Oklahoma budget deal struck as Medicaid changes sought

Top Republican Oklahoma officials announced a fiscal 2027 budget deal on Wednesday as they advance ballot measures to restrain Medicaid spending. 

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Gov. Kevin Stitt praised the $12.78 billion agreement for his last budget in office, highlighting a plan to beef up the state’s already hefty reserves with the creation of a Taxpayer Endowment Trust that will invest $200 million in existing savings. 

“Within the next decade, this account will start delivering earnings to support states general revenue, and it’s going to lock up savings today as we’re protecting future core services that serve the people of Oklahoma and protecting our progress to become a zero-income-tax state sometime in the future,” he told reporters.

Stitt’s proposed fiscal 2027 budget projected the state will end the current fiscal year on June 30 with $1.776 billion in reserve funds and nearly $1.53 billion in unspent cash, along with more than $1 billion in other fund balances.

Legislative leaders said the budget holds state agency appropriations harmless, while protecting core services. They also warned about looming federal cuts to Medicaid, which Oklahoma expanded under a 2020 constitutional amendment approved by voters. Legislation to place measures on the August ballot to control Medicaid costs passed the House and are pending in the Senate. 

One would remove Medicaid expansion from the constitution, putting it back in the legislature’s control, while another would terminate expansion if the federal government’s share of expansion funding drops below 90%.

“What we’re going to ask the voters to do is simply take it out the constitution and put it in statute so we can work around the edges and make it work much better for the state to get those people who need the help the help they need, but not those who just refuse to go work,” Senate President Pro Tem Lonnie Paxton said. “We have to control those expenses. If we do not accomplish this, it’s going to be harder and harder to keep a budget moving forward without making cuts.”

House Democratic Leader Cyndi Munson, who has raised concerns about efforts to undo Medicaid expansion, said her members were largely shut out of budget talks.

“We are all learning of this budget deal alongside every Oklahoman — and it’s precisely why we don’t see their needs reflected in this budget, especially as federal cuts are looming and made,” she said in a statement. 

Oklahoma has been the recipient of three bond rating upgrades since 2024, with the latest coming from Fitch Ratings in March.