OKLAHOMA CITY — Gov. Mary Fallin’s ambitious proposal to expand Oklahoma’s sales tax to dozens of services to help balance the budget and raise teacher pay appears on life support just two weeks into the legislative session as her fellow Republicans quickly distance themselves from it.
Lt. Gov. Todd Lamb, a likely candidate for governor in 2018, resigned his position on Fallin’s Cabinet over the proposal last week, and other potential candidates for governor and rank-and-file GOP House members have panned the plan as a non-starter.
“While I respect the determination with which Gov. Fallin met her obligation to present a balanced budget to the Legislature, I cannot support her proposed tax increases,” Lamb said in announcing his departure on Thursday.
Fallin’s plan would generate about $840 million to help close a projected $870 million budget hole. It would extend the state sales tax to 164 services that are currently untaxed, including such items as residential utility and cable TV bills, doctor and dentist visits, and engineering and architectural services. Her proposal also calls for hiking the tax on cigarettes and motor fuel, while eliminating the state sales tax on groceries and the corporate income tax.
Her plan was ridiculed in a slickly produced, three-minute video released last week by Tulsa attorney Gary Richardson, another likely candidate for governor in 2018.
“She’s wanting to tax ‘Dora the Explorer,’ ” a fast-talking narrator says as he recites a list of all the targeted services.
Fallin acknowledged passing her plan won’t be easy, but said without new revenue, Oklahoma’s schools and public health and safety will be decimated.
“If we want to educate our children, a teacher pay raise and ensure the health and public safety of our citizens as well as improve our roads and bridges, we must fix the structure of our budget so we don’t keep having budget shortfalls and uncertainty,” she said.
While House Speaker Charles McCall and Senate President Pro Tem Charles Schulz said they weren’t ready to write off Fallin’s proposals just yet, they hardly gave it a warm embrace when talking to reporters last week.
Schulz said any revenue-raising measure would be considered only as a “last resort,” and that Senate Republicans are looking first at scaling back various tax incentives for businesses and further cuts to the budgets of state agencies, most of which have seen funding slashed for three consecutive years.
Making it even more difficult for Fallin is a constitutional requirement that any revenue-raising measure receive a three-fourth’s vote in the House and Senate, which would require the support of at least some of the 26 Democrats in the House, which currently has only 99 members because of two vacancies.
House Democratic leader Scott Inman, also expected to run for governor in 2018, has been adamant that any plan to raise revenue will not get the support of his caucus unless it also includes a provision to roll back recently enacted cuts to the individual income tax and the tax on oil and natural gas production.
“We will have cut billions of dollars in taxes for well-to-do corporations and wealthy folks who make millions of dollars in Oklahoma, and turned around and raised taxes on the backs of middle-class families through services and cigarette taxes,” said Inman, D-Oklahoma City. “That’s unconscionable and immoral.”
Fallin’s plan to add a new $1.50 tax on cigarettes cleared a House committee on Monday on a 17-10 vote, which is still not enough to earn a tax hike final passage.
“I believe that’s a very good indication of where we are, not just on the tobacco tax but on revenue-raising measures in general,” said McCall, R-Atoka.