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Oklahoma legislative leader says work on Oklahoma budget should be done in two weeks

Oklahoma House Speaker Kris Steele says plans on Oklahoma's budget still call for a cut in the top personal income tax rate.
BY MICHAEL MCNUTT Published: May 6, 2012

With only three weeks left in this year's session, a budget agreement between legislative leaders and the governor should be worked out within two weeks, House Speaker Kris Steele says.

The package will include a cut in the state's personal income tax rate, said Steele, R-Shawnee.

“In addition to the income tax reduction proposal that we're working on, we're also considering not just this next year but several years,” Steele said. “We're not trying to determine an income tax reduction based on one year.”

But any cut for next year won't be as deep as some had proposed, and the idea of economic triggers that would lower the rate further in subsequent years still is being debated, he said.

Restoring funding?

Discussions on reducing the personal income tax rate are intertwined with developing the budget for the 2013 budget year, which begins July 1.

House Democrats say any cut in the personal income tax is too deep. Personal income tax collections produce nearly one-third of the budget appropriated by lawmakers, the Democrats say, and funding should be restored to many state agencies that have had to undergo budget cuts the past three years.

Those cuts came as the state dealt with declining revenues caused partially by the national recession and low energy prices.

“If they want to offer up a flat budget and everybody's gong to get essentially what they got last year, that's another cut to core services of government because nothing got cheaper over the last year,” said House Minority Leader Scott Inman, D-Del City.

Steele said the top personal income tax rate has been reduced eight times since 1998, from 7 percent to 5.25 percent. The most recent drop occurred last year when it was reduced a quarter percent.

“We've been able to implement those reductions without jeopardizing funding for core services,” he said. “I truly suspect that at the end of the day that's what we'll see come out of this session as well.”

Core services have been identified as roads and bridges, public safety, education, human services and health. Those make up nearly 90 percent of the budget appropriated by lawmakers.

Steele said it's unknown whether any economic trigger for future years would be part of a personal income tax reduction plan. Triggers would cut the personal income tax rate by an additional percentage in any year in which the state met a projected amount of revenue growth.

Republican control

Democrats are outnumbered 66-32 in the House, which makes it difficult for them to be much of a roadblock to any budget approved by the Republican-controlled Legislature. Republicans have a 32-16 majority in the Senate, and Gov. Mary Fallin is a Republican.

“We continue to make the case that public education, infrastructure, transportation and health care is too important to the state of Oklahoma to pass unnecessary and damaging tax cuts during this economic time,” Inman said.

Legislators this year are scheduled to adjourn May 25, and approving a budget is one of their main tasks.

Fallin and several GOP legislators have suggested cutting the top personal income tax rate of 5.25 percent next year as well as developing a plan to eliminate the income tax. But those proposals depend partially on eliminating economic tax credits, something they haven't done so far this session.

“To the degree that we're going to be able to clean up or eliminate various tax credits, we're not going to do all that I hoped that we would do in that regard,” Steele said.

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