Budget Summit: State Needs More Revenue But Needs To Find It Equitably
Oklahoma needs more revenue if the state is going to thrive.
That was the theme of Oklahoma Policy Institute Budget and Tax Senior Analyst Paul Shinn’s presentation at the think tank’s annual budget summit on Tuesday. Shinn said Oklahoma’s already lower-than-average tax revenues have plummeted over the past 20 years, taking some of the shine off a projected $8.2 billion budget for fiscal year 2022, half a billion more than this year’s budget.
"If you adjust for inflation and you adjust for population growth, the equivalent budget in fiscal year 2000 was $11 billion. And so, we have lost nearly $3 billion — 23%, 24% of the budget — over that time," Shinn said.
There are some potential immediate fixes. OK Policy suggestes halting additional tax cuts and finding ways to get more money into the hands of working Oklahomans who will spend it.
But there's a bigger problem at work. Over roughly the same period of revenue declines, the state shifted taxes to low-income families. The bottom 20% of earners pay more than 13% of their incomes in taxes, a higher share than all neighboring states but Texas.
"Now, it’s important to remember how closely race and income remain tied in our economy. And so, a tax system that requires more from low-income people is also going to require more from people of color," Shinn said.
Oklahomans who are Black, Latinx, Native American, or two or more races pay larger shares of their income in taxes than those who are white. Shinn said in addition to making taxes proportional to income, the state could consider reforms like reducing the amount of revenue earmarked for specific things, updating the sales tax to reflect a service-based economy and making budgeting a less-rushed process.