- Associated Press - Monday, February 6, 2017

OKLAHOMA CITY (AP) - Gov. Mary Fallin’s nearly $7.8 billion budget proposal would rely on new taxes to diversify Oklahoma’s revenue streams, and overcome a projected $868 million budget hole for the next fiscal year.

If approved, Fallin says her plan would bring in $1.5 billion in revenue for the spending year that starts July 1. Her budget also would increase spending by almost $318 million for eight state agencies.

Here’s who would see increases or decreases using Fallin’s plan:

WHO COULD GAIN

TEACHERS: Fallin’s budget proposes $60 million for $1,000 annual raises for the state’s public school teachers, whose salaries have not increased since 2008. Oklahoma’s average teacher salary of $44,921 is last of the seven states in the region and among the lowest in the nation. The state faces a chronic teacher shortage as experienced teachers seek higher-paying jobs elsewhere.



STATE INFRASTRUCTURE: The plan proposes a bond package of about $350 million to pay for a variety of infrastructure needs across the state. They include $136 million for housing and other needs at the Department of Corrections, another $50 million to expand and renovate correctional facilities to treat prisoners with substance abuse issues, $52 million to replace the laboratory at the Department of Health and $42 million to renovate the Jim Thorpe state office building in Oklahoma City.

SMALL BUSINESSES: Fallin proposes to eliminate the corporate tax, one of the most volatile sources of state revenue. The governor maintains that would reduce red tape for many small businesses and boost economic development.

ROADS AND BRIDGES: The executive budget proposes to direct taxes associated with roads and bridges as the funding source for their maintenance and returning individual income taxes to the General Revenue Fund. The proposal would not change projects already scheduled in the Department of Transportation’s long-range construction plan.

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WHO COULD LOSE

TAXPAYERS: Fallin’s budget would eliminate the state sales tax on groceries, reducing state revenue by almost $235 million. But it also would eliminate exemptions on many goods and services that for now are not taxed, although officials say which ones are still being negotiated. That would increase sales tax revenue almost $840 million under the governor’s plan. Fallin says that would provide a stable source of recurring revenue, correct problems in the current sales tax system and ensure new growth in coming years.

SMOKERS: Fallin wants the state to make almost $258 million by more than doubling the tax on cigarettes. If approved the rate would jump to $2.50 from the current rate of $1.03 per pack. The governor says annual health care costs associated with smoking in Oklahoma are $1.62 billion. Raising the tax on cigarettes might encourage people to stop smoking, so fewer smokers will reduce the amount of revenue from tobacco taxes.

WIND ENERGY: Fallin’s budget proposes accelerating elimination of the wind production tax and the zero emission tax credit. The ad valorem exemption for manufacturing of wind energy will cost Oklahoma residents $40 million in the current fiscal year, and it is estimated that claims paid over the next 15 years will average $60 million a year for a total of $840 million.

MOTORISTS: The executive budget proposes increasing gasoline and diesel excise taxes to 24 cents per gallon. Oklahoma levies excise taxes on gasoline at 16 cents per gallon and diesel at 13 cents, with an additional 1-cent motor fuel assessment fee levied on both. Oklahoma’s tax ranks 49th in the nation, while the diesel tax ranks 48th. The proposal would keep Oklahoma’s motor fuel tax rates well below the national average of more than 29 cents per gallon while using the revenue for roads and bridge-related maintenance.

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