Keeping the focus on improving the state's business climate and taking a hard look at reducing the state's personal income tax rate are among the objectives of Senate President Pro Tem Brian Bingman for this year's session, which starts in about a week.
Bingman, R-Sapulpa, said he supports lowering and gradually eliminating the state's personal income tax, but he doesn't want to rush into a decision that could be catastrophic for the state. Personal income taxes bring in about one third of state tax revenues.
“It has to be a very thoughtful, deliberative approach,” he said.
A couple of bills have been filed that would lower the state's top personal income tax rate of 5.25 percent to 2.25 percent in 2013, and then gradually lower it until the rate is zero in 2022. A legislative task force has come up with criteria for tax credits and another panel has proposed reducing the top personal income tax rate by a half percent over the next two years.
“We still have some challenges with our budget and we have to have a balanced budget,” Bingman said. “Any cuts that we make we've got to account for.
“If we're going to make a cut in the income tax, which I'm all for, we just got to offset that somewhere. The revenue's got to come from somewhere.”
One third of revenues
Personal income taxes generate nearly one third of the revenues appropriated by legislators. Lawmakers appropriated $6.4 billion this fiscal year; about $1.9 billion is to come from personal income taxes.
“As easy it is to go out and reduce our income tax, if we ever went too far in some area you're never going to come back,” Bingman said. “I just want to make sure that we've got consistent growth in sales tax and other revenues.”
Bingman said he wants to ensure core services, such as education, transportation, public safety, and health and human services, are properly funded. More money likely will have to be allocated to the Department of Human Services as the result of a pending settlement to a federal lawsuit against the agency.
A federal class-action lawsuit accuses DHS of harming children in its foster homes and state shelters.