Lawmakers OK tax cut, funding bill

By John Greiner and Jennifer Mock Published: June 24, 2006
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State legislators passed a major funding bill for state government and the biggest tax cut in Oklahoma history Friday as they battled to complete their work so government can continue operating July 1.

The $7 billion budget’s final passage - the largest in state history - comes after months of political wrangling over the funding details.

A special session was forced when lawmakers could not agree on a budget before the session ended in May. About $100,000 was spent on the special session since Wednesday because lawmakers could not finish their work in the constitutionally set time.

The tax reduction plan will cut the income tax rate from 6.25 percent to 5.25 percent over four years; raise the standard deduction to the federal level in four years; and eliminate the estate tax in three years. The Senate passed the tax cut measure Friday afternoon. The House on Friday evening approved the tax plan, which will be sent to the governor.

In total, the package costs about $624 million once fully implemented, but House Speaker Todd Hiett said the cuts will expand the state’s economy. The amount of the tax cuts - the House leadership’s top priority this session - spurred most of the budget impasse, as Senate Democrats opposed any cuts.

Eventually a combination of a rate cut and raising the standard deduction was needed to break the logjam.

Lawmakers passed legislation that will nearly double the state budget for state highways and county roads over a period of years.

State Transportation Director Gary Ridley said that eventually the highway program will have $470 million annually for its programs.

For years, it’s been receiving about $200 million a year from the state fuel taxes.

A $3,000 across-the-board pay raise for Oklahoma’s teachers was passed Friday, after being one of the main sticking points in budget negotiations.

The raises will cost a total of about $137 million. School support personnel will also receive a 50 cent per hour raise, totaling more than $18 million.

But school districts will be responsible for more than $28 million in increased social security and retirement payments on the increased salaries. A separate appropriation was not made to cover that added liability. Some lawmakers called the move an unfunded mandate on schools.

State employees also got a 5 percent across-the-board pay raise. The average raise for state employees will be about $1,200 a person, Hiett said.

Legislators also passed a bill giving an average 16-percent salary increase to judges and statewide elected officials. The judicial raises were recommended last November by a new panel on judicial compensation.

For example, the salary of the Chief Justice of the Oklahoma Supreme Court will go from $117,571 to $140,000.


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