The Senate Appropriations Committee heard a two-hour briefing on the stateudgetorecasting process on a presentation led by Marie Schubel, director of tax policy and research at the Oklahoma Tax Commission, and John Gilbert, deputy director of revenue and budget at the Office of Management and Enterprise Services (OMES).

Schubel told the panel the Board of Equalization, created by the Oklahoma Constitution, relies on tax collection estimates produced by the Tax Commission and OMES and then certifies an amount the legislature may appropriate. "The BOE will certify that, and that then tells the legislature the amount of money that you can spend during session," she said. "The certification by the BOE is a 95% certification of that number, and that allows a 5% cushion to prevent some sort of revenue failure."

The presentation described the multi-step process used to produce apportionable revenue estimates. The Tax Commission develops detailed forecasts for major tax categories, including individual income, sales, motor vehicle, corporate and gross production (oil and natural gas) taxes. The Commission draws on two contract economists, internal staff, historical collections data and federal benchmarks from the U.S. Energy Information Administration (EIA) for oil and gas prices; OMES then applies statutory apportionments to produce the statewide certified numbers presented to the Board of Equalization in December and again in February for final certification.

Why it matters: The BOEertified number sets the upper bound on what the legislature can appropriate under Oklahomaonstitutional rules for a balanced budget. Small changes in forecasted collections can translate into tens or hundreds of millions of dollars in available spending or required cuts.

Key details from the briefing

- Process and timing: Schubel said the Tax Commission begins work in November after EIA releases energy data, receives independent scenarios from two contract economists, and produces a selection (typically the base case) that the three-member Tax Commission certifies before OMES packages the figures for the BOE. The BOE meets in December and again in mid-February (this year noted as Feb. 14) to certify figures.

- Who decides what is apportionable: OMES takes the Tax Commission's gross estimates, allocates collections to the constitutionally and statutorily required funds and produces the 95% apportionable figure that the BOE certifies.

- Major sources of revenue and relative shares: Schubel showed the longer-term average shares of collections by tax type: individual income and sales taxes together typically account for more than half of recurring general revenue, with motor vehicle, corporate income and gross production taxes smaller but consequential pieces.

- Legislative changes and "off the top" deductions: The briefing noted that some revenues are removed "off the top" for statutory programs before the 95% apportionable calculation (examples presented included the parental choice tax credit, quality jobs incentives and other statutory carve-outs). Schubel noted the parental choice tax credit and grocery sales tax cut were material items that affected year-to-year totals; she said the parental choice program produced a $175 million adjustment in the first year and that the cap rises in later years (committee discussion referenced a $250 million cap in a later year).

- Grocery sales tax cut and data lag: Committee members asked about the grocery sales tax reduction, which took effect August 29 in the cycle under discussion. Schubel said early quarterly data cover a holiday period and she preferred a full year of data before drawing firm conclusions about the full-year effect; she also said initial Tax Commission selections factored in an estimated $308,000,000 effect for the grocery exemption in the December analysis.

- Gross production (oil and natural gas) forecasting by statute: Schubel said, "by statute, we do those internally" for gross production tax and that the Commission uses EIA benchmark prices (West Texas Intermediate and Henry Hub) adjusted by an Oklahoma differential and applies Oklahoma production growth trends reported to the Tax Commission. She emphasized the Commission forecasts taxable value for collections, not total physical production.

- Volatility and accuracy: The presenters emphasized that oil-and-gas and corporate income tax are notably volatile. Schubel presented seven-year accuracy statistics showing December forecasts become more accurate in the February update; typical December-to-actual accuracy for major categories ranged in the low 90s percent for individual income and sales taxes but were lower for gross production and corporate income.

- OMES packet and fiscal outlook: John Gilbert, OMES deputy director, reviewed the BOE packet and the difference between certified funds (fiscal-year-limited funds certified at 95%) and authorized or agency revolving funds (which may be available at the agency level and are not always fiscal-year-limited). He said the fiscal year that built the governorudget had a base general revenue estimate near $8.29 billion and that actual FY24 general revenue collections were about $8.47 billion, producing a roughly $177 million surplus. Of that surplus, $40.4 million went to the constitutional reserve (rainy-day) fund, which the packet showed capped the fund at $1.365 billion.

Questions and points of debate

- Senators asked repeatedly about timing and transparency: whether contract economists consult with the Tax Commission, how legislative changes are reflected, and the effect of biennial vehicle registration and recent motor vehicle trade-in legislation on motor vehicle sales tax collections. Schubel said the contract economists provide independent scenarios directly to the Tax Commission and that staff consider collections and industry data when selecting between those scenarios.

- The committee asked OMES for historical information about how much of the 95% certified authority the legislature historically appropriated. Gilbert said pre-COVID practice was to appropriate close to the full 95% authority; post-COVID years showed more frequent under-appropriation of the full certified authority.

What was not decided

There were no formal motions or votes recorded during this briefing. The session was an informational presentation and Q&A; final BOE certification was scheduled for the BOE meeting in February.

Ending

Members thanked Tax Commission and OMES staff for the overview and asked for follow-up information on several specific items raised during the session, including detailed breakdowns for smaller tax types (such as the fee related to electric vehicle registration collected by Service Oklahoma), historical variance between December and February forecasts, and further analysis of interest and investment income assumptions for FY26.