January 24, 2013
By Skyler Cooper and Sean Murphy, The Associated Press
A one-time cut to the state's income tax is not off the table, Gov. Mary Fallin said Wednesday, even as she outlined about $56 million in new funding proposals for mental health programs and Medicaid.
Fallin's proposals, which she discussed at a legislative forum hosted by The Associated Press, drew immediate criticism from top Democrats who said it was hypocritical to call for additional spending while proposing a cut in a key source of state revenue.
"We've got a governor and Republican leadership who aren't making the proper investments in our seniors and in our children," said House Minority Leader Rep. Scott Inman, D-Del City. "To say we can afford to cut hundreds of millions of dollars out of our income tax revenue while openly recognizing the need to care for these folks is hypocritical and misguided."
Fallin said she will urge lawmakers to consider a one-time cut in the state's top income tax rate of 5.25 percent — without losing exemptions or deductions — when the Legislature convenes on Feb. 4. Unlike a sweeping proposal she unveiled during last year's State of the State address, Fallin said this year's plan would be simple and modest, although she declined to give specifics.
"I am committed to continuing to gradually reduce our income tax rate in the state of Oklahoma at a rate that we can afford and still provide essential services," she said.
New House Speaker T.W. Shannon, R-Lawton, and Senate President Pro Tem Brian Bingman, R-Sapulpa, both said they would endorse a balanced tax-cut proposal, but stressed the need to consider eliminating some of various tax credits and deductions that cost the state millions of dollars each year.
"It (a tax cut) has to be done with a balance and a need for core government services," Shannon said.
A cut of about one-quarter of 1 percent to the state income tax rate equates to a loss of roughly $120 million annually once fully implemented, state finance officials have said. But Fallin said that revenue would ultimately be offset by growth in the economy that results from a lower tax burden.
The Senate's minority leader, Sen. Sean Burrage, D-Claremore, said there are too many demands on state money.
"We are in no position to cut revenue," when the state needs to spend more on its workers, schools and to make necessary repairs to the Capitol, Burrage said.
Fallin also said she plans to propose $16 million in new funding for the Oklahoma Department of Mental Health and Substance Abuse Services and a $40 million boost in revenue to the Oklahoma Health Care Authority to cover an anticipated increase in the number of enrollees in the state's Medicaid program.
The ODMHSAS funding would help fund several programs, including a new crisis center, drug treatment, suicide prevention and counseling services for families with children with severe emotional disturbances.
The state's Medicaid population is expected to grow once new tax penalties are in place under the new federal health care law for those who do not have health insurance. Fallin said the $40 million would help pay for so-called "woodwork eligibles," low-income Oklahomans who are eligible for Medicaid but are not currently enrolled in the program.
Legislative leaders also discussed a proposal to increase salaries for state workers through a new merit-based system for pay hikes. Shannon said that while he believes state workers deserve a pay increase, it likely will be targeted raises and not an across-the-board hike.