Income Tax Reduction With a Flat State Budget Still Possible, Republican Lawmakers Say

• Joe Wertz
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  Joe Wertz was a reporter and managing editor for StateImpact Oklahoma from 2011-2019. He reported on energy and environment issues for national NPR audiences and other national outlets. He previously worked as a managing editor, assistant editor and staff reporter at several major Oklahoma newspapers and studied journalism at the University of Central Oklahoma.

Oklahoma Senate

State Sen. Clark Jolley, R-Edmond, said reducing the state's personal income tax will help it compete with income tax-free Texas, and Kansas, where income tax elimination is being discussed.

If things go well, next year’s state budget is likely to be flat, and Republican lawmakers are still eying cuts to the state income tax.

Eliminating the personal income tax — the state’s largest single source of revenue — might not be possible with a looming $150 million budget hole, but lawmakers will likely work to reduce it, the chairman of the Senate Appropriations Committee told The Oklahoman.

“You’ve got a major competitor in Texas and with the discussions that Kansas is having on eliminating the income tax I think it’s imperative for Oklahoma to aggressively try to make sure the income tax is as low as it can possibly get,” Sen. Clark Jolley, R-Edmond, told reporter Michael McNutt.

Offsetting the revenue lost through income tax reduction would come through eliminating tax credits and through agency and service consolidation, Gov. Mary Fallin told the paper.

But agency spending requests for FY 2013 are more than $1 billion higher than the $6.5 billion available.

This could mean agency budget cuts.

Jolley said agencies, some of which have had budget cuts of up to 25 percent the past three years, may be cut again next year.

This year’s general revenue collections are more than 8 percent above estimates, so there is still hope that the $150 million budget shortfall could be reduced or erased by February, when the Board of Equalization meets to certify the amount of money available for legislators to appropriate.