Oklahoma’s highest income-tax rate will drop to 5.25% from 5.5% on Jan. 2, 2012, after the Board of Equalization determined last week that revenues will be 4.4% higher next year than in fiscal 2011.
State law provides that the rate must be lowered whenever revenue is up by more than 4% from the previous fiscal year.
The board accepted a revenue estimate that showed the Legislature would have $6.2 billion of general fund revenues to appropriate in fiscal 2012. The spending limit of 95% of revenues is $159.6 million more than was available in fiscal 2011 and $106.4 million more than the board was told in December.
Preston Doerflinger, director of the Office of State Finance, said the revised revenue shortfall for fiscal 2012 is $500 million.
“Projected increased revenue from oil taxes and personal-income tax collections make up the bulk of the difference in December’s estimate and February’s estimate,” Doerflinger said.
Gov. Mary Fallin, who chairs the revenue estimating board, said the higher estimate will be helpful in developing a final state budget for next year.
“My priorities as I work with the Legislature to balance the budget, however, are the same: find ways to make government operate more efficiently and effectively and continue to look for ways to save taxpayer dollars,” Fallin said.
“It’s great that our budget shortfall is smaller than expected, but modernizing our government agencies is still every bit as important,” she said.
Fallin’s proposed fiscal 2012 budget calls for cutting most agency spending by 5% from fiscal 2011, but public safety, education, and health care agencies will see cuts of only 3%.