The Enid News and Eagle, Enid, OK

April 2, 2013

Leadership bill to cut Oklahoma income tax stalls

By Sean Murphy
Associated Press

OKLAHOMA CITY — The chairman of the Senate Finance Committee on Tuesday stalled a leadership-backed proposal to cut Oklahoma's income tax, but later said he expected to bring the bill back up for a hearing before a Thursday deadline.

The decision by Sen. Mike Mazzei to not hear the bill in his committee came one day after a separate income tax proposal Mazzei sponsored was soundly rejected by a House panel. Thursday is the deadline for the bill to receive a hearing in a Senate committee before proceeding to the full Senate.

"We've been trying to have a caucus this week with our Senate Republican colleagues to talk about tax cuts and tax proposals and haven't been able to do that yet, and so that's why I said (the bill was) laid over for today," said Mazzei, R-Tulsa. "We'll discuss everything with our team, and we've got two days left to have another Finance Committee meeting."

When approached by reporters after the meeting, Mazzei initially declined to respond to questions and said he had a meeting to attend.

The Senate and the House have two separate proposals to cut the state's top income tax rate. The bill that Mazzei stalled Tuesday, sponsored by Shannon and Bingman and endorsed by Gov. Mary Fallin, would slash the top income tax rate from 5.25 percent to 5 percent. Mazzei had a separate bill that would have cut the income tax rate even further, to 4.75 percent, but offset much of the lost revenue by eliminating dozens of income tax credits and deductions. That bill was defeated Monday on an 11-2 vote in a House subcommittee.

Eliminating tax credits and deductions would limit the impact that a tax cut would have on the state's general revenue fund, but those credits and deductions are worth millions of dollars to the businesses and industries that receive them and are fiercely protected by teams of lobbyists hired to keep them in place.

Mazzei said even though he's disappointed his bill was derailed in the House, he's still hopeful that some tax credits and deductions can be eliminated to help soften the blow a potential income tax cut would have on state revenues, particularly the money appropriated to public education.

"I think that's a very good plan to allow us to lower the tax burden on all hardworking Oklahomans, but at the same time construct a plan to significantly increase education funding over the next two years," Mazzei said. "We've got eight weeks left, and there's still time to discuss the Senate plan, fortunately.

"I have always hoped that we would, in collaboration with our friends in the House, talk about a good mixture of tax cuts, tax reform, and a significant increase for education funding."

After Mazzei delayed the bill, Fallin issued a statement in which she said she's working closely with Shannon, Bingman and individual legislators to "deliver a responsible, meaningful tax cut this year."

"I am confident that a tax cut plan will eventually pass and be signed into law by the end of the legislative session," Fallin said.

Rep. Earl Sears, the chairman of the House Appropriations Subcommittee on Revenue and Taxation, sponsored Mazzei's bill in the House and said he remains confident legislators will reach a consensus on a tax cut this session.

"The actions that have been taken in the last 24 hours, it's obvious people are frustrated over how their bills are being received in their respective chambers," said Sears, R-Bartlesville. "What needs to happen now, everybody just needs to keep cool heads, not get frustrated, and continue the dialogue to develop and implement an income tax cut for all the people of Oklahoma."

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Online: Senate Bill 585 | House Bill 2032