House speaker says tax reform is dead this year

Thursday, February 7th 2002, 12:00 am
By: News On 6

OKLAHOMA CITY (AP) _ Republican Gov. Frank Keating's tax reform proposal appears to be dead this year, the Oklahoma House's top Democrat said Thursday.

House Speaker Larry Adair said Keating's plan to eliminate Oklahoma's 7 percent income tax and replace it with a 5.9 percent sales tax on services has received little support from the public or lawmakers who convened on Monday for the 2002 Legislature.

``I'm not finding anyone who's for the governor's program,'' Adair, D-Stilwell, said. ``I don't see there's a lot of support for it.''

Adair disputed claims by Republicans in the House that the state can afford to reduce tax revenues and said the biggest issue facing lawmakers this year is an estimated $100 million budget shortfall.

``We've cut the fat away. We've cut the muscle away,'' Adair said. ``We're now down to the bone.''

Adair said the budget shortfall probably will require cuts in some state services but that lawmakers will work to prevent deep cuts in education and health care spending.

``We're not advocating that we make cuts in those areas,'' Adair said.

The Oklahoma Health Care Authority, which administers the state's Medicaid program, cut millions of dollars in health care benefits to Oklahoma's neediest citizens last month to help meet a projected $21.3 million budget shortfall.

Adair said that if further cuts are needed at the agency, lawmakers will direct them away from vital areas like prescription medication and programs where federal matching funds would be affected.

The House Revenue and Taxation Committee took up the issue of tax reform at a meeting on Wednesday where business owners said Keating's plan could add thousands of dollars to the cost of a new home, create an accounting nightmare for service businesses and be difficult to enforce.

The committee passed a tax reform shell bill that contains no specific proposals.

House Republicans have also shown little support for the governor's plan. They have proposed a separate program that reduces the income tax, eliminates the sales tax on groceries and over-the-counter drugs and implements a sales tax holiday.

House Democrats recently advanced a plan that would reduce the income tax and create a limited 4.5 percent sales tax on services, the same as the current state sales tax on goods.