The State Board of Equalization recently met to certify revenue projections for fiscal year 2026. These projections provide a baseline for building a state budget for the upcoming fiscal year. The governor will use these estimates from the Oklahoma Tax Commission and Office of Management and Enterprise Services to craft an executive budget proposal that he will present to the Legislature. In February, the Board of Equalization will meet again to certify updated budget projections, and those are the figures the Senate will use to develop our budget proposal.
Early budget estimates show state revenue is down. The Board of Equalization projects the state will have roughly $12.3 billion available for appropriation next year, which is about $191 million less than the current year’s state budget. Part of that revenue decline is due to the elimination of the state portion of the grocery sales tax and an increase in the amount of money set aside for the state’s Parental Choice tax credits. Volatility in the oil and natural gas sector is also affecting state revenue. Oil and gas prices are down. Although budget analysts expect natural gas prices to rebound, they expect the average price of oil will drop to about $67.98 per barrel, down from $72.05 a barrel. State revenue depends heavily on gross production taxes, which are levied on oil and natural gas production.
Tax cuts are always a major topic of conversation at the state Capitol, and I expect my colleagues and I will continue to explore ways to reduce residents’ tax burden during the upcoming legislative session. However, we must always consider tax cuts in the context of Oklahoma’s overall financial health and the needs of our citizens. Balancing our state budget means accounting for inflation and the long-term impact of any decisions we make. That’s why Senate leaders took a careful approach last year, waiting for the Board of Equalization to meet in February before sending the governor legislation to eliminate the state portion of the grocery tax The process of writing a state budget for the fiscal year that begins in July is just getting started. State agencies have submitted their budget requests for the upcoming year, and the combined requests are more than $1 billion over what the Legislature appropriated in the current year. That figure also doesn’t factor in nearly $400 million in new funding obligations, including the full cost of eliminating the grocery sales tax, $50 million in additional funding for Parental Choice tax credits, and other costs we must cover next year.
Among the state agency requests, the Department of Veterans Affairs requested additional funding because of increased operating costs at state veterans’ homes. The State Regents for Higher Education is seeking additional funding for concurrent enrollment programs, workforce initiatives and capital needs at colleges and universities. CareerTech requested more funding to increase enrollment, and the Department of Public Safety seeks additional money to replace some Oklahoma Highway Patrol vehicles and hold a trooper academy. These are just a few of the budget requests the Senate will dig into in the coming weeks.
Finally, I hope everyone in Senate District 38 has a merry Christmas. And as we enter the new year, I want to wish you all a happy, healthy and prosperous 2025.
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.Howard@oksenate. gov, or call (405) 521-5612.
