February 4, 2013
KRMG.com
By Shelby Travis and Sean Murphy, The Associated Press

Oklahoma Governor Mary Fallin called for a modest cut to the state's top income tax rate Monday in her annual State of the State address to lawmakers as the 2013 legislative session got underway.

In a departure from last year's address, when she unveiled a major overhaul of the state's tax code and deep cut to the top rate, Fallin this year is proposing a one-time cut of one quarter of 1 percent.

Her proposal would drop the rate from 5.25 percent to 5 percent for most tax filers in the state and cost $106 million when fully implemented in 2015, according to the governor's estimate.

"This proposal gives us the flexibility we need to ensure that we are reducing taxes responsibly without starving government," Fallin said in prepared remarks. "This is not the last tax cut we will see from my administration. I am serious about lowering taxes and I will work to get us a lower income tax rate that makes us more competitive with our neighbors to the north and to the south — both of which have lower taxes than Oklahoma."

Fallin also called for further changes to the state's pensions that would reduce the unfunded liability of the major systems, an overhaul of the workers' compensation system and an immediate boost in funding for repairs to the Capitol and teacher benefits.

Fallin also released her executive budget, which is her recommendation for how lawmakers should divvy up the estimated $7 billion in revenue they are authorized to appropriate this year.

The governor's budget often serves as a starting point for negotiations with lawmakers on how the state revenue will be allocated.

Although the final amount for how much lawmakers will have to spend for the fiscal year that begins July 1 won't be determined until later this month, early projections are that they will have about $170 million more to spend this year than last year.

The governor wants lawmakers to approve $18.5 million in supplemental funding this year, including $10 million to begin repairs on the Capitol's crumbling exterior facade and $8.5 million to help pay for health benefits for public school teachers and education employees.

"The Capitol is a symbol of our state, a place of business and a living museum dedicated to preserving Oklahoma history, literature and artwork," Fallin said in prepared remarks. "It is not right for visitors to be greeted at this building by construction cones, crumbling facades and a faulty sewer system."

Fallin's executive budget calls for increased funding for education of about $13.5 million and major boosts in spending for the state's Medicaid and and child welfare programs.

Her proposal includes $40 million in funding next year for an increase in the number of Medicaid-eligible Oklahomans who are expected to enroll in the program and another $40 million to the Department of Human Services for improvements to the state's child welfare system.

"For years, care for these children has been inadequate," Fallin said in her remarks.

Fallin devoted much of her remarks to issues of health care, criticizing the federal health care plan's expansion of Medicaid, which she called "unaffordable for the country at a time when we are already experiencing a long-term spending crisis."

Fallin gave support to a proposal to allow Oklahoma cities to enact tougher smoking bans in public places.

Doing so would address "the state's number one killer tobacco."

Fallin said it would save taxpayer money by lowering health costs and lost productivity.

State law currently bans smoking in many public places and indoor workplaces but prohibits cities from adopting their own smoking bans.

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