Governor Stitt believes income tax cut is possible despite expected revenue shortfall

OKLAHOMA CITY (KFOR) — The Board of Equalization released some finalized numbers for the Fiscal Year 2026 budget and said the state is underwater by around $350 million.

The Fiscal Year (FY) 2026 budget was announced on Friday at around $12.4 billion.

Earlier estimates showed that numbers to be around $12.3 billion but the state income taxes along with a tax on oil and gas brought it up.

There were two members of the Equalization Board who didn't show up—State Superintendent Ryan Walters and Attorney General Gentner Drummond.

The governor grabbed the press and had a small media squabble to discuss the new numbers and how they fit into his idea of a state income tax cut, something he's pushed for quite some time but hasn't gotten.

He pushed to how other states did their income tax and repeated that money came back to them in the end. He didn't name any other states besides Colorado.

However, according to reports from stations in Colorado, that state is facing an over $700 deficit going into the next year.

Lawmakers remained firm in that they will not dip into savings to afford a state income tax cut.

On Thursday, Senate Pro Tempore Lonnie Paxton, R-Tuttle, said he would consider an income tax cut but they would not appropriate from savings.

After seeing the new numbers, Senate Appropriations Chair Chuck Hall (R-Perry) said, "In the year following the largest tax cut in state history, this dip in revenue doesn’t come as a surprise, but it reminds us to be careful and deliberate while reviewing proposals for further revenue cuts. We currently have around $1.2 billion in new funding requests from executive branch agencies to consider and nearly $500 million in new capital project requests. This Legislature has a track record of passing sound fiscal policies that have set Oklahoma up for success, breaking a cycle of crippling budget shortfalls as we saw in past years. While the state faces some financial challenges in the upcoming year, I see this as a chance for Oklahoma to eliminate wasteful spending and focus on making government more efficient. I’m confident the Senate, working alongside the House and the governor, will pass a responsible, balanced budget this year that keeps our state government funded, as the constitution requires.”

“The Board of Equalization’s certification of lower revenues for FY 2026 is a clear signal that we must approach this budget cycle with both caution and optimism," Senate Appropriations Vice Chair John Haste (R-Broken Arrow) said. "We must be mindful of the long-term impact of our decisions to ensure we do not put the state on a bad fiscal trajectory for future budget years. With significant funding requests before us, it is more important than ever to practice fiscal discipline by prioritizing core government services and identifying opportunities to eliminate waste and inefficiencies.”

Attorney General Gentner Drummond came out criticizing the Governor and the numbers before they were released, essentially stating that his concern is centered around the fact that these numbers fluctuate by millions of dollars each year.

“I am disappointed but not surprised that the Governor refused to increase legislative involvement in this process, which is far too important to the future of Oklahoma to be monopolized by a single politician,” Drummond said. “The budget certification process is in dire need of reform. The status quo allows the Governor to manufacture budget numbers that support his policy agenda, rather than a consensus approach that would reflect legislative input.”

When asked how the governor felt about AG Drummond not attending the BOE meeting he said in part, "First off, what does that mean having no confidence in the numbers? Do they think they're overinflated or what? It just seems weird to me."

Stitt wants to cut the state’s 4.75% personal income tax by .5%. It would cost $240 million for a half year and $600 million for a full year.