OK Republicans set to squabble over agency cuts, lower taxes, energy incentives


THE GOVERNOR PROPOSES: Oklahoma Gov. Mary Fallin proposed a small income tax cut, some new state debt, cuts to some agencies and possible new pension reforms. Her biggest problem on achieving any one of those objectives is likely to be fellow Republicans.

By Patrick B. McGuigan | Oklahoma Watchdog

OKLAHOMA CITY — After growing state government by about $800 million during her first three years in office, Gov. Mary Fallin laid out a restrained executive budget in this week’s State of the State.

The tighter Fallin plan comes just in time for her re-election campaign in a year where government revenue available for appropriation is down slightly.

While Democrats — including the party’s likely gubernatorial nominee state Rep. Joe Dorman of Rush Springs — were predictably critical of Fallin’s priorities, her main challenge will come from within Republican ranks in both the House and Senate.

While proposing a $50-million boost for K-12 education spending and new spending for a handful of other government functions, the proposal is arguably the most conservative Fallin budget outline yet. Among other things, the chief executive proposed 5-percent reductions for most state agencies, a small reduction in overall spending and a one-quarter percent income tax reduction.

As in many states, the governor propose, but the Legislature disposes. And, the leaders of both the state Senate and the House have their own ideas about state spending — including bonded indebtedness — taxation and treatment of the energy industry.

A leadership change in the lower chamber may contribute to upcoming drama.

The House of Representatives on Monday is scheduled to name a successor to Speaker T.W. Shannon, R-Lawton, who is keeping his seat but giving up the leadership job to run for the U.S. Senate seat Tom Coburn is leaving this winter.

The number two in the House, Mike Jackson, R-Enid, is an income tax cut advocate and not a fan of bond issues, much like Shannon.

Competing with Jackson for the top job is Rep. Jeff Hickman, R-Dacoma. Hickman narrowly lost the speaker’s race to Shannon in 2013 and is considered more moderate than Jackson.

As for the Senate, although many of the upper chamber’s objectives can be characterized as conservative, advocacy of a tax cut was notably absent from the formal listing of Republican priorities issued Thursday.

The stage for substantive discussion was set in Fallin’s annual address in which she called for a shift toward market forces in public employee compensation.

That shift translates into higher pay for some employees, notably state troopers and human service workers, perhaps fewer employees in several agencies and a shift away from defined benefit public pensions to defined contribution retirement plans modeled after 401(k) plans in the private sector for new state employees.

Fallin encouraged the Legislature to approve new state debt to finance at least the front end of exterior and interior state Capitol repairs. The House has been the main roadblock to passage of any new bonding measures. Oklahoma state debt is relatively low and outgoing Speaker Shannon, among others, wants to keep it that way.

Fallin also pushed a modest income tax reduction, arguing that it is time to give “a tax cut to taxpayers.”

Last year, the Legislature approved, and Fallin signed, a one-quarter percent reduction in the levy, but that measure was struck down for violating the state’s “single subject” rule.

The Senate leadership’s silence this week on another go at an income tax cut speaks loudly — a none-too-subtle hint the idea could be in for rough sledding.

Unspoken in the governor’s state of the state message, and in her executive budget, was her proposal to negotiate with the state’s energy industry a rise in the horizontal drilling incentive.

Several oil industry leaders, including George Kaiser and John Brock, both of Tulsa, support allowing the levy, reduced during the industry’s slump in the late 2000s, to rise moderately this year.

Preston Doerflinger, Fallin’s secretary of finance, said there have been active negotiations with industry representatives and members of the Legislature over the issue.

The state House seems inclined against a boost, while Senate leaders in both parties appear sympathetic.

Contact Pat at pmcguigan@watchdog.org .

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