Could Oklahoma legislators have $698M more to spend after failed Volkswagen deal?

But Gov. Kevin Stitt’s office on Tuesday said it’s too soon to talk about spending funds that were set aside as economic development incentives to lure a major manufacturer to the state.

If no company qualifies for the incentives by April 15, the funds lawmakers earmarked as part of the Large-scale Economic Activity and Development Act will revert back to the state’s general revenue fund.

At that point, discussions about what to do with the money likely will become intertwined with budget negotiations on tax cuts, school choice tax credits and other legislative spending priorities.

Senate President Pro Tem Greg Treat, R-Oklahoma City, said he had people coming to him with suggestions on how to spend the $698 million even before Volkswagen announced that it will build in Canada instead of in Oklahoma.

Treat said only time will tell whether the additional money will make it easier for lawmakers to craft a state budget for the upcoming fiscal year.

While expressing optimism about other potential business deals, Stitt’s office said discussions about repurposing the LEAD Act incentives should be put off until after April 15.

“We are right back to pursuing additional (economic development) opportunities in the pipeline,” said Stitt spokeswoman Carly Atchison.

The $698 million could be freed up, as the state is already flush with cash. State savings are at a record high, and Oklahoma is projected to have about $1.5 billion in unspent cash that can be appropriated next year.

That’s in addition to rosy revenue projections showing lawmakers will have roughly $2 billion more to spend in next year’s budget than they did in the current year. Stitt and key lawmakers have warned that a portion of that $2 billion is one-time cash that should not be used for recurring expenses.

House Speaker Charles McCall, R-Atoka, said tapping into the $698 million could allow the Oklahoma Legislature to fund all of its budget priorities.

“From inflation relief to generational education reform and investment, the freeing up of these funds should alleviate any doubt some may have had about accomplishing the goals the House has prioritized this year,” he said in a statement.

In a recent news conference, Stitt said he doubted that the state could afford to cut personal income taxes, eliminate the state’s grocery sales tax and fund the House’s $800 million education plan all in the same year. Stitt called for both tax cuts and school choice reforms in his proposed executive budget.

Should the Legislature get a chance to repurpose the LEAD Act funds, Treat said that money should be used for one-time expenses.

Across-the-board teacher pay raises and tax cuts would be recurring expenses. But a supplemental appropriation to the Department of Veterans Affairs to build a new veterans home in Sallisaw and financial assistance for OU Health, both of which are possible this year, likely would be one-time costs.

The clawback provision of the LEAD Act doesn’t kick in until next month, Treat noted.

“If there is something else that (the Department of) Commerce is working on that would qualify, they still have a short runway, but there’s a runway,” he said. “I just want to caution the Legislature and caution Oklahomans to realize that is not going to be recurring revenue. That’s a one-time deal.”