OKLAHOMA CITY — State Rep. Ben Loring said Gov. Mary Fallin's State of the State message earlier this week acknowledged that Oklahoma has a revenue problem – not just a spending problem.
“The important thing that she was admitting is that basically we've cut taxes too much and so now she says we need to raise taxes by $100 million,” Loring (D-Miami) said.
Fallin proposed increasing the cigarette tax and expanding the sales tax to a variety of services that are currently exempt as a way to close an estimated $900 million hole in next year's budget.
“I agree with a lot of what she said and I disagree with a lot of what she said,” Loring said. “I really disagree with what she didn't say. There was no talk about the income tax they are doing for the wealthiest Oklahomans. In fact, she applauded that. In lieu of doing that, what she is saying is 'we're going to increase the sales taxes, we're going to increase the tobacco taxes and close all these loopholes.
“I am not adverse to any of that and if it was balanced, I would agree with it. But all she is wanting to do is shift tax burden to the poorest Oklahomans and the middle class.”
Fallin's executive budget recommends about $910 million in what she describes as “recurring revenues,” including $181 million from a proposed increase in the cigarette tax from $1.03 to $2.53 per pack. She also maintains that $125 million can be captured through various agency revolving accounts that are generated mostly through fees and other sources. An additional $200 million would come from a combination of eliminating sales tax exemptions and expanding sales taxes.
Finance Secretary Preston Doerflinger, the governor's chief budget negotiator, said the Fallin's proposal was intentionally vague about which services would be targeted for a tax increase or which sales tax exemptions might be eliminated.
“If I reveal the specific areas, that rotunda would be full of constituency groups screaming and crying to protect their specific exemption,” Doerflinger said.
The sale of tangible property is taxed in Oklahoma, but most services, such as haircuts, home improvements and others, are not. The state also provides dollars in sales tax exemptions for things like advertising sales, tickets to professional sporting events, or dues paid to fraternal, religious or civic societies.
The governor's budget also appropriates $178 million to pay for a permanent $3,000 pay raise for Oklahoma teachers, and she says some education savings could be realized by consolidating dependent school districts, which are typically those that have only kindergarten through eighth grade.
Under her proposed budget, most state agencies would see budget reductions of about 6 percent, but a handful of agencies were cut just 3 percent, including the Department of Human Services, Department of Health, Health Care Authority and Department of Public Safety.
Loring has filed several bills, including one that would raise the age of tobacco use from 18 to 21.
He believes this measure will have an impact on public health costs.
“As Gov. Fallin pointed out in her State of the State address, tobacco use is the leading cause of preventable death in Oklahoma and costs the state $1.6 billion in related health costs,” Loring said. “One in nine Oklahomans use tobacco.
“Her interest in discussing this is to raise revenue for the state. My interest is to cut down those deaths and myriad other health problems resulting from tobacco use and to reduce those health costs to families and the state.”
Loring said 100 local governments across the country, along with the State of Hawaii have raised the minimum sale age of tobacco to 21.
“Studies show that raising the age will significantly reduce the number of adolescents and young adults who start using tobacco,” Loring said. “Studies also show that the younger a person is when he or she starts using tobacco, the more likely he or she will become addicted and the susceptibility to the damaging effects of tobacco is enhanced.”
The bill also includes electronic cigarettes.
Loring said studies indicate those who use e-cigarettes are more than “eight times as likely to progress to cigarette smoking than non-users.”
The Associated Press contributed information to this report.