Editor’s Notebook: Senate advances income tax cut, conservation plan, pension back-fill

From an editor’s notebook, a one-half percent cut in the state income tax clears the Oklahoma Senate, a conservation plan to save hundreds of millions of dollars in energy costs advances, and the upper chamber approves another proposal aiming to backfill on the state’s unfunded pension liabilities. 

The tax measure moved ahead on a more-or-less party line vote, but on two of the measures, Senators found themselves united.

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Last evening (Tuesday, March 14), after a relatively long work day, the Senate approved Senate Bill 1623, a proposal that would trim the state income tax from its present top 5.25 percent rate to 4.75 percent.  While a significant reduction in state income taxes, the measure is the least dramatic of the proposals now working through the Legislature, which is considering a variety of proposals that would, over a decade or more, phase out the unpopular levy.

Sponsored by Senator Mike Mazzei, a Tulsa Republican, the measure would make the reduction over a two-year period. In a statement sent to CapitolBeatOK, he observed, “We are continuing to review and modify this legislation so that at the end of this process, we will have a plan that truly lowers taxes for hardworking Oklahomans and ensures the funding of core government services through the elimination of special interest tax subsidies.

“The plan will not raise taxes on retirees or military, and the working poor will not see a higher tax bill either.  This bill will promote job-growth, create prosperity and a better quality of life for our citizens.

The Senate Finance Chairman noted the bill “includes a trigger to lower the tax rate again to 4.5 percent upon revenue growth of 4 percent over and above fiscal year 2011 tax collections.”

Senate President Pro Temp Brian Bingman, a Sapulpa Republican, commented, “Putting more money back in the pockets of hardworking people is the right thing to do for a competitive Oklahoma in the 21st century. I want to commend Senator Mazzei for proposing a bold plan of action to cut taxes and grow our economy—he knows private sector individuals and families, not government bureaucrats, are the real innovators, entrepreneurs, and drivers of our economy.

“Oklahomans have told us time and again they are hungry for a meaningful tax cut, and Senate Republicans have every intention of delivering for them.”

Despite its comparative moderation (a measure that cleared the Senate earlier this week would eliminate the income tax over a 10-year period), the measure attracted unified opposition from Democrats, and nearly-unanimous support from Republicans.
Voting yes on the roll call (recorded at 6:09 p.m. Tuesday) were 27 Republicans, including Bingman, Mazzei and Sens. Don Barringon of Lawton, Josh Brecheen of Coalgate, Rick Brinkley of Owasso, Bill Brown of Broken Arrow, Harry Coates of Seminole, Greg Childers of Oklahoma City, Brian Crain of Tulsa, Kim David of Porter, Eddie Fields of Wynona, John Ford of Bartlesville, James Halligan of Stillwater, David Holt of Oklahoma City, Rob Johnson of Kingfisher, Clark Jolley of Edmond, Ron Justice of Chickasha, Bryce Marlatt of Woodward, Mike Mazzei of Tulsa, Dan Newberry of Tulsa, Jonathan Nichols of Norman, Steve Russell of Oklahoma City, Mike Schulz of Altus, Ralph Shortey of Oklahoma City, Frank Simpson of Ardmore, Gary Stanislawski of Tulsa, and Greg Treat of Oklahoma City.

Voting against S.B. 1623 were 15 Democrats, inclulding Tom Adelson of Tulsa, Tom Ivester of Elk Cty, Judy Eason-McIntyre of Tulsa, Richard Lerblance of Hartshorne, Connie Johnson of Oklahoma City, Jerry Ellis of Valliant, Roger Ballenger of Okmulgee, Randy Bass of Lawton, Sean Burrage of Claremore, Earl Garrison of Muskogee, Al McAffrey of Oklahoma City, Susan Paddack of Ada, John Sparks of Norman, Jim Wilson of Tahlequah and Charles Wyrick of Fairland; Republican Mark Allen of Spiro also voted no.
Absent for the vote were three Republicans — Sens. Cliff Aldridge of Midwest City, Mark Allen of Spiro, Patrick Anderson of Enid, and Cliff Branan of Oklahoma City – and Democratic Sen. Charlie Laster of Shawnee. 
S.B. 1623 now moves to the House.

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Pro Tem Bingman has often pointed to conservation steps he has advocated that could save millions of dollars in state government spending, resources that could then be available for other purposes, including tax reduction.

Monday (February 12), Bingman’s Senate Bill 1096, a measure described as “a behavior-based energy conservation program,” cleared the Senate on a unanimous 44-0 vote.

Bingman drew inspiration for the measure from an energy conservation program at Oklahoma State Unviersity that has lowered energy consumption by nearly $19 million since 2007.

In a statement sent to CapitolBeatOK after the measure cleared the upper chamber and headed to the House, Bingman said, “Oklahomans deserve smaller, simpler, and smarter government.  They know we don’t have to do things the way they’ve always been done, just because they’ve always been done that way.  
“We can save hundreds of millions of taxpayer dollars just by doing some basic, common-sense things our families do to save money at home—things like turning off the lights when they’re not in use, or turning off our computers at the end of the day.  These savings are real, and we’ll see the return immediately in the first month our energy conservation plan is in place.”

The proposal sets a “cumulative energy savings target of at least 20 percent by the year 2020 when compared to 2012 fiscal year utility expenditures.” Senate staff projects that could reduce state government’s energy consumption 20-30 percent, and trigger $300-500 million in savings over a decade.

The measure would put the director of the Office of State Finance, or a designee, in charge of implementation. Governor Mary Fallin has backed such efforts. She commented, “Oklahoma can and should lead the way in implementing energy efficiency measures that will save hundreds of millions of taxpayer dollars.  My thanks go out to the Senate for passing common-sense legislation that will reduce government waste and make our state agencies run in a more cost-effective manner.”
The bill now advances to the Oklahoma House of Representatives.

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Senate Bill 1264, by Republican Dan Newberry of Tulsa, aims to use “spillover funding” to pay down state government pension debt.  
Whenever the state’s Constitutional Reserve (better known as the Rainy Day Fund) is full, the proposed law would designate 30 percent of spillover fundilng to reduction of pension liability debt. The object would be to get pension funds to the 80 percent level considered sufficient for soundness. 

Newberry’s bill also specifies, according to Senate staff, “The remaining 70 percent, if appropriated by the Legislature, could only be used for one-time or nonrecurring expenditures.”

Newberry said, in a statement to CapitolBeatOK, the bill would be “a strong step to avoid the troubles faced by states that have failed to control their long-term debt and have seen capital flee as a result.

He pointed to Illinois as an example of dysfunctional state government pension policies: “As a direct result of unsustainable pension and debt policies, states such as Illinois have raised taxes to a point where job creators are fleeing the state.

“In our effort to build a more prosperous Oklahoma and sustain our momentum as one of the nation’s leaders in job creation, we must make debt reduction a priority.  I’m pleased my colleagues understand the importance of this issue.”