8 million for projects addressing the nursing workforce shortage.

— $250,000 for the Health Workforce Training Commission to administer nursing workforce programs.

— $25 million for a grant pool for eligible nonprofit recovery programs.

— $39.4 million to complete the Oklahoma Children’s Hospital Behavioral Health Center.

— $500,000 to provide preliminary support to open a State Broadband Office, which legislative leaders say will be reimbursed through other federal funds once they’ve been accessed.