Tax cuts passed a decade ago and renewed in 2010 are set to expire at the end of the year. In early January, spending cuts totaling $1.2 trillion are scheduled to take effect, with most affecting the Defense Department.
“Income taxes are getting ready to go up if they don't address these issues,” Fallin said.
The White House released a report this week showing Oklahoma consumers would spend an estimated $2.2 billion less next year should federal income tax rates return to the levels of a decade ago. The average Oklahoma family of four with an annual income of $63,100 would see its tax bill rise by $2,200.
Fallin said she's concerned about the effect that cuts in military spending could have in Oklahoma, which has five military installations
“That would have a huge impact on our state,” she said.
A stalemate continues in Washington, with Obama wanting to extend all expiring tax cuts except those that apply to incomes over $200,000 for individuals and $250,000 for couples. Most Republican congressional leaders argue that would harm the economy and instead are pushing for specific cuts.
Oklahoma finance officials have said the $137 million in projected losses of federal funding includes $50 million in funding for education and more than $40 million for health and human services. Several federal funding streams would not be affected by the looming cuts, including funds for Medicaid, transportation, Social Security payments, food stamps and most veterans' programs.
Fallin said the uncertainty already is affecting Oklahoma.
“One of the things I hear constantly from the business community is that they're not making any major spending decisions, they're not buying equipment, vehicles,” she said. “Some aren't expanding because there's so much uncertainty in Washington. The uncertainty at the U.S. Capitol is one of the things that is holding back the national economy and why we haven't seen some of the improvements that we need in the high unemployment rate that we face as a nation.”