- Associated Press - Saturday, May 20, 2017

Budget negotiations between Oklahoma lawmakers meeting for a rare weekend session appeared to collapse again Saturday, derailing efforts to close a nearly $880 million budget shortfall.

Legislators are bound by the state’s constitution to pass any revenue-raising measures by Sunday or be forced to call a special session to complete work on the budget for the fiscal year that begins July 1.

Republican Gov. Mary Fallin and the GOP-controlled Legislature are faced with difficult choices this year - either find ways to raise revenue through tax hikes or impose devastating cuts to public schools and state agencies already battered by back-to-back years of revenue shortfalls.

One sticking point during Saturday’s negotiations in Oklahoma City is a proposal by Democrats to increase the gross production tax on oil and natural gas wells from its current 2 percent level up to as much as 5 percent on a sliding scale.

Democratic Minority Leader Scott Inman has proposed raising the tax to 5 percent for the first 36 months of production, 4.5 percent for the first 18 months or 4 percent for the first 12 months. The rate would revert to the traditional level of 7 percent after the initial time expired.

The Legislature in 2014 made permanent a 2 percent tax on production for a well’s first 36 months of production -typically the most profitable- before the rate increases to the 7 percent level.

Spokesmen for each of the House leaders blamed the other side Saturday for walking away from a deal over the tax.

“(Scott Inman) is still willing to negotiate, but there are limits,” Inman spokesman Mike Ray said. “They’re not willing to give away the farm.”

Jason Sutton, a spokesman for Republican House Speaker Charles McCall, said raising the production tax too high could stymie growth in the state’s energy sector just as it’s “on the rebound after massive layoffs here the past couple of years.”

Oklahoma’s oil and natural gas industry and some Republican leaders have cautioned that too much of a tax increase could prompt companies to drill in other states.

Lawmakers are considering other ways to increase revenue, such as hiking the state tax on cigarettes and imposing a 6 cents-per-gallon fuel tax, among other proposals.

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