Claremore Daily Progress

State/Nation

February 18, 2014

Legislature to have $188M less to spend

(Continued)

OKLAHOMA CITY —

Despite having $188 million less to spend on state services for the next fiscal year, Fallin said that did not dampen her enthusiasm for an income tax cut that would take effect in 2015.
“I still support an income tax (cut) for the state of Oklahoma,” Fallin said after the meeting. “We still think we’ll make up the revenue.
“We’ve created a lot of new jobs in Oklahoma, and we think that’s because we’ve been gradually and responsibly lowering the income tax rate as it’s possible.”
Fallin’s proposal to cut the top personal income tax rate from 5.25 percent to 5 percent, beginning Jan. 1, has been drafted into a bill that passed a Senate committee Tuesday. The bill would further reduce the rate to 4.85 percent in 2016 if revenue collections continue to climb.
Oklahoma City Republican state Sen. Kyle Loveless, the author of the bill, said his plan is to offset much of the revenue lost to the state as a result of the tax cut by eliminating what he described as a “loophole” in existing law. He said current law allows tax filers to claim a personal deduction for state and local property taxes twice and that eliminating that provision will result in a savings to the state of about $80 million.
Fallin’s proposed income tax cut would cost the state $53 million in the first fiscal year and $172 million when fully implemented, according to the Oklahoma Tax Commission.
Fallin and Senate President Pro Tem Brian Bingman have supported the idea of offsetting lost revenue from an income tax by eliminating various tax deductions and exemptions. Newly elected House Speaker Jeff Hickman said Monday that he has discussed broadly the idea of a tax cut with House Republicans but that no consensus has been reached on how such a cut would be structured.
Hickman, R-Fairview, was one of a handful of Republicans who voted against last year’s tax cut proposal, which was later ruled unconstitutional by the Oklahoma Supreme Court because it included more than one subject.

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