Tax cuts may be in the air, but they they are not in favor with the Oklahoma Legislature’s top budget writers.
Speaking Friday to a Tulsa Regional Chamber breakfast, both House Appropriations and Budget Committee Chairman Kevin Wallace, R-Wellston, and Senate Appropriations Committee Chairman Roger Thompson, R-Okemah, said they do not favor further tax reductions at this time, but they acknowledged a certain amount of pressure to do just that.
“Last year we cut the corporate (income) tax from 6 (%) to 4 (%),” said Thompson. “We cut (individual) income tax a quarter point. The corporate tax was about a $237 million cut to the overall budget. The quarter-point was a $102 million cut. Both of those are yet to be realized.
“So … this ought to be the year we just hold even, that we hang on to what we have and we write a budget. Then if the economy continues as it has, this may be a conversation that works more in the future than it does now.”
Thompson pointed out that he opposed last year’s tax cuts and was overruled and outvoted.
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Wallace expressed similar sentiments but said if revenue is to be reduced, he favors temporary measures.
“Probably the most talked about (revenue measure) would be the sales tax cut on groceries,” said Wallace. “I will tell you that personally I’m not for that — for two reasons: It’s going to be bad politics when the constituent goes to buy groceries and finds they’re still paying (local) sales taxes. And I have questions about whether, if we do away with the sales tax on groceries, we’ll be compliant with the streamlined sales tax.”
The Streamlined Sales Tax Agreement is a compact among 24 states, including Oklahoma, to simplify as much as possible state and local sales tax laws in order to facilitate collection of taxes from online sales.
Wallace said advisors believe that a proposal by House Speaker Charles McCall, R-Atoka, to suspend the state sales tax on groceries for two years would keep the state in compliance with the agreement and would also make reinstating the tax easier if necessary.
The various sales tax proposals apply only to the 4.5% state sales tax and would not affect local taxes.
Wallace said he is also more amenable to expanding the sales tax credit, which can be claimed on income tax returns, and McCall’s proposal to issue one-time rebates of $125 per single filer and $250 per joint filing.
“That’s much better than just cutting taxes,” Wallace said.
Thompson agreed and said he is concerned that some small grocers without computerized checkout systems would have trouble separating taxable from nontaxable items.
Both chairmen seemed to think taxes are not the highest priority for constituents. They said they hear far more about the explosive growth of marijuana growing — and in some cases already the aftermath — than anything else.
Thompson said some illegal operators are already walking away from their grows, which is creating another set of problems but is a sign that the state is beginning to get a handle on the new industry.
“The message is out,” said Wallace. “People are packing up in the middle of the night and just leaving. …
“However, in my House district, where there was one of the big busts, there are 80 acres that are going to take three or four years to roll through the system. … It’s got eyesores and perhaps even things that (the Department of Environmental Quality) needs to be looking at in terms of pollutants into the soil and water.”
Wallace said his personal priority is ending the waiting list for services to disabled Oklahomans. That list, which at times has been described as 13- to 14-years long, is being whittled away, and Wallace said that for $70 million or even less it could be reduced to zero.
Rep. Mark Lawson, R-Sapulpa, who has carried much of the related legislation in recent years, said he hopes to have “very good news” on that front by the end of the current legislative session.
More broadly, Wallace said he would like to replicate the recent success of Pryor’s Mid-America Industrial Park at other locations across the state.
Thompson said his personal priority is better pay for state troopers and other employees.
More than that, he said, “This year ought to be about policy, asking how we can change lives. Whatever we have, making sure that whatever we do actually changes lives.”
