Last year, Oklahoma lawmakers approved an automatic income tax cut if the state meets certain surplus revenue targets. This year, the state is about $1 billion short of the threshold to activate what would've been the first quarter-of-a-percent income tax cut under House Bill 2764.
The estimated available appropriations for Fiscal Year 2027 are down nearly $700 million.
Still, Stitt said during a short press gaggle, he's optimistic because recurring revenues are actually up.
"Our income is up over $300 million from last year," Stitt said. "That's a great sign. Savings account is still $3.7 billion. So really, really strong and very, very pleased where we're at."
Here is the latest state budget breakdown by the numbers, according to estimates by the Oklahoma Office of Enterprise Management Services (OMES) and the Oklahoma Tax Commission:
- Total Expenditure Authority - $12,046,247,137 - This is the amount of money OMES and the tax commission estimate lawmakers can appropriate to state agencies for FY 2027. It includes recurring revenues, certified federal funds, unspent general revenue surplus and available cash. It's down nearly $700 million from last year.
- Total Recurring Revenues - $10,948,170,104 - This amount represents the total state-certified and authorized dollars from tax and other revenue streams. It's up $338 million from last year, and the amount Stitt said he thinks is a good sign for future income tax cuts.
The quarter-of-a-percent income tax cut many Republicans have been hoping for didn't pan out based on this year's estimates. The cut would have been triggered if total gross revenues from the last year were greater than the highest gross revenue collection in any previous year (2023 in this case), and the estimated cost of the income tax reductions.
Here are those numbers as presented by OMES and the tax commission:
- Comparison Year Total Collections - $13,536,811,036.93 - This number represents the total gross collections for FY 2025. State statute requires the tax commission to use the fiscal year immediately preceding this annual December meeting of the Board of Equalization to determine gross revenue.
- Base Year Total Collections - $14,176.086,118.88 - This is gross revenue for FY 2023; The highest previous collections amount preceding FY2025.
- Income Tax Threshold - $340,483,000 - This is how much the tax commission estimates an income tax cut would cost the state for 12 months, multiplied by 1.25 as a cushion, to ensure any real cuts stem from actual economic growth.
Stitt said most of the difference in spending authority can be attributed to depleted state-owned cash accounts, rather than lost recurring revenue.
"I was really, really pleased that we fully realized the grocery tax, our quarter of a point tax cut last year, and even the [Parental Choice] tax credit, for the $250 million there, and we're still growing," Stitt said.
But $12 billion is the number he is charged with using to craft his Executive Budget proposal.
"You know me," Stitt said. "I'm always advocating for flat budgets … ever since 2019, because I just think government spends too much money."
It's the first Board of Equalization meeting Attorney General Gentner Drummond, who sits on the Board of Equalization with Stitt and other state-wide elected officials, has attended since this time last year. Having skipped the December 2024 meeting, he commented on the matter in February, when the board released updated estimates for the legislature to make its FY26 budget.
"I have no confidence in the Governor's approach to this matter, but I do believe our legislative leaders will negotiate the best plan for our future," Drummond had said in a press release.
This year, Drummond said he was pleased with the promising outlook but worried about upcoming costs tied to implementing federal "Big Beautiful Bill "mandates.
"We've got rising revenues," he said following last week's meeting. "That's good. I have concerns that we need to bake… for fiscal year 28 because there's going to be fewer federal reimbursements."
President Trump's Big Beautiful Bill shifts the administrative cost burden for Medicaid and food assistance programs from the federal government to states, which could cost Oklahoma up to $1 billion, according to estimates by some lawmakers.
So, while Stitt is on his way out of office and focused on leaving his mark as the "business-man governor" who cut state income taxes, Drummond, who is running for Governor in 2026, is thinking about how he might manage costly federal demands going forward, assuming he takes office.
Copyright 2026 KOSU
