By Patrick B. McGuigan
OKLAHOMA CITY — The Oklahoma State Senate has advanced an income tax proposal that was characterized as a tax cut in floor discussion.
Indeed, the Democratic minority has decried the proposal.
However, state Tax Commission analysis of a similar (and unsuccessful) prior measure indicates the new bill could, through elimination of certain deductions, increase tax burdens for some taxpayers.
Senate President Pro Temp Brian Bingman, R-Sapulpa, told Oklahoma Watchdog he supports a tax cut for income taxpayers, and that the proposal some described as Gov. Mary Fallin’s bill is not a finished product.
When Democrats controlled all or most of Oklahoma government, frustrated conservative Republicans characterized the state Senate as “the place that good ideas go to die.” That is not generally the case these days, but some critical scrutiny has come to bear concerning provisions in Senate Bill 1246, co-sponsored by Sens. Kyle Loveless, R-Oklahoma City, and Mike Mazzei, R-Tulsa.
The proposal cleared the upper chamber this week, but might not fit a tax “cut” definition satisfying Gov. Mary Fallin’s call for lower income taxes, this year.
The Tulsa World reported Sen. Loveless said “the measure contains tax reforms to offset the cost of the income tax cut.” The World also reported Mazzei believes “reform savings” would be more than $80 million.
“Reform savings” in this case translates into increased tax payments for at least some income tax payers – those who itemize deductions on both federal and state income tax forms. When similar language made it through the Senate in 2012, a Tax Commission analysis characterized it as a tax cut for most taxpayers, but an increase for some.
While some described S.B. 1246 as “the governor’s tax cut bill,” in this week’s exchange with Capitol reporters, Senate President Pro Temp Brian Bingman, R-Sapulpa, said, “You can’t really label any bill the governor’s tax cut bill. There are a couple of House bills could say that, too.”
Bingman told Oklahoma Watchdog, “At the end of the year, we’d like to have a tax cut.”
In an exchange focused on deductions, Bingman did not quarrel with this reporter’s assessment, that the measure would increase tax burdens for some. The affable leader smiled as he said, “We don’t like to be cutting taxes on people and at the same time raising taxes on people, do we?”
In his conversation with reporters, Bingman echoed state Finance Secretary Preston Doerflinger, who said this year’s comparatively tight appropriations picture presents challenges, but not a crisis.
Bingman is not taking any ideas off the table, including a “tax trigger” (linking possible tax reductions to growth in tax revenue).
To support a tax reduction, Bingman said he hoped there could be “offsets” elsewhere in the budget, but that there has been no discussion of “raiding a dedicated revenue source” for such offsets this year.
Bingman said, concerning the budgeting process, “I’m very optimistic. We may need to be careful about dedicated funds, moving forward. There are certainly situations where it’s beneficial to decide ahead of time this is how we’re going to spend money.”
The Legislature faces a seemingly paradoxical situation. Although state government tax revenues are higher than ever, the amount available for legislative appropriation is projected at $188 million less than last year (http://watchdog.org/129227/ok-revenue-tight-sky-not-falling/).
At least part of the explanation for that is the dedication of some incoming revenue directly to pre-determined purposes, including pension funds, public education and other accounts.
Fallin called for an income tax cut in her State of the State address, and Secretary Doerflinger has pointed to proposed agency cuts and other savings as a means to support tax reduction this fiscal year.
In 2012, the lower chamber opposed “reforms” that would have boosted taxes for a minority of taxpayers, based in part on the Tax Commission’s analysis (http://capitolbeatok.com/reports/commentary-smart-alec-ok-gov-mary-fallin-is-no-thomas-jefferson).