The state budget passed by both legislative chambers has officially become law. The governor let the general appropriations bill, the backbone of the budget, become law without his signature. The governor also recently signed a related budget bill that gradually phases out the state’s income tax and imposes a 0.25% income tax cut in the 2026 tax year, which will decrease the state’s top tax rate to 4.5%. Although House Bill 2764 eliminates three of the state’s six tax brackets, a positive reform that simplifi es our tax code and makes it more equitable, I believe the quarter-point tax cut is shortsighted.
Although I knew the bill would ultimately pass the Legislature due to significant political pressure from the executive branch, I voted against the tax cut when it came before the Senate. I opposed this measure because my main role as a senator is to represent the will of the people of Senate District 38, and I didn’t hear anyone in my district asking for this tax cut. I recently did two radio interviews to discuss the proposed cut. In both interviews, I urged residents to call or email my office to share their opinion on decreasing state income taxes. I received just two phone calls. Both callers vehemently opposed the quarter-point cut.
More broadly, as I’ve talked to people at various events throughout the district, I’ve had many conversations with constituents who believe state government can make a difference in their lives by investing in essential services. These constituents emphasized the importance of the state investing in public education, improving our highways, roads and bridges, funding public safety and improving health care. At the outset of this year’s budget process, state agencies submitted requests seeking $1.4 billion in additional funding. While many of those requests went unmet, the underlying needs remain and will continue to grow.
When fully implemented, this tax cut will reduce state revenue by at least $330 million each year. This reduction comes as the federal government is preparing to shift significant costs to the states, potentially adding $1 billion or more in annual expenses. In light of these growing financial pressures, I believe now is not the time to diminish the state’s ability to fund core services. Congress is currently considering legislation that would alter the Supplemental Nutrition Assistance Program, or food stamps. Federal legislation requiring states to cover up to 25% of SNAP costs could cost Oklahoma as much as $470 million each year. The state could also be responsible for up to $650 million more annually if the federal government eliminates the current match for Medicaid expansion. The state is constitutionally required to pay for this because voters approved Medicaid expansion through a state question in 2020.
The Legislature has demonstrated strong fiscal discipline in recent years by building substantial state reserves to protect against the major revenue shortfalls the state experienced in the past. However, this tax cut, along with federal uncertainty, puts that progress at risk and could quickly deplete those savings. While I don’t think we should grow government needlessly, there is still a necessity for the state government and the services it provides to keep pace with the needs of Oklahomans.
To contact me at the Capitol, please write to Senator Brent Howard, State Capitol, 2300 N. Lincoln Blvd. Room 427, Oklahoma City, OK, 73105, email me at Brent. [email protected], or call (405) 521-5612.
