OKLAHOMA CITY — Gov. Mary Fallin proposed on Monday that the state sales tax be eliminated for groceries but expanded to some services.
She also proposed eliminating the corporate income tax but increasing taxes on cigarettes and gasoline to the regional average while giving teachers a meager raise.
At current projections, the state expects to have $868 million less to craft a fiscal year 2018 budget than it has for the current fiscal year.
Any move to increase taxes would have to start in the state House of Representatives and would require a supermajority in both legislative chambers or a vote of the people.
Fallin made the proposals during her 30-minute, seventh State of the State address to a joint legislative session assembled in the House Chamber. She also included a plan to use bonds to help the Oklahoma Department of Corrections, to pay for a new Department of Health laboratory and to help the state’s mental health and juvenile affairs agencies.
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She said her proposed budget for the next fiscal year includes a $50 million bond issue to build additions to existing prisons for substance-abuse offenders and rehabilitation.
Fallin also called for criminal justice reform.
“And while I’m talking about public safety, send me a bill to fix Real ID licenses,” Fallin said. “We have four months to solve this issue. Let’s get it done.”
The federal Real ID Act of 2005 created minimum standards for state driver’s licenses in the wake of the 2001 terrorist attacks, in which the perpetrators used faked documents to acquire the IDs they used to board commercial airliners.
Oklahoma opted out of compliance with the federal Real ID law in 2007. If the state does not comply, residents will be required to use an alternative form of identification, such as a passport, to board commercial aircraft.
In her speech Monday, Fallin called the sales tax on groceries “the most regressive tax on the books today.” Abolishing it would save a family of four up to $676 annually, she said.
Fallin said the corporate income tax is one of the most volatile sources of state revenue. Eliminating it “will reduce the paperwork and red-tape burden of many small businesses in our state and boost economic development,” she said. “Eliminating this tax provides more transparency as it also eliminates the need for the Legislature to pick winners and losers with specific tax credits.”
Fallin said her budget will recommend providing higher education an additional $20 million for critical occupations.
For a second year in a row, Fallin is proposing a teacher pay raise. Finance Secretary Preston Doerflinger said it would be $1,000.
“The pay raise may need to be phased in, and it may be targeted, but it must be done,” Fallin said.
She said she is creating a task force to evaluate the funding formula for common education, evaluate funding sources and analyze the K-12 system footprint.
This is also the second year Fallin has called for an increase in the cigarette tax. Last year, a proposed $1.50 tax hike on a pack of cigarettes failed to garner legislative support.
The revenue from the increase could be used to improve health care in the state, she said, adding that “smoking remains the No. 1 preventable cause of death in Oklahoma.”
Fallin also used her speech to thank members of the Oklahoma Highway Patrol who in October successfully stopped fugitive Michael Vance Jr., who was wanted in connection with killing two of his family members and injuring three law enforcement officers.
Twitter: @bhoberock
