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Budget Battle Looms As Legislature Enters Final Month

Updated:
OKLAHOMA CITY (AP) _ With one month remaining in the 2006 Legislature, lawmakers' biggest task _ writing a balanced budget _ remains their biggest challenge.

Leaders of the House and Senate have discussed budget priorities in infrequent meetings as lawmakers devoted most of their time over the past three months to other issues like immigration and Medicaid reform.

Those preliminary budget discussions have not produced an agreement. And with just four weeks before they adjourn on May 26, lawmakers are no closer to a budget for state government than they were when the Legislature convened on Feb. 6.

``We're far, far, far from agreement,'' Senate President Pro Tem Mike Morgan, D-Stillwater, said. ``We are as far apart as we have ever been. We have literally made no progress on any of the major issues in our budget negotiations.''

Lack of success has raised concern in the Democrat-controlled Senate that an agreement will not be reached and they will have to return in special session to write a budget for the fiscal year that begins July 1.

But Republican House Speaker Todd Hiett of Kellyville said he remains optimistic that an agreement, including on a proposed income tax cut he is pushing for, can be reached in time.

``We have to work fast,'' Hiett said. ``We have a lot of work to do. There are two very different visions in play.''

Lawmakers must decide how to divide the largest budget in state history _ about $7 billion, including $1 billion in surplus revenue and windfalls fueled by strong economic growth.

In March, the House passed a $6 billion general appropriations bill that includes baseline funding of state agencies with no revenue for proposed new programs. The balance, about $1 billion, was set aside for appropriation to proposed spending programs and a possible income tax cut.

The measure included money for $1,200 across-the-board pay raises for teachers, the second phase of Gov. Brad Henry's plan to bring teacher salaries to the regional average. It does not include money to raise state worker salaries or boost funding for state agencies.

Last week, the Senate passed an amended version of the House budget bill that appropriates $6.5 billion. The measure includes $3,000 raises for teachers, increases state workers' salaries and boosts funding for health care, social services and public safety programs. It does not include a tax cut.

``We are not interested in padding the pockets of wealthy people,'' Morgan said. ``I would say it is highly unlikely that we would ever agree to a massive permanent tax cut. Someone in the Capitol has got to stand up for working people.''

``We want to take care of the needs of Oklahoma. If there's anything left, we can take care of tax cuts,'' said Sen. Johnnie Crutchfield, D-Ardmore, chairman of the Senate Appropriations Committee.

Hiett, a candidate for lieutenant governor, supports a plan to reduce Oklahoma's top income tax rate from 6.25 percent to 4.9 percent. It would reduce state revenue by $171 million in its first year and $480 million when fully implemented.

In 2007, the total cost of Hiett's tax-cut plan would be almost $200 million. The plan includes elimination of the inheritance tax at a cost of $87.1 million a year when fully implemented.

``Tax restructuring is so important,'' Hiett said. ``We want to do as much as is reasonable.''

Hiett has said the tax cut would attract investment in the state and help grow the economy. Hiett originally proposed reducing the income tax to 5.85 percent, a more modest proposal that would have reduced revenue by $130 million when fully implemented.

``We had the revenue to go further than we had originally thought,'' he said.

Hiett's tax cut demands and lack of attention to Senate spending proposals, including increasing funding for higher education and expansion of the Oklahoma Higher Learning Access Program scholarship fund, are at the heart of the burgeoning budget impasse, Senate Democrats said.

``The leadership in the House has taken some really strange approaches to negotiating. Jabbing someone in the eye and telling them you want to talk really doesn't work very well,'' Morgan said.

Hiett said he has not rejected spending plans proposed by the Senate and Democratic Gov. Brad Henry. ``I am certainly not opposed to the items they're talking about. Everything's on the table for discussion,'' he said.

But the speaker is demanding agreement on a tax cut plan first so lawmakers know how much revenue is available for state government.

``You don't know how to handle the rest of the budget until you know how much you have to spend,'' he said.

In the meantime, Democrats say Republican House negotiators refuse to consider proposals to help needy Oklahomans, like their plan to pay for mental health services for 500 people on a list of 3,000 mentally ill people who need the services.

``We can't get any kind of discussion of this going,'' Crutchfield said. ``To me that says a lot about what we value.''

Morgan said the budget talks have united Senate Democrats behind their spending plans and against Hiett's tax cut proposal.

``We're talking about the next generation. He's talking about the next election,'' Morgan said. ``He has galvanized our caucus. They want to remain very firm.''
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