- Associated Press - Tuesday, February 16, 2016

OKLAHOMA CITY (AP) - Gov. Mary Fallin defended a recently enacted cut in Oklahoma’s top individual income tax rate, even as a state board she leads certified on Tuesday that the Oklahoma Legislature will have a $1.1 billion hole in next year’s budget.

The State Board of Equalization certified a projection for how much money will be available in the state’s General Revenue Fund for lawmakers to spend on the fiscal year that begins July 1. The deficit actually will be closer to $1.3 billion, or about 20 percent of overall appropriations, once one-time funds are considered, including about $120 million from the state’s Rainy Day Fund that was used to close a budget gap last year.

After the meeting, Fallin stood by her decision to sign a bill two years ago that reduced the top income tax rate from 5.25 percent to 5 percent, beginning Jan. 1. The latest figures released Tuesday by the Oklahoma Tax Commission project the tax cut will cost the state about $52 million in Fiscal Year 2016 and about $135 million annually beginning in FY 17. Oklahoma’s top marginal income tax rate applies to individuals earning at least $8,700 annually or married couples earning at least $15,000.

“Giving the middle class and the poor a tax break is a smart thing to do, letting them keep more of their hard-earned money, especially when people are losing their jobs right now,” Fallin said.

The tax cut will save the average Oklahoma tax filer about $85 annually, according to Tax Commission estimates.

Fallin says because thousands of Oklahomans have lost their jobs as a result of the downturn in the state’s economy amid plunging oil and gas prices, the cost of the income tax to the state has decreased from an initial projection of $147 million annually.

Fallin’s defense of the tax cut comes as Republican Senate leaders unveiled a proposal on Tuesday to restore the tax rate back to 5.25 percent, an idea that both Fallin and House Speaker Jeff Hickman rejected.

“You can’t roll it back, because it already went into effect,” said Hickman, R-Fairview. “The only way to change that now is to vote to increase it, which would take a three-quarters vote in the House and Senate to do that. I do not see that there is the number of votes necessary to do anything like that.”

A new proposal by Tulsa Republican Sen. Mike Mazzei to return the tax rate to 5.25 percent was unveiled Tuesday in the Senate Finance Committee. Mazzei said the bill is expected to be considered by the panel next week.

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Online:

Senate Bill 1073: http://bit.ly/1Xw6tzi

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Follow Sean Murphy at www.twitter.com/apseanmurphy

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