Warning issued by Tulsa group over state legislature tax cut proposal

Tuesday, April 26th 2005, 3:03 pm

By: News On 6

OKLAHOMA CITY (AP) _ Tax cuts under serious consideration will bust the state budget and make it impossible for Oklahoma to invest in essential needs in the areas of health, education, social services and transportation, an analysis showed Tuesday.

The analysis by the Tulsa-based Community Action Project said a budget agreement reached last week by legislative leaders could pave the way for $425 million in tax cuts, equal to total state funding for the Department of Human Services.

``Oklahoma lawmakers are making binding economic decisions without any plan for or knowledge of the state's future budget situation,'' said David Blatt, public policy director of the anti-poverty agency.

``While it is politically appealing to react to today's good times with a huge tax giveaway, Oklahoma will ultimately suffer from this short-term perspective.''

The affect of the various tax-cut plans supported by the House, the Senate or Gov. Brad Henry will be only $58 million next year, but that will balloon to $425 million when reductions are fully phased in, the CAP analysis said.

Other tax-cut plans, including proposed tax breaks to the oil industry, could increase the amount of lost revenue needed for critical state services to more than $600 million each year, it showed.

Blatt said tax cuts anywhere near the magnitude of those proposed by state leaders will lead in future years to double-digit tuition increases, less competitive teacher salaries, reductions in health insurance coverage for children and social services for seniors and understaffed prisons.

Income tax cuts would be the most costly among the proposing winding their was through the Legislature.

The Republican-led House wants to permanently reduce the top income tax rate from 6.65 percent to 6.25 percent, which would cost $108 million each year.

The Democrat-led Senate has proposed raising the standard deduction over a period of years to the amount allowed by the federal government. The projected cost: $252 million.

Gov. Brad Henry has proposed $64 million in tax cuts, including reductions in retiree taxes and estate taxes, while giving citizens rebates of up to $100 this year at a cost of $100 million.

Blatt said raising the standard deduction makes sense, but increasing it to the federal level would cost so much it could offset the economic benefits by reducing needed funding for roads and other essential programs.

The plan to cut the top income tax break would mean a tax cut of only $9 on average and would mainly benefit the wealthy, he said.

Blatt said legislators have not presented a plan to pay for the proposed tax cuts past the next fiscal year and are ``winging it as they go along.''

Also voicing concern about the tax-cut plans were Randall Raburn, executive director of the Cooperative Council for Oklahoma School Administrators; Shirley Cox of Catholic Charities and Brian Clowers, Student Association President of the University of Oklahoma Health Sciences Center.

Rayburn called the tax-cut movement ``shocking'' in light of the state's boom-or-bust history and the inability of the Legislature to make up revenue shortfalls because of a 1992 constitutional amendment severely restricting tax increases.

Former Senate President Pro Tem Stratton Taylor, D-Claremore, did not attend the news conference but sent a statement expressing similar concerns.

Taylor said Oklahoma continues to underfund public schools and colleges and had fallen out of compliance with the state's Medicaid law.

``Obviously, everyone would like to have a tax cut and it is always desirable,'' the senator said. ``Until, however, we have more adequately addressed mental health needs, veterans and children, we should be very cautious about enacting any of these tax programs.''