In the annual State of the State address, Governor Mary Fallin advocated strongly for a plan to reduce and eventually eliminate Oklahoma’s state income tax. Several competing proposals have been introduced in the Legislature this session, but it is still too early in the process to tell what will ultimately happen to the state’s income tax system.
Despite having majorities in both houses of the Legislature, many of the tax proposals face some challenges. Following the State of the State address, Senate President Pro Tempore Brian Bingman (R-Sapulpa), issued a statement in which he said the Senate would “seek an aggressive yet responsible reduction of the state income tax,” but stopped short of directly endorsing Governor Fallin’s plan.
“Our agenda is pro-growth, with a renewed dedication to a government that is smaller, simpler and smarter, while still protecting services that are vital to our citizens,” Bingman said in a statement.
Beyond what is happening at the state level, Moody’s, the well-known bond rating agency, also has issues with Oklahoma’s plan to eliminate the state’s income tax. According to the Tulsa World’s Wayne Greene, the agency recently denied Oklahoma’s request to increase the state’s bond rating for multiple reasons, including the potential loss of income from eliminating the state income tax.
In the statement released by Moody’s, the agency listed the Legislature’s limited ability to raise taxes and the proposal to eliminate the state’s income tax as two of the largest fiscal challenges facing the state. The report also listed the volatile nature of the energy sector as a reason for declining to raise the state’s bond rating.
OPEA has had several calls about the income tax proposals, especially and Executive Director Sterling Zearley said he wants to reassure all concerned members that the association is monitoring each of the proposals carefully.
“We have had several members express concerns about what the proposals will do to the tax benefits they current receive,” Zearley said. “OPEA is closely watching the situation to be certain that important state services are funded and retirees do not lose money, since many of our members count on tax exemptions to help them make ends meet.”