OKLAHOMA CITY (AP) — Gov. Mary Fallin and legislative leaders have reached a deal to cut Oklahoma's top personal income tax rate to 5 percent, beginning in January 2015, two Republicans with direct knowledge of the discussions confirmed on Tuesday.
Fallin, Senate President Pro Tem Brian Bingman and House Speaker T.W. Shannon scheduled an announcement Tuesday afternoon to discuss details of the tax cut, plans to overhaul the state workers' compensation system, and “progress on major legislative items.”
Two Republicans with knowledge of the discussions told The Associated Press the tax cut will include a drop in the top rate from 5.25 percent to 5 percent, starting Jan. 1, 2015. A second cut to 4.85 percent would take effect in January 2016 if certain revenue triggers are met.
Both spoke on condition of anonymity because they were not authorized to disclose the plan ahead of the announcement.
Cutting the state's personal income tax rate has been a top priority for Fallin, who proposed a major reduction in the rate in 2012 only to see an agreement on the plan fall apart in the waning days of the legislative session.
This year, Fallin proposed a more modest plan to cut the top rate from 5.25 percent to 5 percent, beginning in January. Her proposal was embraced by Shannon, but gutted in the Senate and replaced with a proposal to delay the cut until 2015 and drop the top rate to 4.95 percent.
Fallin and Shannon both expressed a willingness to delay the cut if it meant a deeper cut. The plan could be seen as a political victory for all sides — Fallin would be able to sign a tax cut into law this year, the Senate would have effectively delayed the cut until 2015, and Shannon was able to secure a deeper cut to the rate.
Dropping the top income tax rate to 5 percent would save the average Oklahoma taxpayer about $80 per year and cost the state an estimated $130 million annually when fully implemented.
Bingman and some other members of the Republican-controlled Senate have voiced concerns that waiting until 2015 was more fiscally responsible, since the state is still obligated to pay back an estimated $90 million to the oil and gas industry next fiscal year in the form of delayed tax incentives.
Shannon and Bingman both have said they expected to announce a deal this week on the income tax cut, overhauling the workers' compensation system and a long-range plan to repair and refurbish state buildings, including the Capitol.
The workers' compensation plan calls for a transition from the current court system to an administrative one, along with an “Oklahoma option” that would allow companies to provide their own workers' compensation coverage if they meet certain required standards.
HB 2032: http://bit.ly/12r3SKc
Sean Murphy can be reached at www.twitter.com/apseanmurphy.