Straight shooting needed in Oklahoma tax cut trigger talks
TRIGGERS come to mind when considering the open carry law, but triggers are just as relevant to the debate over tax cuts. Open carry is moving toward the governor's desk, not quite as fast as a speeding bullet perhaps but rapidly nevertheless. An immediate income tax cut and measures to trigger them in the future? Those are moving targets as the Legislature enters its final month.
Tax cut triggers are already embedded in state law, starting with the one that reduces the gross production tax on natural gas when prices fall below a certain level. Also, the state's current top individual income tax rate, 5.25 percent, fell to that level because of an economic growth trigger. Other such triggers are now being discussed.
Tax cutters are determined to get the rate below 5 percent; others are just as determined to keep the floor at 5.25 percent. Triggers can be compromise strategies. A tax cut is promised but conditioned on growth. Politicians can say they cut taxes even if they really didn't, at least not yet.
The trigger for gross production taxes makes sense. Producers are taxed at 7 percent if the monthly average price of gas stays above $2.10 per thousand cubic feet (MCF). When prices average below that, a reduction to 4 percent is triggered. Another trigger, when the monthly average drops below $1.75 per MCF, reduces the amount to 1 percent.
Thus, when producers are prospering, state revenues benefit. When prices are low, producers can keep a higher percentage of revenues but the state surrenders more of its take.
This protects a heritage industry in a time of decline but also depresses state revenues. State Treasurer Ken Miller expects a hit on state revenues of $70 million if gas prices are $1 per MCF under estimates. Current estimates were based on a price of $3.64 per MCF. The actual price is closer to $2.
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