Oklahoma Governor Wants Quicker Tax Cut

DALLAS — An Oklahoma Senate proposal to delay a reduction of the state income tax rate for a full year will be opposed by Gov. Mary Fallin and the House leadership.

Senators amended a House-passed measure to lower the top tax rate to 5.5% to 4.95% rather than the 5% cap in the House version, and delayed its implementation to 2015 rather than 2014 as requested by Fallin in her opening address to the 2013 Legislature in February.

"My preference is that we still are able to give some relief to our taxpayers right now," Fallin said Wednesday.

"My priority is to have a responsible, meaningful tax reduction package signed into law this year," Fallin said.

The lower state tax rate should go into effect Jan. 1, 2014 rather than a year later to offset a two-year federal payroll tax cut that expired in January, she said.

"One of the ways that we can help relieve some of that is to give them a tax cut this year," Fallin said.

"I appreciate the words of support for the principle of tax reduction coming from the Legislature," she said. "Now it's time for action. I encourage the Senate and House to come together, negotiate, decide on the details of a tax cut plan, and send it to my desk."

House Speaker T.W. Shannon, R-Lawton, called the delayed tax cut in the Senate proposal "a travesty."

"I think that's a fundamental step in the wrong direction," Shannon said. "We need to provide tax relief now, not delay it another year."

The Senate Finance Committee adopted the revisions to House Bill 2032 on April 3 shortly after the House budget committee rejected Senate Bill 585. The failed measure, sponsored Sen. Mike Mazzei, R-Tulsa, would have lowered the top tax bracket to 4.75% in 2015 and eliminated dozens of tax credits and exemptions.

The 12-month delay in the new lower tax rate would help compensate for $98 million a year of subsidies that the state must rebate to natural gas producers through 2015, said Senate President Pro Tem Brian Bingman, R-Sapulpa.

The Oklahoma Tax Commission said the Senate committee's proposed rate cut would cost the state $65.8 million in fiscal 2015 and $169.3 million when fully implemented in fiscal 2016. A reduction to 5% on Jan. 1, 2014, would reduce revenues by $50.4 million in fiscal 2014 and $130 million in fiscal 2015, the commission said.

"That revenue would be available and help absorb the $170 million impact for the second year on the reduction of the income tax," said Bingman.

Mazzei, chairman of the Senate Finance Committee, said the 4.75% rate would lower the annual tax bill for a married couple of $80 a year or $40 a year for an individual filer.

House Speaker T.W. Shannon, R-Lawton, called the delayed tax cut in the Senate proposal "a travesty."

"I think that's a fundamental step in the wrong direction," Shannon said. "We need to provide tax relief now, not delay it another year."

Sen. Sean Burrage, leader of the Democratic minority in the Senate, said the rate cut will hurt state services.

"Senate Republican leadership says that the average Oklahoman could save $80 a year with this tax cut," said Burrage, D-Claremore. "When you add it all up, it means millions of dollars that could be used to restore funding cuts to our local schools, give our teachers or our Highway Patrol a raise, fix our roads and bridges, and restore our state capitol, which is literally crumbling around us as we debate these bills."

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