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.
Agencies have made budget requests totaling an increase of about $1.4 billion for the 2014 fiscal year, which begins July 1.
“There are a lot of people out there wanting to start or expand new programs,” she said.
Fallin's income tax proposal was among several discussed by lawmakers last year. Some depended on eliminating tax credits and deductions, which lawmakers backed off of after hearing complaints from businesses and individual taxpayers. More modest proposals were pitched in the last days of the session, but lawmakers adjourned without agreeing on an income tax reduction.
Fallin said her proposal also will be much more conservative than the income-tax plan approved last year in Kansas. The plan, similar to one proposed by many Oklahoma GOP lawmakers last year, has resulted in revenue shortfalls, with revenues projected to drop more than $700 million.
Fallin said she will ask lawmakers to appropriate some of the state's growth revenue to pay for programs intended to improve learning for students, such as better reading instruction and end-of-high school exams in public schools.
Fallin said she will ask for more money for mental health programs and encourage Oklahomans to develop healthier habits.
“I've made that a priority the last couple of years, mental health services and health care and improving the health of Oklahoma,” she said.
Fallin said she is encouraged that a ranking of America's health in 2012 puts Oklahoma 43rd in the nation in the wellness of its residents. Oklahoma was ranked 49th three years earlier.
Fallin said she will challenge lawmakers to find a way to repair and renovate the nearly 100-year-old state Capitol, which has serious plumbing and electrical wiring problems. She supported a bond issue last year; a $200 million proposal that included repairing other buildings in the Capitol complex failed in the House.
She said she again will encourage legislators to find a way to provide funds to help complete the American Indian Cultural Center in Oklahoma City.
“There are a lot of different options we can look at, whether it's bond issues, whether it's cash, whether it is raising private-sector money,” Fallin said. “We're going to keep all options on the table.”