It is incredible to look back at this time last year and think about where our state was. Between the pandemic’s impact on the economy and low oil and gas prices, Oklahoma was facing a $1.3 billion revenue shortfall.
But unlike other states, Oklahoma started opening up and getting people back to work, and our employment rates are now among the best in the nation. State revenues have rebounded and we will be able to make critical investments in education, economic development, rural broadband access, rural communities, health care and public safety.
We were able to restore last year’s cuts in public education—the budget we’ve agreed to for Fiscal Year 2022, beginning July 1, increases common education funding to a record high of nearly $3.2 billion, reduces class sizes for kindergarten and first grade, and provides other much-needed resources for our schools.
This budget also provides tax relief for families and businesses, reducing the top personal income tax rate from 5% to 4.75%, and reducing the corporate income tax rate from 6% to 4%. These changes will place Oklahoma in the Top 10 for lowest tax rates in the country among states that levy those types of taxes.
One of the things that really helped protect us last year was the decision we made in the 2020 session not to spend the full amount of money we were authorized by the State Board of Equalization to appropriate. Coupled with additional funds we’d saved the previous year, these fiscally conservative approaches really enabled us to protect core services from deep, deep cuts last session and left us on much more solid financial footing going into the next budget. This year, we’ll be saving back more than $800 million, taking our state savings to around $1 billion, ensuring critical reserves in the case of future economic shifts.
As Vice Chair of Appropriations, I think it is very important to make investments that will pay our state dividends for years to come, enhancing job and economic growth and improving opportunities throughout Oklahoma. Our current film rebate has been a phenomenal success, creating thousands of jobs and home-grown production businesses, with more and more major films and TV series being produced right here in Oklahoma. This session, we’re raising that rebate from a cap of $8 million to $30 million.
As we work to recruit new businesses to Oklahoma, one of the first things they want to know is how is our connectivity? Unfortunately, we are ranked 47th in the nation, and that caused major challenges for schools and businesses across the state during the pandemic when so much of our day-to-day lives was shifted to online. We’ve been working on this issue for months, and among the many steps we are taking is the creation of a $42 million tax incentive for providers. This is crucial for rural Oklahoma and will ultimately benefit our entire state.
We’re also giving county commissioners greater flexibility in accessing resources available through the County Improvements for Roads and Bridges (CIRB) fund, as well as boosting appropriations to REAP, the Rural Economic Action Plan, which funds important infrastructure projects in our rural communities. We were also able to fund the ongoing effort to address the REAL ID backlog, with mega centers serving the public planned for late summer. I’ll be giving you more information about this in the weeks to come.
This is a solid budget that addresses needs in our core services like education, transportation, public safety and health and mental health, lowers tax burdens, invests in key areas to stimulate job creation and economic development and allows us to build our savings for future emergencies. And almost as soon as the gavel comes down on the 2021 session, we’ll soon be back at work, analyzing the economic data and revenue projections as we begin to develop the budget for Fiscal Year 2023.
Please feel free to contact my Capitol office with any questions or concerns you may have about legislation or other issues impacting our state at 405.521.5628 or at Chuck.Hall@oksenate.gov.