State legislators say there will be no income tax decrease – for now (Tahlequah Daily Press)

By Janelle Stecklein

OKLAHOMA CITY – Even though state budget writers face a hole hundreds of millions of dollars deep, top officials haven’t ruled out an income tax cut next year.

The state may be looking at an estimated $868 million shortfall, but its top financial board said Wednesday while a proposed income tax cut currently is unaffordable, it will reconsider one come February.

Its hand may be forced. Tax cuts are legally required if a growth in state collections exceeds the cost of a $100 million cut.

That would have reduced the personal income tax rate from 5 percent to 4.85 percent, but it didn’t happen this time because the state didn’t have the revenue growth to cover it.

“I think most people around this building are relieved that the trigger wasn’t met,” said Treasurer Ken Miller. “I don’t like triggers, never have liked triggers, but (I’m) glad that this one didn’t pull.

“We are experiencing a revenue problem in the state, and at some point, we’re going to have to face reality and address that,” he said.

The seven-member Board of Equalization – whose members include Miller, Gov. Mary Fallin and state Superintendent Joy Hofmeister – is mandated to consider tax cuts every year, regardless of whether they make fiscal sense.

Fallin said she plans to ask lawmakers next year to adjust how the automatic cut is enacted. Lawmakers last time ignored the same request.

Sen. Ron Sharp, R-Shawnee, said he would love to eliminate the trigger, but that requires agreement from three-quarters of his colleagues – an impossibly large number. Instead, he plans a measure to essentially stall the automatic cut, by increasing the amount by $500 million.

The higher threshold would pretty much ensure the state economy has recovered before taxes are slashed, he said, because it would only come with revenue growth of roughly $600 million.

“We’ve just got too many demands upon the system right now,” he said. “This is not the time to be cutting taxes.”

Among weights on the budget are growing Medicaid costs, increasing schools enrollments, overcrowded prisons and underpaid state workers.

Sharp said he’s not philosophically opposed to tax cuts, but the state shouldn’t even be considering them in its current condition.

As it stands, lawmakers face slashing education, road funding and nursing homes. Troopers face furloughs next year, as well.

The budget woes are blamed, in part, on declining oil and gas prices, which have led to layoffs and sent ripples throughout the economy.

But in a statement, David Blatt, director of the Oklahoma Policy Institute, also blamed “choices that have shrunk our revenue base and resorted to one-time revenues to plug budget holes.

“The result is a structural budget deficit that won’t be fixed just by a recovery in oil and gas prices,” he said. “This session, lawmakers will have to make the difficult decisions to boost recurring revenues in order to avoid devastating cuts and to address the teacher pay crisis and other urgent needs.”

Blatt said lawmakers need to cancel the income tax cuts or stall them.

During a media briefing, Finance Secretary Preston Doerflinger agreed lawmakers face hard choices about raising revenue, and that an income tax cut is ill-timed.

“We’re not cutting our way out this situation,” he said.

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