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Step Up Plan
Step Up Plan
Chad Hance
Friday, February 02 2018

Original Article Source

Oklahoma House Speaker Charles McCall said Thursday he's optimistic he can get enough Republican votes to pass Step Up Oklahoma's plan to resolve the state's budget impasse if as many Democrats will vote for the plan as voted for a revenue bill that failed last year.

A crucial vote on revenue-raising portions of the plan is expected to take place as early as next week, he said.

Whether large numbers of Democratic House members will support the plan remains a huge question, however.

House Democratic Caucus Chair Emily Virgin said Thursday that House Democrats would like to see substantive changes in the plan's proposal to raise additional revenue through changes in state income tax laws. Virgin said she doesn't believe there will be enough Democratic votes to pass it unless those changes are made.

Meanwhile, House Minority Floor Leader David Perryman of Chickasha said he's going to have to see the proposals in bill form before he can decide whether to support them.

The Step Up Oklahoma plan is a package of proposals put together by a statewide coalition of Oklahoma civic and business leaders.

It calls for raising revenues to resolve the state budget impasse, providing $5,000 pay raises for teachers, and restructuring state and county government to reduce waste and fraud and improve accountability.

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"This is a really good opportunity," said McCall, R-Atoka. "We're looking at the Step Up plan holistically in that it is a plan of revenue and reforms."

Major revenue-raising measures called for by the plan include raising the cigarette tax by $1.50 a pack, raising the tax on gasoline and diesel fuel purchases by 6 cents a gallon, increasing the initial gross production tax on oil and gas wells from 2 percent to 4 percent, making changes in individual income tax laws, placing some sort of new tax on the wind industry and revising gaming laws to allow Indian casinos to use balls and dice in craps and roulette games.

The changes would produce about $749.7 million in new revenue for the state each year, with about $285 million of that money going to provide $5,000 raises for teachers and principals, according to the latest figures developed by the Oklahoma Tax Commission, which performed all the calculations except those related to Indian gaming revenue.

The Step Up plan also includes about a dozen law changes that coalition members believe would improve the structure and accountability of state and county government.

For example, the coalition wants to create a state office specifically designed to root out waste, fraud and abuse in state government and improve synergies.

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It also wants to raise cumulative term limits for state lawmakers to 16 years, lower the supermajority threshold required for the Legislature to pass revenue-raising measures from 75 percent to 60 percent, establish a budget stabilization fund, have the governor and lieutenant governor run on the same ticket, have the governor directly appoint the directors of several of the state's largest state agencies, and allow county voters to determine their forms of government.

McCall said the revenue-raising portion of the bill is similar in many respects to a bill that was narrowly defeated in the House last year on a 71-27 vote, with 76 votes needed for passage because of the three-fourths threshold requirement. Both bills called for increased taxes on tobacco, motor fuel and oil and gas production.

McCall said 48 House Republicans voted for the earlier bill and he believes he can get more to vote for the Step Up plan because it includes reforms that many Republicans had demanded.

"Our goal is to deliver more than 75 percent of our caucus," he said, noting that would be 54 Republican votes.

Twenty-three House Democrats voted for the measure that was defeated in November. If those same 23 Democrats would vote for the Step Up plan, McCall said he is optimistic he can get enough Republican votes to pass it.

Virgin, D-Norman, said its hard for House Democrats to comment on proposals they haven't yet seen in bill form, but the earlier plan had some provisions that Democrats liked that are not part of the Step Up plan, including restoration of the earned income tax credit and a pay raise for state employees.

She also noted that the Step Up plan calls for a number of complicated changes in state income tax laws in order to raise about $144 million in revenue. Those changes include placing a $22,500 cap on itemized deductions (although charitable contributions would be excluded from the cap) and eliminating the $1,000 regular personal exemptions that taxpayers currently can claim. The changes also include lowering standard deduction amounts, establishing two intermediate tax rates and establishing a three-tiered nonrefundable tax rate.

"We've asked for the last income tax cut to be reversed and go back to a 5.25 percent rate at the top," she said, adding that House Democrats would also like to see the earned income tax credit restored and the standard deduction gradually increased back up to the federal level.

"We haven't asked our members to lock up against it, but I don't think that there are enough Democratic votes to pass the bill unless some change takes place," Virgin said.

Speaker McCall said House Republicans don't have a specific backup plan if the Step Up Oklahoma plan fails.

"We're not contemplating a Plan B," McCall said. "We've poured all of our focus and effort into this plan."

The Step Up Oklahoma plan has proved popular among many diverse groups, with more than a dozen organizations like the Greater Oklahoma City Chamber, Oklahoma Education Association, Oklahoma Independent Petroleum Association and Oklahoma Cattlemen's Association declaring their support.

Thursday, seven statewide transportation industry organizations added their endorsements.

The Association of Oklahoma General Contractors, the American Council of Engineering Consultants - Oklahoma Chapter, Oklahoma Concrete Pavers Association, Oklahoma Concrete Pipe Association, Oklahoma Asphalt Pavers Association, Oklahoma Municipal Contractors Association, and Transportation Revenues Used Strictly for Transportation (TRUST) all announced their support.

“This new plan is the only plan that has included provisions to help guarantee transportation revenues fund road and bridge repairs,” said AOGC Executive Director Bobby Stem. “For too long, the state has been using gas tax revenue to balance the state budget.”

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