A closer look: The proposed state budget

Feb. 14--Gov. Mary Fallin says her $7.9-billion proposed budget for fiscal year 2018 is $100-million less than the state's 2009 budget, when adjusted for inflation. The budget proposed by Gov. Brad Henry for fiscal year 2009 totaled $7.3 billion, although a revenue shortfall later forced a 5-percent cut in funding for all state agencies.

In her executive summary for the 2018 budget, Fallin said it was designed to address the problem of recurring shortfalls and reliance on one-time funds, including the state's Rainy Day Fund, to balance the budget.

The budget directs, or in some cases redirects, $1.5 billion in recurring revenue from a combination of taxes and fees into the state's general fund where it would be available for the legislature to appropriate for current needs.

She said her intent is "to begin reversing the detrimental trend of diverting revenues off-the-top for specific purposes."

Fallin has repeatedly blamed recent budget shortfalls on off-the-top allocations that she says leave less than half of every dollar collected by the state available for appropriation by the legislature.

Her budget proposes new or increased taxes and fees she says will diversify revenue streams going into the state's general fund.

Fallin calls for "sales tax modernization" or expanding the tax base by collecting state sales tax on a variety of services that aren't currently taxed. The governor says it's necessary because of a shift from manufacturing and sale of goods to a service-based economy.

A list of services not currently taxed in Oklahoma that could be taxed was identified by NewsOK. It included utility bills, insurance payments, cable television subscriptions, legal fees, funeral services, visits to the doctor, real estate and banking, along with child care, nursing home care, tattoos, pet grooming, lawn services and taxidermy.

The Oklahoma Policy Institute reported that 45 states don't apply sales tax to most of the 168 categories of services identified as taxable by the Federation of Tax Administrators.

Hawaii, New Mexico, South Dakota and West Virginia tax services broadly, according to a blog post by Oklahoma Policy Institute director David Blatt, while Arkansas, Kansas and Texas tax services, such as utilities, admission and amusements and repair services but don't tax professional services like legal fees.

Fallin also proposes eliminating sales tax on groceries, which she projects will decrease state sales tax revenues by $234.7 million.

Cities and counties would still be able to collect sales tax on groceries.

Corporate income tax would also be eliminated, decreasing revenues by $140.2 million.

She plans to restructure funding for the Oklahoma Department of Transportation and shift revenue it gets from individual income tax to the state's general fund.

All revenue from increasing gasoline and diesel tax to $0.24 per gallon and from new fees of $100 for electric and $50 for hybrid vehicles would be dedicated to ODOT for road and bridge funding.

Increasing the current $1.03 per pack cigarette tax by $1.50 is projected to generate $257.8 million for the general fund.

Fallin also proposes accelerating the end of wind generation and zero emissions tax credits and beginning to tax the sale of electric power produced by wind.

She identifies a portion of fees, fines and other revenues from non-appropriated agencies as another source of revenue for the general fund. Non-appropriated agencies include boards, commissions and retirement funds.

The specific agencies affected were not listed in the budget summary.

The fee for reinstating a suspended corporation and the excise tax paid when registering commercial trucks would both increase tenfold, going from $15 to $150 and $10 to $100, respectively.

The budget includes $317.8 million in supplemental spending for the Department of Human Services, Department of Public Safety and State Department of Education and targeted increases for specific needs for the State Department of Education, Corporation Commission, Oklahoma Department of Health, Oklahoma Healthcare Authority, Department of Human Services, Office of Juvenile Affairs, Department of Mental Health and Substance Abuse, Department of Corrections and Office of the Medical Examiner.

The governor also proposes nearly $350 million in capital improvement projects to be funded with bonds. More than half of the bond funds would be used to make improvements to Department of Corrections facilities.

Twitter: @mcharlesNP

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