By Patrick B. McGuigan
OKLAHOMA CITY – At the Legislature, proposals actually to reduce income taxes in Oklahoma are back on track, but with a twist. Still alive and kicking about the legislative process are competing proposals that include “triggers” requiring tax revenue growth. If passed, any income tax reduction actually won’t take effect until at least 2016.
Leading grass roots groups are pressing for a “clean tax cut” to be implemented sooner, rather than later, so the discussion is far from over.
A week ago, it seemed possible, even likely, that any tax cut able to clear all the hurdles this year would actually boost taxes on at least some taxpayers
But after critical scrutiny of a proposal that had cleared his own chamber, Senate President Brian Bingman, R-Sapulpa, intervened.
Consequently, now the bottom line is this: Both chambers of the Legislature have “live rounds” – bills still alive in the process – that would indeed cut taxes, but delay effective dates for nearly two years.
At his weekly briefing with reporters, Sen. Bingman said the latest maneuver was a highlight of the past legislative week. He said the new Senate bill intends to put back into place what the state Supreme Court had overturned in 2013 (http://watchdog.org/84562/ok-gov-fallin-signs-income-tax-cut-to-take-effect-in-2015/).
The measure would reduce the unpopular levy from the present 5.25 percent top rate, to 5 percent, assuming that growth revenue as of late 2015 would offset the reduction.
However, Dave Bond, CEO of OCPA Impact, remained critical: “Oklahoma taxpayers were promised income tax relief on their 2015 tax returns, but at this point, there are no remaining proposals at the Capitol guaranteed to keep that promise. Total tax collections from Oklahoma taxpayers and employers reached an all-time high last year, and they’re on track to set a new record this year, so any concerns about state government not having enough money are unfounded.
“Meanwhile, Kansas, to our north, has recently reduced their penalty on work, their income tax, below Oklahoma’s. And, they are reducing it further. And, Texas to our south still takes less money from its citizens than we do here.”
Two weeks ago, Bond had cheered a committee’s approval for House Bill 3291, a “clean” measure without triggers to start the process of lowering the top personal income tax rate to 4 percent by 2018.
Gov. Mary Fallin, in her State of the State address and Fiscal Year 2015 executive budget (http://watchdog.org/127601/ok-republicans-squabble/), called for a tax cut, but Bingman said the governor had not, in his most recent conversation with her, picked a preference among the proposals still moving in the legislative process.
Oklahoma Policy Institute, based in Tulsa, advocates increased state spending. Gene Perry, policy director, told Oklahoma Watchdog, “We shouldn’t schedule tax cuts years in advance when we don’t know what our budget needs may be. We could face a natural disaster, a drop in federal support, spiking health care costs, or who knows what. Legislators can’t predict the future, so they shouldn’t be putting our tax system on auto-pilot.”
The war of words over a possible income tax cut – and when and how it should take effect – continued with the comments of the Oklahoma branch of Americans for Prosperity.
“We need to give the people what they deserve — their money. Americans For Prosperity Oklahoma, along with our more than 25,000 grassroots activists across the state, support the first step in cutting taxes with the desire that policymakers will embrace the conversation we’re starting on how to lessen the role of government,” said John Tidwell, AFP’s state director.
House Minority Leader Scott Inman, D-Del City, has passionately opposed a tax cut. Responding to this reporter’s questions at a weekly briefing with journalists, Inman said his Democratic caucus was “puzzled” to see Republicans pushing tax cuts that won’t be implemented for two years.
Inman and other tax cut critics point to a projected $188 million decline in revenues subject to legislative appropriation, saying public education, public safety and human services spending should be increased.
Bond and state Finance Secretary Preston Doerflinger, Fallin’s principal spending adviser, counter that total state government tax revenues are higher than ever. Doerflinger pressed his point in a recent discussion with Oklahoma Watchdog, saying that the state will spend as much in 2015 as id did in 2013, so “the sky is not falling.”
The seemingly contradictory “cut” in direct appropriations is due to pre-determined expenditures for pensions and other state programs.