Governor doesn't favor delaying state personal income tax cut
Delaying any reduction of the state's personal income tax for a year is not an option, even if the money saved by not implementing the cut for a year would go to repairing the state Capitol, one of her key priorities, Gov. Mary Fallin said Wednesday.
The GOP governor said she is willing to consider various options by the Republican-controlled Legislature to lower the state's top personal income tax rate of 5.5 percent, but she opposes postponing any reduction from taking effect later than Jan. 1.
“My preference is that we still are able to give some relief to our taxpayers right now,” Fallin said. “People in Oklahoma have seen their paychecks cut because their Social Security taxes went up. People in Oklahoma have less money in their pocketbooks and one of the ways that we can help relieve some of that is to give them a tax cut this year.”
The two-year reduction in the payroll tax — which funds Social Security — was allowed to expire in January as part of negotiations with the president and Congress over federal budget cuts. Nearly 2 million workers in the state have smaller paychecks because of the expired tax cut.
A Senate committee last week changed Fallin's personal income tax-cutting proposal and replaced it with a new plan. Among other things, it would delay the income tax cut until Jan. 1, 2015, a year later than Fallin proposed.
House Speaker T.W. Shannon, R-Lawton, who carried Fallin's proposal in House Bill 2032, has said he also supports having a tax cut take effect in 2014.
State Treasurer Ken Miller, writing in his most recent Oklahoma Economic Report, said cutting the income tax and financing repairs to the Capitol and other buildings in the Capitol complex could be accomplished this session.
“The Legislature could pass a bill to lower the income tax, but move the effective date forward by 12 months,” wrote Miller, a Republican. “By dedicating the revenue that would have been lost with earlier implementation, the Capitol project could be financed without debt or costly delay. This approach may appeal to those who want to address Capitol repairs without debt but also want to lower taxes on Oklahoma families.”
Miller was unavailable for comment Wednesday, but his spokesman, Tim Allen, said the treasurer's preference is both to cut taxes and fund repairs this year. His proposal is a possible compromise, Allen said.
Fallin and GOP legislative leaders last year sought to cut the personal income tax rate, but lawmakers, after sorting through five income tax-cutting measures, couldn't agree on two compromise bills in the last days of the session. Fallin is calling for a smaller cut this year, and proposed reducing the top rate to 5 percent. Her proposal called for it being paid out of existing revenue, which would have cost about $120 million a year when fully implemented.
MICHAEL MCNUTT, Capitol Bureau