, Muskogee, OK

Oklahoma News

February 27, 2014

Tax-cut triggers included in latest legislative proposals

Reductions would hinge on state revenue growth

OKLAHOMA CITY (AP) — Oklahoma Republican legislative leaders unveiled new proposals on Wednesday to cut the state’s income tax, but not until certain levels of revenue growth are reached.

Separate House and Senate bills were released Wednesday to reduce Oklahoma’s top personal income tax rate from 5.25 percent to 5 percent, a longtime but elusive goal of Gov. Mary Fallin, a Republican, and GOP legislative leaders.

Senate President Pro Tem Brian Bingman said his measure, which will be considered Thursday in the full Senate, would cut the rate once collections to the state’s main operating fund for state government return to 2013 levels.

“We made a commitment to the people of Oklahoma and we intend to keep that commitment,” Bingman, R-Sapulpa, said in a statement. “This is a fiscally responsible approach that will bring tax relief to Oklahomans and encourage economic growth in our state.”

Bingman’s measure includes a second reduction in the rate to 4.85 percent if certain additional revenue triggers are met.

The Legislature approved a similar tax-cut bill last year that Fallin signed, but that measure also included funding for state Capitol improvements, and it was thrown out by the Oklahoma Supreme Court for violating a constitutional requirement that bills deal with just one subject.

This year, legislators have about $188 million less to spend on state programs, making passage of a tax cut more of a challenge.

A separate House proposal by state Rep. Earl Sears passed narrowly through a House committee late Wednesday to impose a similar cut from 5.25 percent to 5 percent, beginning in January 2016, if income tax collections grow enough to cover the cost.

“I’m well aware the economic environment is not good for talking about a tax cut,” said Sears, R-Bartlesville. “But I feel this is a responsible tax cut that is tied to revenue growth from income tax collections.”

The Oklahoma Tax Commission’s current estimated projected cost of a .25 percent reduction in the tax is $147 million a year.

Democratic leaders criticized both proposals as politically motivated and said there is no reason the Legislature can’t wait until next year to see whether revenues improve enough to offset the cost of a tax cut.

“We know it’s bad public policy to cut taxes right now, so why do it?” asked Senate Democratic Leader Sean Burrage, D-Claremore. “The only reason is politics. They want to vote on a tax cut in an election year.

“It sounds to me that once again it’s politics over good policy.”

Although Fallin typically doesn’t discuss specific legislative proposals until they reach her desk, a spokesman said she is open to any plan to “responsibly reduce the income tax rate.”

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