Oklahoma Governor Mary Fallin, along with state House and Senate GOP leaders, will again push for a cut in the state income tax when lawmakers return to the Capitol on Monday for the start of a new legislative session.
Republican leaders last session spent considerable time talking and studying the issue, but a final plan did not materialize. This year, they will work on another proposal during the four-month session, which must conclude no later than May 31.
“I think we just pick up from where we left off last year,” said Senate President Pro Tem Brian Bingman, R-Sapulpa. He said he would prefer that some ineffective credits and incentives be eliminated to pay for it.
Fallin is expected to propose a modest reduction, less than 1 percent, in the current rate of 5.25 percent. It would not be contingent on additional growth revenue or the elimination of credits and exemptions.
An income tax reduction would be a good way to offset the loss residents saw with the rise in the federal payroll tax earlier this year, Fallin said. House Appropriations and Budget Committee Chairman Scott Martin, R-Norman, has a bill to reduce the income tax rate to 5 percent from 5.25 percent.
House Speaker T.W. Shannon, R-Lawton, said that last year, discussions started too late in the process. Senate Appropriations Chairman Clark Jolley, R-Edmond, called last year’s tax cut discussions productive, adding that lawmakers simply ran out of time to pass an agreement.
Shannon, Fallin and Bingman believe a tax cut would generate additional revenue for the state because consumers would have more money to spend. The state is expected to have about $170 million in additional revenue. Agencies have proposed $1.4 billion in additional spending compared to last year.
Shannon said any cut needs to be balanced with the need for core government services.
“You can go too far too quickly,” Shannon said. A potential reduction in federal funding is also of concern to Shannon, who said state agencies need to prepare themselves should federal funding be reduced.
Democrats, the minority party in both chambers, saw their numbers reduced following the November election. They have vowed to oppose a tax cut until core services and issues, such as repairing the crumbling state Capitol, are funded.
“Last year, we spent four months-plus talking about tax cut proposals and in the end, nothing passed,” said Senate Minority Leader Sean Burrage, D-Claremore, who leads the 12 Democrats in the 48-member Senate. “And I hope I am not being derelict in my duties, but I am refusing to read any of the tax cut bills at this point, because last year I wasted many, many hours reading those bills and none of them came to fruition.”
Burrage said the state is in no position to decrease its revenues when it is not properly funding education, paying state employees decently or fixing the Capitol. He called last year’s discussions about tax cuts platitudes because people wanted to hear it.
“So, I hope we don’t spend too much of this session talking about a tax cut like we did last year that is never going to happen, that we don’t need,” Burrage said.
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Copyright 2013 – Tulsa World, Okla.
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Tags: Income Tax, State and Local Taxes
