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Additional Oklahoma Income Tax Cut May Trigger In January 2018

Oklahoma state capitol
Jacob McCleland
/
KGOU

The income tax rate in Oklahoma may be cut by an additional 0.15 percent if state revenue grows at a sufficient rate.

Rick Green reports for The Oklahoman that the income tax rate would fall from 5 percent to 4.85 percent at the beginning of 2018. Legislation that would have delayed the decrease passed the state Senate but did not come up for a vote in the House.

“We have to get rid of that trigger,” said Sen. Ron Sharp, R-Shawnee. “We will be anemic when we come out of this terrible economic situation. We can't allow it to kick in. “It would be a disaster.”

The income tax cut law, approved in 2014, comes with various triggers that incrementally drop the tax rate. The first trigger took effect on Jan. 1, 2016 and took the rate from 5.25 percent to 5 percent. The additional 0.15 percent cut will take effect on Jan. 1, 2018 if the Board of Equalization finds general revenue growth covers the $94.7 million cost of the first tax cut.

Green writes:

Such growth could be stimulated by measures approved by the legislature this year to increase new revenue. Also, oil prices appear to be slowly increasing, which also could eventually increase state revenue. But that doesn't mean it would be a good time for another tax cut, Sharp said. “When we do start a recovery, it will be an anemic recovery, like getting over the flu,” he said.

Oklahoma faced a $1.3 billion shortfall in this year’s legislative session. Agencies chopped 7 percent from their budget mid-year after two revenue failures. The legislature’s budget – signed on the final day of the session – preserved funding for education, Medicaid and corrections but included 5 percent cuts for many other agencies, including the Department of Human Services. Higher education took a 16 percent cut compared to their original appropriation in the previous fiscal year. Oklahoma teachers did not receive a pay raise and continue to be among the lowest-paid in the country.

Treasurer Ken Miller said tax cut triggers make no economic sense. “I can think of no financial reason to pass a measure predicated on future growth when legislators could simply wait to preserve flexibility for unforeseen fiscal challenges, such as the ongoing problems we are experiencing,” he said. “Until lawmakers come to the terms with the fact that their desire to spend surpasses their desire to generate revenue, Oklahoma will continue to have structurally unbalanced budgets that will only worsen as recurring revenue sources are reduced.”

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Jacob McCleland spent nine years as a reporter and host at public radio station KRCU in Cape Girardeau, Mo. His stories have appeared on NPR’s Morning Edition and All Things Considered, Here & Now, Harvest Public Media and PRI’s The World. Jacob has reported on floods, disappearing languages, crop duster pilots, anvil shooters, Manuel Noriega, mule jumps and more.
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