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Politics and Government

Capitol Insider: Budget Agreement Reached For Fiscal Year 2022

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KGOU
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Governor Kevin Stitt (R) Oklahoma

There is one thing Oklahoma legislators are required to do every year: craft and pass a state budget. Budget talks usually come together in the waning days of the legislative session and it was no different this year. KGOU's Dick Pryor and eCapitol's Shawn Ashley talk about the proposed fiscal year 2022 budget and what it does in this week's Capitol Insider.

TRANSCRIPT:

Dick Pryor: This is Capitol Insider, your weekly look inside Oklahoma politics, policy and government. I'm Dick Pryor with eCapitol news director, Shawn Ashley. It's mid-May, which means it's time to talk seriously about the state budget, with just a couple of weeks left in the session. And right on cue, Governor Stitt and legislative leaders announced a budget agreement on Thursday. Shawn, how did this year's budget come together?

Shawn Ashley: Well, you know, House Speaker Charles McCall and Senate President Pro Tem Greg Treat emphasized Thursday that this was not something put together in just a few days. Throughout session we've heard talk and reported on the House desire to put more money in the common education. We saw McCall advance his individual and corporate income tax reduction proposals. And the Senate talked about limiting spending growth, particularly avoiding using one time money for ongoing programs. And the governor talked about the opportunity to save some money when the Board of Equalization increased the revenue estimate for the upcoming fiscal year in February. So, like McCall and Treat pointed out, this is work that has been going on throughout the legislative session and finally that agreement was reached this week.

Dick Pryor: What stands out to you in this budget agreement?

Shawn Ashley: You know, what is really interesting to me is what is happening with taxes in this budget and not simply the individual and corporate income tax cuts, particularly the increase proposed in the Equal Opportunity Scholarship Program cap and the new 30 million dollar film credit. The Equal Opportunity Scholarship Program provides a credit for contributions to certain organizations that award scholarships for private schools and support public schools. There have been previous efforts to increase these caps, and Governor Stitt even included that proposal in one of his previous executive budgets. But it has always run into problems in the House and has never advanced. To see it included in the budget agreement - the biggest piece of legislation that lawmakers will consider this year - is rather interesting. Also, the film credit is very interesting because it was just a few years ago that lawmakers were criticizing the existing film credit as being a giveaway for Hollywood elites. But since that time, we've seen that credit reduced, then doubled and expanded. And this new program would provide nearly four times as much credit than is currently available to produce films in the state of Oklahoma.

Dick Pryor: How are they able to provide funding increases to practically every agency while also cutting taxes?

Shawn Ashley: Well, really two things come into play here. First of all, the current fiscal year budget was cut one point-three dollars billion from that of 2020. As you'll recall, a year ago we were looking at a budget agreement that significantly reduced spending on average four percent across the board. That was due to the fact that we were in the middle of the pandemic. Fast forward to February of this year and the Board of Equalization indicated that there would be approximately one point-three billion dollars in additional revenue available to appropriate for the upcoming fiscal year. The difference between the prior year's budget and the upcoming year's budget creates the room, if you will, for them to provide additional funding to state agencies while at the same time reducing state taxes.

Dick Pryor: How does this budget handle Medicaid expansion?

Shawn Ashley: It's really an interesting formula when you look at it. For the first year of the Medicaid expansion, it relies heavily on additional federal dollars that the state has already received and will be receiving in the upcoming fiscal year. At the same time, it also increases the Supplemental Hospital Offset Payment Program (SHOPP). This is a program created by the state's medical care facilities to help draw down additional Medicaid dollars. That fee will be increased annually in each of the three upcoming calendar years to make more locally generated money available. So as the federal money declines, the state contribution will increase and pay for the program on an ongoing basis.

Dick Pryor: Since the governor and legislative leaders have come to an agreement, will the budget move through quickly and easily or might there still be some hiccups?

Shawn Ashley: It should move rather quickly and easily, but of course, they have to make sure they have all their I's dotted and all their T's crossed and of course, that all the numbers add up. In the end, could the legislature get out before the May 28th deadline to complete the legislative session? It could do that, but there's still a lot of work that has to be done.

Dick Pryor: All right. Thanks, Shawn.

Shawn Ashley: You're very welcome.

Dick Pryor: And that's Capitol insider. If you have questions, e-mail us at news@kgou.org or contact us on Twitter @kgounews and @eCapitol. You can also find us online at kgou.org and ecapitol.net. Until next time with Shawn Ashley, I'm Dick Pryor.

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