- Associated Press - Thursday, December 18, 2014

OKLAHOMA CITY (AP) - Oklahoma taxpayers will see a slight reduction in their income tax rate in 2016 after a state panel on Thursday certified state revenues were enough to trigger the cut.

The seven-member Board of Equalization, led by Gov. Mary Fallin, certified the general revenue estimate for the upcoming fiscal year was more than the estimate in February 2013, triggering the reduction.

The cut will drop Oklahoma’s top personal income tax rate from 5.25 percent to 5 percent, beginning in January 2016. The average tax filer will save about $85 a year, while the cut is expected to cost the state about $147 million annually when fully implemented.

If revenues keep rising, a second cut to 4.85 percent is possible in 2018.

The board also determined Fallin will have $6.9 billion in available revenue to build her executive budget, which is $43 million less than was approved for the governor’s budget last year. The amount is also nearly $300 million less than the $7.2 billion state-appropriated budget approved by the Legislature for the current fiscal year.

Although a final estimate on how much the Legislature will have to appropriate won’t be determined until February, state officials are warning agency leaders to prepare for budget reductions next year.

“Even though our economy is strong, all entities which receive state tax dollars should be making preparations now in their current budgets for fewer dollars in next year’s budget, just like Oklahoma families and businesses do every day,” House Speaker Jeff Hickman said in a statement.

Senate President Pro Tem Brian Bingman, R-Sapulpa, said in a statement he plans to focus during the upcoming legislative session on how much state money is being diverted from the general revenue fund for various purposes, such as tax incentives or other state priorities like roads and education.

“It is also important that we identify and protect economic incentives that are productive, and give close scrutiny to credits that are less effective in promoting growth,” Bingman said.

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