A measure that cuts Oklahoma's top personal income tax rate in 2015 and provides $120 million over two years to pay for repairs to the state Capitol was signed into law Monday by Gov. Mary Fallin.
House Bill 2032 reduces the top income tax rate from 5.25 percent to 5 percent on Jan. 1, 2015. Taxpayers would first see the effect of the tax cut in 2016.
The measure also sets up a mechanism to cut the rate to 4.85 percent in 2016 if the total revenue growth in the 2016 fiscal year, which begins July 1, 2015, being equal to or greater than the fiscal impact of the 0.15 percent tax cut.
HB 2032 contains two key priorities sought by Fallin this year. The governor for the second year in a row sought a reduction in the top personal income tax rate and implored lawmakers this year to provide funds to repair the nearly 100-year-old Capitol.
Having those two items addressed in one bill will draw a legal challenge from Jerry Fent, an Oklahoma City attorney who has challenged the constitutionality of funding bills passed by lawmakers the past several years.
Fent said HB 2032 violates the Oklahoma Constitution in a couple of areas. The constitution requires bills to contain one subject, and HB 2032 illegally sets up a special appropriation, he said.
Fent said he will file papers asking the state Supreme Court to take original jurisdiction of the matter before the measure takes effect July 1.
“I think they will because it's a statewide concern, there's an immediate emergency and a pure question of law,” he said.
Fallin said the income tax cut was an important tool for job creation and economic development.
“One of the first questions I get when I am talking to business owners throughout the country is, ‘if I come to Oklahoma, are you going to raise my taxes?'” Fallin said. “Passing a significant and responsible tax cut will help us to recruit these businesses and retain the ones we already have. Our tax cut will ultimately lead to more job opportunities for all Oklahomans.”