Though Oklahoma ‘s Governor Mary Fallin and leaders from the state Legislature reached a tentative agreement on a $6.8 billion budget for the fiscal year beginning July 1.
The deadline for Fiscal Year 2013 budget approval is Friday – the day the constitution calls for the Legislature to adjourn.
Key in the FY 2013 budget is proposed changes to Oklahoma's tax structure, changes that some say relieve the burden mostly on wealthy Oklahomans.
Fallin's proposal changes Oklahoma income tax's seven-bracket structure and replaces it with three income brackets.
House Bill 3061 Tax Bracket Changes
Under HB 3061, the highest income earners will see a tax rate decrease from 5.25 percent to 4.8 percent.
Under the new plan, Oklahoma would experience an income tax reduction in two-stages, eventually seeing its top bracket reduced to 4.5 percent. The plan would first lower the rate to 4.8 percent in Fiscal Year 2013 before lowering that rate further to 4.5 percent in 2015, provided the state's tax revenues grow by 5 percent.
"The Legislature is currently considering an income tax cut plan that will save Oklahoma taxpayers over $218 million in its first full year of implementation," said Fallin.
"That's money that will help to create jobs, spur economic growth and provide relief to working families. It will also help small business owner
The governor says the "vast majority of taxpayers" will see a tax cut without shifting the burden to others. But as the budget deadline approaches, other budget crunchers are coming up with differing figures.
According to the Oklahoma Policy Institute, House Bill 3061 translates into the following:
A single parent with two children earning $20,000 per year will pay $45 more tax than currently – because more of their income falls into the higher rate - while a single parent with two children earning $40,000 will pay $75 less.
A two-parent family with four children earning $100,000 a year will pay $134 more while a two-parent family with four children earning $250,000 per year will pay $93 less.
Middle- and upper-middle taxpayers with income between $85,000 and $173,000 are likeliest to see a tax hike, according to the Oklahoma Policy Institute.
Income tax cuts to continue
Governor Fallin proposes continuing to cut the Oklahoma state income tax by an additional quarter point in every year were the state sees a revenue growth of 5 percent, eventually eliminating state income tax.
The governor's plan quotes the Americans for Prosperity that shows higher economic growth and job growth for non-income-tax states.
The budget notes that taxes paid by Oklahoma citizens, businesses and others doing business in the state account for the single largest source of revenue collected by the state. Individual income tax accounts for 35 percent of that revenue.
2013 Budget by Cabinet:
Proposed Funding Increases
$99 million increase to repay FY 2012 fund transfer; ensures eight-year road and bridge plan remains intact and anticipates implementation of the Bridge Improvement and Highway Modernization plan proposed by the governor in future fiscal years.
The education budget is flat from Fiscal Year 2012 and totals $3,378,750,780. The budget calls in continue the $52.4 million supplement for flexible benefit allowance for teachers and support staff and National Certified Teacher bonuses.
Department of Human Services
$25 million to fund Pinnacle Plan reforms
$1.5 million for Advantage Waiver Program to provide reimbursement rate increases for home health care providers that serve the elderly
$1.5 million to provide Developmental Disabilities Services Division (DDSD) reimbursement rate increases
$1 million to reduce the current DDSD waiting list
Department of Mental Health and Substance Abuse Services
$5.5 million for Systems of Care Grant and for an additional crisis center.
$667,000 for mental health screenings to determine the risks and needs of each offender; justice reinvestment.
Transfer of Behavioral Health dollars from OHCA - $118,492,703
Department of Public Safety:
$5 million for authorization of an annual trooper academy with capacity for 40 participants.
University Hospitals Authority:
$3 million increase for Tisdale center in Tulsa
$2.9 million to close designated wings of the Oklahoma State Penitentiary in McAlester, build a lethal fence, transfer up to 800 prisoners to private beds
$1 million for justice reinvestment.