Fallin joined House Speaker T.W. Shannon, R-Lawton, and Senate President Pro Tempore Brian Bingman, R-Sapulpa, yesterday afternoon to announce an agreement on those measures, which still must receive approval from the full House and Senate.
“We’ve been working on common goals to create a more vibrant environment for our citizens and businesses,” Fallin said at a Capitol news conference. “We are continuing with our forward momentum.”
She said the tax reductions will return an estimated $237 million to state taxpayers. That would save an individual taxpayer between $88 to $140 a year, depending on the exemptions he or she claims, according to state finance officials.
The proposed tax cut, contained in House Bill 2032, lowers the top income tax rate from 5.25 percent to 5 percent on Jan. 1, 2015. A second reduction of 0.15 percent would kick in Jan. 1, 2016, provided state revenues grow by $40 million in Fiscal Year 2016.
The initial cut would create an immediate financial impact of $54.4 million in fiscal year 2015 and would cost $136 million once it’s fully annualized. The second cut would drop state revenues by $40.5 million and impact state finances by $101 million when fully annualized.
“We are sending a signal to businesses and Oklahomans that Oklahoma is committed to a reduction in the tax rate and that we’re business friendly,” the governor said.
She and the legislative leaders said the tax cuts will not prevent public education from receiving what Bingman termed a “substantial” budget increase this year.
Moreover, they defended the tax-cut package by suggesting state revenues would “double or triple” the amount lost from reductions.
“This makes us more competitive when other states are raising taxes,” Fallin said.
The tax-cut proposal drew a rebuke from David Blatt, executive director of the Oklahoma Policy Institute, a left-leaning think tank. He said there is already too much uncertainty about how state revenues will be affected by federal budget cuts and other factors.
“In this situation, it’s not the time for more tax cuts that would do little to help average Oklahomans, take $237 million from schools and other core services, and make Oklahoma more vulnerable to an energy bust or economic downturn,” he said.
A second major announcement centered on the creation of a new administrative workers’ compensation system to replace the workers’ comp court. It would be led by state-appointed commissioners who, in turn, would hire administrative law judges to handle the cases. All commissioners would require Senate confirmation.
Bingman said the current system has been a deterrent to businesses in Oklahoma and firms looking to locate in the Sooner State.
“Our goal is making sure employees get back to work as soon as possible,” he said.
As part of the proposed measure, a Court of Existing Claims would be created to handle pending cases. The proposed law also would allow companies to operate their own workers’ compensation plan if it meets state standards.
If approved by the House and Senate, most sections of the bill would take effect February 2014.
A portion of HB 2032 reserves $60 million in fiscal year 2014 and $60 million in fiscal year 2015 for repairs to the Capitol building, which has a crumbling exterior and faces major infrastructure issues related to its plumbing and sewer systems.
An architect has estimated the Capitol needs about $153 million in repairs.
A related measure, HB 1910, would create an eight-year, pay-as-you-go plan for prioritizing public infrastructure spending, Shannon said.
“This is nothing short of historic. In the past, the model has been to let state infrastructure crumble and then go borrow the money and pay for it,” he said. “This is a win for the people of Oklahoma.”
HB 1910 would create a long-range capital planning commission charged with whittling down the amount of state-owned property and turning it over to private-sector ownership.
According to the legislation, the commission must submit an itemized list of proposed infrastructure improvements within seven days of a regular legislative session. The Legislature then has 45 days to disapprove of an item before repair work begins.
In addition, the measure will require prior approval by the Office of Management and Enterprise Services before any agency can enter into or renew a lease for real property. According to HB 1910, leases and purchases of new buildings will not be allowed if the agency can make use of existing resources.