DALLAS — Oklahoma Gov. Mary Fallin and Republican legislative leaders reached agreement Monday on a $6.8 billion budget for fiscal 2013.
The spending plan is up slightly from fiscal 2012 appropriations of $6.6 billion.
Lawmakers must adopt a budget by Friday’s scheduled adjournment to avoid a special session. The state’s fiscal year begins July 1.
“This budget deal is a responsible, fiscally conservative agreement that appropriately funds core government services,” Fallin said.
The budget accord was belatedly announced Monday night after House Republicans met for several hours in three closed caucuses. The delay was caused by a division on a proposed cut in the state’s top income tax rate to 4.8% from the current 5.2%.
Lawmakers were concerned after an analysis of HB 3016 by the Oklahoma Tax Commission said the drop in the rate would increase state taxes on 24% of the 1.6 million filers, decrease taxes on 54% and have no effect on 21%. The bill would also eliminate many tax credits and deductions.
Sen. Mike Mazzei, R-Tulsa, said only 16% of filers will pay more. The analytical software used by the tax commission is flawed, he said.
A number of Republican lawmakers said they were disturbed to find the plan would raise taxes on middle-class families rather than reduce them.
“We don’t want to raise taxes on anybody,” said Rep. Don Armes, R-Faxon.
House Speaker Kris Steele, R-Tulsa, said the House will support the tax cut bill he sponsored.
“The House is going to vote this week on a meaningful tax reduction for hard-working Oklahomans,” he said. “It’s not a product that everyone is happy with, but it represents a compromise.”
Filers whose liability will be lower under the 4.8% rate will realize an average savings of $60, the tax commission said. The highest average increase in liability is $10.
The Tax Commission determined that 87% of the filers with decreased liability earn between $150,000 and $499,000 a year, while 61% of filers with annual incomes between $12,000 and $14,000 will see an increase.
The Oklahoma Policy Institute said the bill would raise taxes on 43% of households with taxable income between $85,000 and $173,000 a year, while 53% would pay less.
Rep. Scott Inman, D-Del City, called the tax plan “horrible” and “politics at its worst.”
“You’ve got a group of Republican politicians who believe that the best way to get re-elected is to sell a tax cut to the people of Oklahoma, whether it’s beneficial for the state or not,” said Inman, leader of the Democratic minority in the House.
Inman said all 31 Democrats in the House are united against the tax cut, but they would need the support of 17 of the 67 Republicans to defeat the measure.
“We don’t believe that plan can garner enough votes in the House to pass,” he said. “The governor and the Republican leadership will have to go back to the drawing board if they want any kind of tax cut this session.”
The tax cut has been approved by House and Senate committees. Passage is expected in the Senate, where Republicans hold 32 of the 48 seats.
Finance Secretary Preston Doerflinger said last week that the lower rate would reduce revenues by $32.7 million in fiscal 2013 and $102 million in fiscal 2014.