LOCAL & STATE
Joe Tomlinson
Photo, Provided
Oklahoma Gov. Kevin Stitt is urging state lawmakers to cut the state’s 4.75% personal income tax and 4% corporate income tax by half a percentage in the current 60th legislative session. Lawmakers are concerned that bills with meaningful fiscal impact or investment could flounder.
Legislators returned to the Capitol earlier this month with more than 3,000 bills filed. But they have far less money to spend. Lawmakers will have about $120 million less to appropriate in the fiscal year 2026 budget than they did in 2025, according to numbers certified at a Valentine’s Day Board of Equalization meeting.
The reduction is partly due to lawmakers’ decision during the 2024 session to cut the state’s portion of the sales tax on groceries. That action is estimated to save taxpayers about $370 million, according to the fiscal impact statement on the bill from the Oklahoma Tax Commission.
Leading up to the current session, lawmakers filed bills to address the childcare shortage, combat the housing crisis, raise wages, and change education policy, among other initiatives. However, with pressure from Stitt to cut taxes further, some are wary that their bills could ever reach the governor’s desk.
Rep. Suzanne Schreiber (D-Tulsa), who has championed childcare, is hopeful that the bills she filed to bolster the recruitment and retention of childcare employees will pass.
“Just like the rest of the country, we have a real shortage in workforce in the childcare arena,” Schreiber said.
Schreiber’s House Bill 1849 would allow employees at childcare facilities to have the household income requirement for the Oklahoma Department of Human Services’ Child Care Subsidy Program exempted from consideration when determining eligibility — taking care of their childcare costs.
“They make an average of about $11.47 an hour, and so while we may not be able to directly impact their hourly rate, we are working to impact what incentives we can offer them, and that is what [House Bill] 1849 does. It offers a recruitment and retention tool to the small business industry that is childcare,” Schreiber said in an interview with The Oklahoma Eagle.
Schreiber added that the fiscal impact of House Bill 1849 is estimated at about $9 million. For the Child Care Subsidy Program, DHS bases the household’s income eligibility on the federal income eligibility threshold per family size. The federal income eligibility threshold cannot exceed 85 percent of the state median income per family size.
“If you’re thinking about it from the fiscal perspective, it’s really a lesser investment for a high rate of return because we already have a lot of early childhood teachers whose household income may qualify them for a subsidy,” Schreiber told The Oklahoma Eagle. “And so you might think, ‘oh my gosh, every childcare worker in the state of Oklahoma is going to get free childcare. That’s going to be a huge cost to the state,’ but the truth is it’s really for a small portion who may be just over the income levels already.”
Proposed Tax Cut for Businesses
Schreiber also filed House Bill 1848, providing a small tax credit to businesses that pay for their employees’ childcare services. Businesses could deduct up to 30% of what they pay for their employees’ childcare costs.
“It’s a very small credit. You could almost call it a pilot, because the total credit itself that the state could extend could not exceed $5 million and employers could only claim [up to] $30,000,” Schreiber said.
The House Appropriations and Budget Human Services Subcommittee unanimously approved House Bill 1849 on Feb. 10, while the Appropriations and Budget Finance Subcommittee approved House Bill 1848 with a 5-2 vote on Feb. 13. As both bills have a fiscal impact, they will be heard by the full House Appropriations and Budget Committee in the coming weeks, but pressure surrounding tax cuts could impede those bills’ progress, Schreiber said.
“I think it’s difficult in the environment that we’re in where there’s a pressure to cut income tax from the governor’s office — and to the extent that the majority party isn’t interested in that — they are seeking fiscal conservative spending that’s consistent with saying they don’t have enough money to cut income tax,” Schreiber said. “That makes an environment for any kind of investments, incentives, tax credits, difficult,” she added.
Schreiber said these concerns are consistent among Republicans and Democrats in the legislature.
“I’m just going to be honest. I’m watching colleagues on both sides of the aisle have to have difficult conversations about that. I’m hopeful that we can take it as far as we did last time, and even further, but the environment around this is hard,” Schreiber said. “I will say, the same is true that the childcare industry is in an even more crisis state than it was last year. So for something that’s pretty affordable, I think it’s worth evaluating.”
Other Bills to Watch
- Senate Bill 28, filed by Carri Hicks (D-Oklahoma City), would allow schools to provide free lunches to students whose families’ annual income during the preceding tax year did not exceed 250% of the federal poverty level. Currently, students qualify for free lunches if their families earn less than 130% of the federal poverty level. In comparison, students whose families earn less than 185% of the federal poverty level qualify for reduced-price lunches. According to a Senate Fiscal Summary of the bill, there would be an estimated impact of $102 million in Fiscal Year 2026.
- Senate Bill 35, also filed by Hicks, would raise the state’s minimum wage from $7.25 an hour to $15 an hour. While filing this bill will allow legislators to give input on wage increases, voters will also have the opportunity to raise the minimum wage through State Question 832 on June 16, 2026. If approved, State Question 832 would provide a stair-step increase to $15 by 2029 — beginning with an increase to $12 in 2027, $13.50 in 2028, and $15 in 2029. Future wage increases beyond $15 an hour would be tied to the U.S. Department of Labor’s consumer price index.
- Senate Bill 201, filed by Sen. Adam Pugh (R-Edmond), would raise the minimum teacher salary from $39,601 to $50,000 and increase salaries for more experienced teachers. The bill was approved unanimously by the Senate Education Committee, which Pugh heads, on Feb. 11. However, the title was stricken. According to a Senate Fiscal Summary of the bill, there would be a $640 million impact in Fiscal Year 2026.
- House Bill 1165, filed by Rep. Gabe Woolley (R-Broken Arrow), would require public schools to obtain proof of U.S. citizenship or legal immigration status from a parent or legal guardian of a student upon enrollment.
- House Bill 1962, another bill filed by Woolley, would require employers to utilize a “status verification system” to verify employees’ citizenship status. The bill text states that an employer who is non-compliant with the law will receive three warnings. After the final warning, each offense will incur a fine between $100 and $500.
- House Bill 2014, filed by Rep. Daniel Pae (R-Lawton), would require organizations that receive funds from the Legal Services Revolving Fund to prioritize eviction cases for residential tenants. The fund helps provide legal services to indigent persons with an income level below 200% of the federal poverty guidelines in civil legal matters. Domestic and family violence and abuse cases are already prioritized under current state law. According to a fiscal analysis of the bill, House Bill 2014 is “not anticipated to have a material impact on state budget or appropriations.”
Joe Tomlinson is a contributor to The Oklahoma Eagle.
