(Good news: The Oklahoma Supreme Court has ruled the proposed personhood ballot initiative is unconstitutional. This follows the demise of a personhood bill in the Oklahoma Legislature. The anti-abortion personhood movement is based on giving civil rights to a fertilized egg in a woman’s womb.)
Oklahoma Gov. Mary Fallin has finally conceded her income tax cut plan won’t make it through the legislature this year, but she’s still pushing for a smaller cut and automatic triggers for additional cuts in the future.
According to media reports, Fallin, a Republican, essentially blamed the Oklahoma Legislature for not having the “appetite” for a large cut in the income tax this year. Fallin’s plan, passed by the Senate, would have dropped the top income tax rate from 5.25 percent to 3.5 percent next year.
Here’s what Fallin said about the issue, as reported by the Associated Press:
There doesn’t seem to be the appetite in the state Legislature to make a huge, significant cut in the income tax, but I’m still pushing to get an income tax reduction that will be meaningful, that will help the people of Oklahoma and certainly help our business owners.
One question is whether Republican legislative leaders are giving Fallin political cover for overreaching in her tax cut plan, which she announced in her state-of-the-state speech, or if she truly believes a major tax cut is still feasible now even after the recent drop in natural gas production taxes.
Another tax cut plan that has been considered would lower the top rate from 5.25 percent to 4.75 percent, a plan that will now apparently get more attention from the GOP-dominated legislature.
Fallin also said she wanted the legislature to pass “growth triggers,” along with any tax cut, that would automatically institute tax cuts when state revenue growth exceeds a certain level. The Oklahoma Policy Institute, a think tank in Tulsa, calls such triggers bad government policy.
According to the OK Policy blog:
Deciding tomorrow’s tax cuts today would tie the hands of future legislators, make them less accountable, and limit their ability to make the best decisions based on the circumstances that they face. Lawmakers shouldn’t use triggers to sneak in bad policy through the back door.
While Fallin’s concession is good news on one level for state agencies and educational institutions, it still leaves the door open for a tax cut with automatic triggers this legislative session. By supposedly “rejecting” Fallin’s plan the GOP can now pose as fiscally responsible, which simply isn’t the case. This is not good news.
Any type of cut seems reckless at this point given the decline of natural gas prices, which means less gross production tax revenue for the state. If the price of natural gas drops below $2.10 per 1,000 cubic feet, the tax rate automatically drops and that means even less state revenue. It’s difficult to see how natural gas prices will rise this year, and what if next winter is as mild as the recent winter?
Another concern for legislators should be the fortunes of Oklahoma City’s Chesapeake Energy Corp., which has raised operating cash recently in light of lower natural gas prices, according to media reports. Is the company vulnerable to a hostile takeover? Could it downsize? Could it go bankrupt? These questions are getting discussed in the media right now.
Any major disruption in the company’s operations-downsizing, layoffs, relocation, etc.-could severely harm the local economy and lead to steep drops in overall state revenue.
The sensible thing to do would be to drop all tax cut plans for this session. There’s no pressing need for a tax cut, which will primarily benefit the wealthiest Oklahomans. It’s hard to believe some Republican leaders even believe that a tax cut will somehow spur enough business development to make up for the lost revenue.
If Republicans want to cut government, then they should try to do it openly and not just create the conditions for a budget disaster.