Tax cuts totaling $500 million approved by Oklahoma House — but don’t spend that money yet | Govt-and-politics

Sales and income tax reductions totaling around $500 million passed out of the Oklahoma House of Representatives on Wednesday, but the citizenry might hold off on spending the roughly $125 per capita projected benefit.

Senate President Pro Tem Greg Treat, R-Oklahoma City, accused the House of grandstanding and something just short of fraud.

House Speaker Charles McCall, R-Atoka, said Treat spends too much time contemplating his navel.

“We saw complete political theater today,” Treat said a few hours after the House sent the tax measures to the Senate. “What the House delivered on today cannot become law. … This is really about having political mailers to send out and say, ‘We cut your taxes.’ I’m sure they’re already at the mailhouse.”

McCall responded that “the Senate has spent all its time this week finding reasons not to help Oklahomans.”

Thus, a situation already confusing to most Oklahomans became more so.

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The Legislature formally adjourned this year’s regular session on May 27. Prior to that, it had called itself into an intermittent special session — officially, the Second Extraordinary Session of the 58th Legislature — to allocate the state’s $1.7 billion in American Rescue Plan Act money. In doing so, it said Gov. Kevin Stitt had reneged on an agreement concerning how the money would be distributed.

Stitt responded by vetoing several tax cut bills — called “inflation relief” in current political parlance — as insufficient, and he ordered a Third Extraordinary Session to begin June 13.

With primaries on June 28, legislators grumbled to order on Monday. The Senate said it expected to be there only one day, just long enough to approve some of the ARPA projects.

The House, though, decided that it would also promote some tax cut legislation. It did that on Wednesday and then gaveled sine die — final adjournment — of the “Stitt” special session.

Treat said that, for procedural reasons, made it impossible for any of the bills it passed Wednesday to become law.

McCall said that’s not true.

Stitt said he was “optimistic” that the Senate will go along with the proposed tax cuts.

Treat, though, made it clear that the Senate won’t be pushed into anything hasty. He appointed a “tax reform working group” chaired by Sen. Dave Rader, R-Tulsa, and declared the Senate the “adults in the room.”

Senate Appropriations Committee Chairman Roger Thompson, R-Okemah, has staunchly opposed all permanent tax cuts on the grounds that the surpluses of the past few years are almost certain to turn to deficits sooner or later.

“I believe with all my heart that within the next 12 to 18 months, we’re going to need every dime we can get our hands on,” Thompson said Wednesday.

The bills passed by the House are essentially variations on two themes — eliminating the state sales tax on groceries and reducing the state’s income tax rates.

In some iterations, the reductions are temporary two-year moratoriums that would have to be renewed to remain in place after 2024.

In others, the reductions would be permanent.

There are also variations concerning restrictions, if any, on local governments raising their sales taxes should the state grocery sales tax be suspended or eliminated.

Also passed was an expansion of the state’s low-income sales tax rebate.

To pay for the cuts and meet the state’s balanced budget requirement, the House proposes using reserves and taking $240 million from the Oklahoma Health Care Authority, the agency that oversees the state’s Medicaid programs.

House Budget Committee Chairman Kevin Wallace, R-Wellston, said the agency currently has fund balances of about $850 million and can absorb the reduction without an impact on services during the fiscal year beginning July 1.

Wallace said the surplus is related to Medicaid expansion and increased federal funding related to COVID-19. It was unclear to what extent the agency’s surplus is the result of nonrecurring revenue.

Separately Wednesday, the House convened in what is officially the Second Extraordinary Session — the one called by the Legislature itself — to pass a series of bills, most of them shell bills, related to disburing the state’s American Rescue Plan Act money.

Projects agreed upon include $25 million for a nonprofit assistance fund overseen by the Department of Commerce and $15 million toward construction of a new optometry school at Northeastern State University.

Tulsa World Opinion: The cavalcade of tax cut proposals, May 2022

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