Oklahoma House approves tax cuts; Senate leader calls it ‘political theater’

The Oklahoma House on Wednesday approved a package of bills to cut the state’s grocery tax and reduce personal income taxes, but the head of the state Senate wrote it off as “political theater.”

As House lawmakers were voting on seven bills to cut taxes, the Senate already had adjourned for the day with no immediate plans to return to the special session on tax relief called by Gov. Kevin Stitt.

Senate Pro Tem Greg Treat, R-Oklahoma City, said the House was prioritizing political expediency over sound tax policy. Noting special sessions cost about $20,000 per day for the Senate and likely twice that for the lower chamber, Treat accused the House of wasting taxpayer money for a political stunt

“This really is about having political mailers to send out to say, ‘we cut your taxes,'” Treat said.

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Treat

The Senate appears unlikely to vote on the tax cut proposals.

House Speaker Charles McCall, R-Atoka, said the Senate should stop dragging its feet and take action as soon as possible.

“The Senate has spent all its time this week finding reasons not to help Oklahomans with inflation,” McCall said in a statement. “From starting studies, to refusing to author bills senators already authored in regular session, to deliberately not convening session for action on bills passed by the House and requested by the governor, the Senate has run out of excuses.

“Oklahomans are tired of waiting.”

McCall

Treat said the Senate is open-minded to cutting taxes, but he said his chamber will take a methodical approach to changes by forming a working group to study tax reform. The working group met for the first time Wednesday in a closed-door meeting.

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Gov. Kevin Stitt praises House bills on tax cuts, asks Senate to act

Stitt praised the House for delivering on his call to cut taxes while inflation is at a four-decade high and food costs have increased.

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“Oklahoma families need inflation relief now and I am glad the House passed legislation to eliminate the state grocery sales tax and reduce personal income tax, both of which I called for in my State of the State address in February,” Stitt said in a statement.

Citing complex procedural rules for the Legislature, Treat argued that even if the Senate were to pass the tax cut bills, the measures couldn’t go to the governor’s desk because the House had already adjourned the special session for the final time.

Stitt was “hoodwinked” into thinking the special session was semi-successful even though the House ultimately tanked its own tax cut proposals because they can’t advance to the governor’s desk, Treat said.

In a news release, House Majority Floor Leader Jon Echols, R-Oklahoma City, called Treat’s statements inaccurate.

“The bottom line is if the Senate was passing bills instead of fabricating false legal excuses, Oklahomans could stop paying state sales tax on groceries come July 1,” Echols said. “If senators don’t want to help Oklahomans, they should just say so and stop blaming everyone but themselves.”

The House approved proposals to temporarily or permanently reduce all of the state’s personal income tax rates by 0.25% and temporarily or permanently eliminate the state’s 4.5% grocery sales tax.

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How would the tax cuts be funded?

Combined, the two tax cuts would cost about $513 million annually.

To offset the costs, the House passed legislation to cut $245 million from the Oklahoma Health Care Authority’s budget for the upcoming fiscal year. The remainder of the tax cuts would be covered through unspent funds and money freed up from when Stitt vetoed two tax relief proposals last month.

Stitt called the special session after vetoing one-time direct rebates of $75 for all taxpayers and a bill to eliminate the 1.25% tax on all vehicle sales, which lawmakers have vowed for years to undo.

Because the Health Care Authority has $824 million in cash reserves, the budget cut would not effect the agency’s operations or programs, said House Appropriations Chairman Kevin Wallace, R-Wellston.

The House scrapped plans to make cuts at two other agencies — the governor’s office and the Office of Enterprise and Management Services. Instead, lawmakers increased the cut to the Health Care Authority to 28% of the agency’s appropriated funds for fiscal year 2023.

House Speaker Pro Tem Kyle Hilbert, R-Bristow, said the House took bold action to address inflation relief.

“As a state, we’re sitting on record surplus, which is because we’ve done a good job of stewarding taxpayer dollars,” he said. “But it’s hard to take the position of boasting about the large surplus that we have while simultaneously having Oklahoma taxpayers paying $4.50-plus at the (gas) pump.”

Kyle Hilbert

The nitty gritty details of the proposals

The House approved bills to permanently cut 0.25% from all personal income tax rates or to enact the cut for two years.

The Legislature and Stitt approved last year a 0.25% reduction to all personal income tax rates — bringing the top rate, which most Oklahomans pay, down to 4.75%. That tax cut and a 2% reduction in the state’s corporate income tax took effect Jan. 1.

With bipartisan support, the House approved bills to permanently eliminate the state’s 4.5% grocery sales tax or suspend it for two years. Some of the bills would block municipalities from increasing their grocery taxes after the state portion goes away.

The House also passed a two-year enhancement of the state’s grocery sales tax relief credit from $40 to $200.

Senate leaders said the House offered up a slate of tax cut proposals without any comprehensive plan.

“They are throwing ideas in the House to see what sticks to the wall,” said Sen. Roger Thompson. “The people of Oklahoma deserve better leadership.”

This article originally appeared on Oklahoman: Oklahoma Senate leader dismisses House tax cuts as ‘political theater’