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Fallin to again seek cutting Oklahoma's personal income tax rate

Oklahoma Gov. Mary Fallin will propose a permanent, one-time reduction when she makes her State of the State address Feb. 4.
BY MICHAEL MCNUTT Published: January 20, 2013

Gov. Mary Fallin will call for lowering the state's personal income tax rate for the second year in a row when she addresses lawmakers next month to start this year's session.

Fallin said she will pitch a simpler, one-year tax cut compared with her somewhat complicated proposal last year that called for revising income tax brackets, eliminating certain exemptions and credits and establishing so-called revenue triggers, which meant further reductions of the income tax depended on the state's revenue increasing by 5 percent.

“We plan on continuing to gradually lower our income tax,” she said.

Fallin is working on her third State of the State address that she will make Feb. 4 to kick off the first session of the 54th Oklahoma Legislature. She will address a joint session of lawmakers about 30 minutes after the House of Representatives and Senate convene.

Fallin wouldn't indicate how much of a cut she is proposing in the state's top bracket of 5.25 percent. But she said it will be much more modest than her idea last year.

“I laid forth a strategic plan for lowering our income tax,” Fallin told The Oklahoman. “There wasn't the legislative will at the time. I think this year hopefully that there will be legislative will to make a simpler, reasonable cut in our income tax and take it a year at a time.”

Fallin said her personal income tax plan would be a modest cut and would be a one-time reduction.

“The reason for that is there is so much uncertainty in Washington with the gridlock in Congress and certainly with the sequestration … the debt ceiling, the debts of our nation … it's becoming more challenging … for all governors across our nation to know … what the federal funds will be coming to our states,” Fallin said.

A last-minute “fiscal cliff” deal avoided federal cuts from being implemented earlier this month and pushed back the deadline for spending cuts until March 1. If a deal isn't reached, then the “federal cliff,” or sequestration, could result in Oklahoma losing $137 million in direct federal funding as a result of automatic, governmentwide spending cuts.

“We'll be right in the middle of our legislative session after we've already laid out what we proposed as our budget,” Fallin said. “Congress could come back and make cuts with sequestration.

“I've warned all of our Cabinet secretaries we've got to be conservative in our approach in our spending because we could see cuts coming from the federal government,” she said.

Lawmakers are expected to have nearly $7 billion, or about $170 million more than last year, to appropriate this year, based on preliminary revenue projections from the Oklahoma Tax Commission. A final estimate will be issued next month.

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