Governor Proposes Cut In Oklahoma's Income Tax Rate

Oklahoma Governor Mary Fallin started the 2013 legislative session with her State of the State address Monday asking for a cut in the state's income tax rate.  

The first session of the 54th Oklahoma Legislature convened at noon with a joint session in the House chamber. 

Fallin asked lawmakers to approve a one-quarter of 1 percent cut to the state's top income tax rate.

The governor urged lawmakers to reduce the top rate from 5.25 percent to 5 percent.

The top rate applies to Oklahomans who earn more than $87,000 annually. Fallin last year proposed sweeping changes to the state's tax code and a dramatic cut to the top rate of nearly 2 percent, but lawmakers balked at her proposal and ended up failing to pass any tax cut.

Fallin's office projects her proposal will cost the state $40 million in the first year and about $105 million annually when fully implemented.

Read Governor Mary Fallin's speech to lawmakers.

She told lawmakers a proposal to expand the state's Medicaid program is "unaffordable." Oklahoma has rejected President Barack Obama's proposal to expand its Medicaid program for low-income residents who do not have private health insurance. Fallin says a report by the Kaiser Commission on Medicaid and the Uninsured says expanding the state's program would increase its Medicaid costs by $689 million between 2013 and 2022.

Fallin also says expanding Medicaid as proposed by the president would divert huge sums of state tax dollars from education, public safety and other priorities as well as existing health care programs.

In her speech, Fallin asked for nearly $20 million in supplemental funding this year to begin repairs on the state Capitol and help pay for teacher benefits.

Fallin is asking lawmakers for $10 million to repair the exterior facade of the building and to pay for an engineering study that would include a price tag for a total renovation of the building.

Fallin also is requesting an $8.5 million supplemental for the State Department of Education to pay for the costs of the flexible benefit allowance for public school teachers and staff. The actual costs of those benefits have exceeded the projections that were available during the 2012 session.

Superintendent Janet Barresi had requested nearly $40 million in supplemental funding this year.

The Associated Press contributed to this story.