After setting low expectations for months owing to slumping revenues and a slew of errors at the state mental health agency, House and Senate budget leaders stepped to the plate Tuesday and connected on a grand deal that funds major health care projects, increases common education funding and cuts the state income tax rate 0.25 percent. Pushed by Gov. Kevin Stitt for the past two years, the tax cut agreement also eliminates the three lowest tax brackets and will include a “path to zero” revenue-increase trigger that Stitt said is still being negotiated.
The budget deal also increases the per-mile funding for county road construction and fully funds a revamped Ethics Commission software system, which will be expanded to collect and display all county elected official reports in the same manner as state campaigns.
In addition to appropriating $25 million of new money into the common education funding formula for the second year in a row, lawmakers are fully funding an $88.5 million increase in flex benefit costs and a $5 million increase in maternity leave costs. A pair of programs — for statewide inhaler access and school panic buttons — are proposed to be moved out of the State Department of Education and into other agencies. The deal also includes an agreement on HB 1727, which will make the children of teachers eligible for the Oklahoma Higher Learning Access Program scholarships.
“By removing financial barriers to higher education for the families of longtime teachers, we are giving their children every opportunity to succeed and investing in the next generation of leaders for our state,” said HB 1727’s author, House Speaker Pro Tempore Anthony Moore (R-Clinton).
At a group press conference of the Capitol triarchy Wednesday afternoon, legislative leaders said the $25 million increase in common education funding will be tied to a new version of HB 1087 that requires one additional day — or six and a half hours — of annual instruction. The new version of the bill will also extend Oklahoma’s teacher salary schedule from 25 years to 40 years.
“It guarantees a teacher pay raise for our experienced teachers,” said House Speaker Kyle Hilbert (R-Bristow).
While House Appropriations and Budget Committee Chairman Trey Caldwell said some agencies will receive roughly 2 percent “efficiency cuts,” he said many of those agencies are also receiving one-time appropriations for certain projects. The FY 26 budget deal’s biggest investments come in the form of roughly $800 million of capital projects:
- $250 million for a new College of Veterinary Medicine complex at Oklahoma State University;
- $312 million to purchase a prison from the GEO Group in Lawton and avoid having to move 2,200 prisoners;
- $200 million for a new pediatric heart hospital operated by the University of Oklahoma; and
- $41.6 million for modernization and deffered maintenance projects for the Oklahoma National Guard.
If approved in joint committees and on both floors next week, three of those projects — the veterinary school, the hospital and the National Guard efforts — would be funded through the Legacy Capital Financing Fund that lawmakers created in 2023. The LCF provides agencies up-front, interest-free money to achieve major construction projects with an agreement to repay the capital outlays to the fund over 20 years.
State leaders chose to make a simple cash appropriation for the Department of Correction to purchase the Lawton prison instead of pursuing an emergency declaration that would have enabled the use of funds from the Constitutional Reserve (or “Rainy Day”) Fund.
Devilish details:
• See the FY 26 budget deal broken down by agency on the House’s online portal.
• Plus: Stay tuned for information about a tort-reform package announced Wednesday that Senate leaders acknowledged was tied to budget negotiations.
Notably, neither the OSU-CVM appropriation nor the OU hospital project — to be funded through the University Hospitals Authority and Trust — meets the total project cost. OSU officials had sought $295 million to fund facility overhauls at the struggling College of Veterinary Medicine. OU leaders had requested $250 million for the heart hospital.
Legislative leaders have implored the Tobacco Settlement Endowment Trust — a constitutional agency with a $1.9 billion corpus built from annual deposits from tobacco companies — to contribute $50 million to the pediatric heart hospital project. In April, TSET announced a $150 million “legacy grants” program as a “one-time, historic funding opportunity designed to address Oklahoma’s leading causes of death — cancer and cardiovascular disease.” However, with the application period closing June 16, lawmakers have no clarity on what TSET will choose to do.
“We’re still encouraging and hoping that TSET will do the right thing and be a collaborative partner for the benefit of all 4 million Oklahomans,” said Caldwell (R-Lawton).
Meanwhile, another major health care development is also receiving support in the FY 26 budget deal. Caldwell said lawmakers are making a line-item appropriation of $8 million for a partnership between the OSU Medical Authority and St. Francis Hospital that would draw down federal funding for the establishment of a Level 1 trauma center in Tulsa. Currently, OU Medical Center operates the state’s only Level 1 trauma center, which designates that a hospital can provide every level of trauma care from injury through rehabilitation.
Presented to the chambers’ Republican caucuses Wednesday afternoon, lawmakers’ FY 26 budget deal received quick praise as a line drive into centerfield, a base hit applauded by the governor as the Legislature rounds second base and heads for home — with a looming play on tort reforms and workers’ compensation changes positioned on the third base line.
Speaking during Wednesday’s press conference, Senate Appropriations and Budget Committee Chairman Chuck Hall said the mantra of his predecessor, Roger Thompson, always hangs on his mind.
“Behind every dollar, there’s a person,” said Hall (R-Perry). “What we do here matters and makes a difference for our citizens, and we take the job very seriously, and I am very pleased with the product we ended up with today.”
Senate Minority Leader Julia Kirt, however, released a statement saying her caucus members “don’t believe this budget prioritizes people.”
“Senate Democrats have consistently prioritized a bipartisan budget that solves real problems for Oklahomans – one that focuses on working families, not big companies and well-connected people,” said Kirt (D-OKC). “We’ve advocated for a budget that provides a great education for every student, not $50 million for vouchers with little to no oversight or accountability. We believe our budget should help make sure Oklahomans can see a doctor when they need one and not have to wait months for health care. We don’t believe this budget prioritizes people.”
Caldwell said he was “very encouraged that the final product of this budget will move Oklahoma forward.”
“It has relatively flat reoccurring spending,” he said. “We kept spending down, and we’ve done select, one-time, generational-type investments to move Oklahoma forward, while also being able to issue a real tax cut that will positively affect every Oklahoman.”
Stitt told NonDoc earlier Wednesday that the budget outcome was “better than we thought” and that Tuesday featured “great negotiations in good faith with both sides” of the Legislature. At Wednesday’s press conference, Stitt said the components will “take care of some priorities that are really important to Oklahomans.”
“Over the last seven years, we’ve cut over $1 billion in taxes. And that is significant,” Stitt said. “I’m excited to sign the policies that will make Oklahoma the most business friendly in the nation.”
How the FY 26 budget deal came together
With all eyes on the baffling budget uncertainty at the Department of Mental Health and Substance Abuse Services, Hall and Caldwell had plodded along for weeks making incremental progress behind closed doors and updating smaller-ticket items on the House budget portal. As legislative leaders received a new $27.4 million figure for ODMHSAS’ Fiscal Year 2025 supplemental appropriation needs late Monday, Hall and Caldwell prepared for a penultimate negotiation meeting Tuesday over a lunch of Long John Silvers.
With significant progress made, the two men joined Hilbert, Senate President Pro Tempore Lonnie Paxton (R-Tuttle) and their various staff members in climbing a back Senate staircase to a shrouded sixth-floor room to present their plan to Gov. Kevin Stitt, whose bodyguards sat in folding chairs perched along a small landing.
RELATED
‘State of emergency’: DOC asking Legislature to buy private Lawton prison by Tres Savage
After more than five hours of discussion and final jockeying on the tax cut details, the parties broke around 8:30 p.m. with an agreement in hand. Caldwell, who celebrated Tuesday night’s budget deal by attending the OKC Thunder’s playoff game and correctly predicting the margin of victory, noted that the state will still have “more than $3.5 billion in cash savings” despite the major investments agreed to for FY 26.
He also noted the inclusion of the Preserving and Advancing County Transportation Act proposed in SB 258, which carries a $50 million price tag for hiking per-mile county road funding.
“The big win for local governments, I think, is the Oklahoma PACT Act,” Caldwell said. “That brings up every single county in Oklahoma to $4,000 per road mile, and it also has $25 million to address dilapidated bridges.”
Hall noted a separate $20 million increase in the funding cap for projects led by the Department of Transportation.
“It allows us to create an eight-year plan to fully staff and improve the weigh stations in our state,” Hall said, noting that the funding after eight years would support general ODOT road work.
Caldwell called the inclusion of the additional Ethics Commission funding a victory for transparency.
“It’s not a big money thing, but we’re going to have full implementation of the new software at the Ethics Commission, and we’re giving them the resources to let county officials report the exact same way state officials do,” Caldwell said. “That’s one of the things I’m probably most proud of in this budget. It’s legitimately more transparency for Oklahomans, and we got more funding in there to do it.”
Hilbert agreed that it’s “a great budget.”
“It was really a smooth conversation,” Hilbert said. “We came together, and we were able to work through it. It wasn’t a big knock-down, drag-out, long fight like you’ve seen in some years past. Everybody’s pretty excited about it.”
Follow @NonDocMedia on:
Facebook | X | Text or Email
Funding nuggets buried in the portal
As outlined on the House budget portal, other notable investments in lawmakers’ FY 26 budget deal include:
- $58 million for PREP Fund infrastructure projects, which Caldwell said includes the Level 1 trauma center project;
- $2 million to the State Regents for Higher Education for the Rising Scholars Awards proposed in HB 1282;
- $3 million for the University of Oklahoma’s specialty tutoring program tied to HB 1287;
- $3 million to match a federal grant obtained by the Tulsa Tech Hub;
- $3 million of increase to Rural Economic Action Plan (REAP) funding;
- $2 million for rapid DNA testing at the Oklahoma State Bureau of Investigation; and
- $21 million for military base “enhancement initiatives,” which Hall said involve maintenance projects at “schools inside the fences” of Altus and Vance Air Force Bases, as well as a “transportation corridor” for the McAlester Army Ammunition Plant.
“All three of those projects were suggested for the state to look at by our congressional delegation,” Hall said.
Hall and Caldwell both confirmed that lawmakers intend to advance ODMHSAS’ FY 25 supplemental funding need — which has grown from $27.4 million to about $31 million over the past 24 hours — but will keep the agency’s FY 26 appropriation flat for now with plans for another supplemental appropriation next spring.
“In the interim, we are trusting that the governor’s new CPA there is going to be able to come back and give us a real number,” Caldwell said. “We expect to have some level of supplemental at the beginning of next year. But they have enough money to get there. Investigations are still ongoing.”
(Update: This article was updated at 9:55 a.m. Thursday, May 15, to include a statement from Sen. Julia Kirt.)
