In her last State of the State address, Gov. Mary Fallin urged the Legislature to rescue Oklahoma from its ongoing, chronic budget crisis by passing several revenue-raising proposals, including a tax increase on oil and gas production.
“Now is our time to act — no more addressing long-term problems with short-term fixes,” Fallin said on Monday afternoon.
In her budget proposal, Fallin has adopted much of the reforms proposed by the group Step Up Oklahoma, which includes business leaders from many of the state’s largest oil and gas companies and other industries.
Fallin decried Oklahoma’s overcrowded prisons and four-day school weeks in some parts of the state as ways the state is failing. She urged the Legislature to act quickly to adopt much of the Step Up Oklahoma plan.
“This is a defining moment for our state,” Fallin said. “We have two clear choices: We can continue down a path of sliding backwards, or the second path is to say ‘Enough is enough. We can do better. We deserve better. Our children deserve better.’”
Fallin’s budget proposal echoes many components of the Step Up Oklahoma plan, including a tax increase on oil and gas production projected to raise $126.7 million in new revenue for the state.
Wells currently taxed at 2 percent would be taxed at 4 percent, according to Fallin’s proposed budget. Gross production tax on new wells would start at 4 percent for the first 36 months and then increase to 7 percent.
Fallin also proposes generating $231.7 million in new revenue for the state with a cigarette tax increase.
The executive budget proposal also calls for tax increases for the wind industry, raising $19.2 million in new revenue.
Fallin is also supporting Step Up Oklahoma’s proposed tax reforms, which would generate an estimated $129.2 million in new revenue for the state, according to her budget proposal.
The proposal would cap itemized deductions at $22,500, with no cap on charitable contributions, as well as consolidating two intermediate tax brackets.
Fallin’s budget proposal would not increase the state’s top income tax bracket of 5 percent.
Fallin also proposes a $289.5 million funding increase for the Oklahoma State Department of Education that includes a $5,000 teacher pay raise.
In rebuttal, House Democrats said at a press conference following Fallin’s speech that they are still wary of many components of the Step Up Oklahoma plan.
Rep. Cory Williams, D-Stillwater, said he believes Fallin’s budget and the Step Up Oklahoma’s plan does not go far enough to restore the state’s historic 7 percent tax on oil and gas production.
“This Step Up Oklahoma plan you see before you is nothing more but a ploy by the oil and gas industry to avoid a ballot issue in November where Oklahomans will overwhelmingly will adopt a restoration of the gross production tax to 7 percent,” Williams said.
Rep. David Perryman, D-Chickasha, decried the proposed tax increases on the wind industry as “vindictive,” noting the proposal could increase utility bills for many Oklahomans.
Democrats also want tax reforms proposed by Step Up Oklahoma and Fallin to include restoring the state’s standard deduction to the federal level and also bringing back the earned income tax credit.
“All of those things would benefit middle class people,” said Rep. Emily Virgin, D-Norman.
Protesters heckled Fallin from the House of Representatives gallery at the end of her speech, unfurling a large bed sheet banner with the governor’s face on it, along with the words “Oklahoma State of Despair.”
Security escorted Tulsa resident Brittany Warrior and her 5-year old daughter out of the House gallery after Warrior stood up and began shouting at end of Fallin’s address, calling the governor a “liar.”
Speaking later in the Capitol hallway, Warrior said her daughter, Jaqie Warrior, has a severe seizure disorder that requires her to take THC oil, which is illegal in Oklahoma.
Warrior said she has been trying to meet with Fallin for the past four years to discuss her daughter’s condition.
This woman started yelling at end of Fallin’s speech, called governor a “murderer” pic.twitter.com/JaffiZBOLY
— Brianna Bailey 🔥 (@briOKC) February 5, 2018
“I think every single word that came out of her mouth is a garbage lie,” Warrior said. “She told me she would never be for medicinal marijuana until it was legalized on a federal level.”