Governor proposes tight budget, $1 billion investment fund

OKLAHOMA CITY — The budget proposal Gov. Kevin Stitt pushed across the table to the 59th Legislature on Monday projects almost $655.7 million worth of tax cuts, $400 million in new money for education — at least $130 million of which would go to private schools — and not much for anything else.

Perhaps the document’s most intriguing element, though, is a recommendation to put $1 billion from the state’s cash reserves into an investment fund that would create a steady revenue stream. The fund would be able to invest state money in potentially higher-yield long-term instruments than short-term cash accounts.

“The aim of the Oklahoma Legacy Fund is to position the state to build additional reserves and generate revenues over the long term through a diversified strategy,” the governor’s budget proposal says.

Total outlays in the proposed fiscal year 2024 budget are $11.4 billion, which would be about $1 billion less than the current budget year that ends on June 30. The decrease is mostly attributed to one-time spending in FY 2023, including nearly $700 million for an economic development fund that’s never been used. It anticipates available revenue to exceed expenditures by about $10 million, leaving total available reserves of $3.9 billion. The state also holds $39.7 billion in pension plan assets.

More than anything, governors’ budget proposals are a first move in a session-long game of chess — or checkers, in some years — with chief executives usually signifying their priorities with dollar signs.

Monday’s budget proposal aligns with Stitt’s stated intent to see substantial tax cuts and state support of private schools this year.

The $655.7 million in tax cuts includes eliminating the 4.5% state sales tax (but not local taxes) on groceries ($351.1 million), a 0.76-percentage point reduction in state individual income tax ($260.9%) and a 0.75-percentage point reduction in corporate income taxes ($43.7 million).

New spending for education would include $130 million for education savings accounts — private school vouchers — and $100 million for an “innovative school fund” to “create new schools focused on innovation, unlocking student potential and addressing workforce pipeline needs.” Apparently grants from that fund would also be available to private schools.

Other education proposals in the budget include $100 million to support reading instruction, $50 million for performance-based teacher raises, $2.6 million for child identification kits and $500,000 to extend concurrent college enrollment to high school freshmen and sophomores.

The ID kits would allow parents and guardians to collect and store children’s fingerprints and DNA for identification purposes.

Other new spending includes $2.9 million for pregnancy resource navigators and $20 million for the governor’s Quick Action Closing Fund.

The rest of the budget proposal is essentially the same as the current budget, except for moving around money associated with the transfer of motor vehicle registration and driver’s licenses functions from the Department of Public Safety and the Oklahoma Tax Commission to the new Service Oklahoma agency and the subtraction of one-time expenditures in the FY ’23 appropriations.