State personal tax rate drops
This week, we’ll adjourn the First Session of the 58th Legislature. It’s been a whirlwind—it seems like just yesterday I was getting sworn in but at the same time, it seems like that was so long ago. We’ve accomplished many things in the last six months. One thing I learned is crafting the annual budget is a year-round process. It doesn’t start when session convenes each February, but rather within a month of the previous session adjourning. Legislative leaders and committee chairs have numerous meetings throughout the interim with the various state agencies to hear their funding needs and how they’ve used their current funding. It’s a very in-depth and comprehensive year-round process.
We approved the largest budget in state history thanks to the fiscally conservative decisions made last year during the pandemic. The legislature chose to spend significantly less than was available, given that they didn’t know how the pandemic was going to impact the state’s economy the last half of 2020 into this year. That decision, along with our rebounding economy and strengthening energy sector, provided us with a historic level of revenue. This session, we once again decided to be fiscally conservative and put more than $800 million of that surplus back into state savings, because you just never know when the next natural disaster or economic downturn could hit, and we must have a financial cushion to protect our state agencies and services.
Overall, we approved a $8.8 billion FY’22 budget that will begin on July 1, which is a 14% increase over the FY’21 budget. The comprehensive plan protects our 65 appropriated state agencies, providing an average increase of 7%. It provides historic funding for schools, tax relief for all Oklahomans, economic development, rural broadband expansion and much more.
The Department of Education will receive its largest budget in state history at $3.16 billion, accounting for more than one-third of the total state budget. These additional funds will greatly benefit our schools, including lowering kindergarten and 1st grade classroom sizes, purchasing new Science textbooks, and restoring cuts made last year because of the pandemic.
All Oklahomans will get tax relief as the personal income tax is being lowered from 5% to 4.75% and the corporate income tax will drop from 6% to 4%, putting Oklahoma among the lowest rates nationwide. We’re also restoring the Earned Income Tax Credit refundability to help even more working families.
Significant investments will be made to help diversify our economy and help it grow. One of the most exciting investments will be a $42 million tax incentive for providers to expand broadband service to underserved and unserved areas statewide. Not having adequate internet capabilities is a major deterrent to businesses looking to relocate to our state, which currently ranks 47th in broadband connectivity. This investment will help attract businesses, but will also help our schools with virtual learning, improve healthcare by expanding the use of telehealth services, and simply improve the lives of more Oklahomans by helping get them connected.
We’ll also be aggressively recruiting jobs and businesses to our state through $35 million in new economic development funding. More than $15 million will also be added to the Rural Economic Action Plan (REAP) to provide grants for additional infrastructure projects around the state, especially in rural districts like ours.
Another exciting economic development effort will come through a $30 million film tax incentive to attract more TV shows and major films to our beautiful state. We’re working hard to diversify our state’s economy and lessen our dependence on the energy sector, which requires us finding new sources of revenue. This incentive has already proven quite successful with a significant return on investment. I’ll talk more about this program next week along with some of the other major accomplishments of the session.
If you have any questions or concerns on legislative matters, please contact me at the Capitol. Please write to Senator Jessica Garvin, State Capitol, 2300 N. Lincoln Blvd. Room 237, Oklahoma City, OK, 73105, email me at Jessica.Garvin@oksenate.gov or call (405) 521-5522.
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