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Oklahoma State Capitol and flag. (Image: Nicolas Henderson via Flickr)

House mulling tax increases amid record $1.3B shortfall

OKLAHOMA CITY (AP) — With just three weeks left in the legislative session, Republican House leaders this week acknowledged they will consider increased taxes on fuel, services, alcohol and cigarettes as potential options for closing a $1.3 billion hole in the state budget.

House Speaker Jeff Hickman said those tax proposals, along with the elimination of tens of millions of dollars’ worth of tax credits and exemptions, all are being brought forward by different working groups of House members who have been studying various options for increasing state revenues.

“It’s probably the most serious financial situation that we’ve faced,” said Hickman, R-Fairview. “Never before have we had all of our members working together, talking about options, researching all different issues.”

Among the ideas is expanding the existing sales tax to a broad array of services to help fund a seniority-based teacher pay raise for teachers. Hickman said it’s possible that plan could be sent to a vote of the people as an alternative to a one-cent sales tax increase that will be on the ballot in November.

“We’re looking at a better alternative for teachers that reward teachers longer,” he said.

Another proposal is for a fuel tax that would increase when gas prices were low, with revenues dedicated to transportation projects. That would free up existing revenue that is currently being used to fund road and bridge construction. Oklahoma’s fuel tax currently is 17 cents for a gallon of gasoline and 14 cents for diesel. Every one-cent increase would generate about $28 million, said House Appropriations and Budget Chairman Rep. Earl Sears.

But any tax proposal would require either a three-quarters vote in both the House and Senate or a vote of the people, and House Democrats have consistently said they won’t support increasing taxes until Republicans consider rescinding the income tax cut that went into effect in January. Republicans have a 71-30 advantage in the House and would need some Democratic votes to pass any tax increase outright.

“They cut millions for wealthy Oklahomans in January, and they want to turn around and raise gasoline taxes and service taxes on middle-class families to make up for it, and that’s not a fundamentally fair way to balance the budget,” said Rep. Scott Inman, D-Del City.

But Inman said many of his members are warming up to a $1.50-per-pack tax on cigarettes to help fund the state’s Medicaid program, including a GOP-backed plan to trigger federal Medicaid funding by providing health insurance to uninsured low-income Oklahomans.

Senate President Pro Tempore Brian Bingman said support for the cigarette tax also appears to be growing in the Senate, where Republicans have a 39-9 edge.

“Early in the session, I would have said no chance,” said Bingman, R-Sapulpa. “(Supporters) seem encouraged they’re getting close to the support they need.”

Meanwhile, Bingman said he and Hickman have agreed on a bill to end a tax rebate for at-risk oil wells that is projected to cost the state $133 million in the upcoming fiscal year.


Related: Oklahoma House, Senate committees pass budget legislation.

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