Oklahoma Bankers Association We make bankers better!
Just another reminder to let your representative or senator know how you feel and what you think about the plan that’s been developed by a group of leading business and civic leaders with the number of individual leaders who also support this program growing day by day.
In a previous OBA Update, we briefly outlined a few of the pros and cons on this issue. What we didn’t do was include the specifics of the plan itself.
Here are the three key areas addressed by the Step Up plan for your review:
EDUCATION
• One of the major features of the plan in the education space includes increasing teacher salaries by $5,000 and increasing principal pay.
GOVERNANCE
• Lower Supermajority Threshold — Reduce the “supermajority” threshold required in the legislature to pass revenue-enhancing measures from three-fourths to 60 percent.
• Budget Stabilization Fund — Establish a reliable annual funding mechanism to protect the budget in economic downturns.
• Line-Item Budget — Require the passage of line-item budgets with effective legislative oversight.
• Independent Budget Office — Create an independent budget office to root out waste, fraud and abuse across all government functions. It will also identify synergies that can be gained throughout government.
• Revenue Transparency — Revises the state budget to increase accuracy and transparency from all state agencies to better reflect all sources of revenue.
• Revise Term Limits — Change term limits for state legislators from 12 to 16 cumulative years.
• Increased Accountability for State Agencies/Streamline Agency Boards — Give the governor direct appointment power over the state’s eight largest agencies; dissolve those agency boards. Appointments would specifically include the state superintendent of public instruction and labor commissioner.
• Governor and Lt. Governor Reform — The governor and lieutenant governor would run as a team rather than as individual ballot items as it is now.
• Supreme Court Reform — Change the process of filling Supreme Court vacancies.
• County Government — Give Oklahoma voters the power and authority to tailor the form and make-up of their county government.
REVENUE
The Step-Up Plan also includes a series of tax reforms to fund the plan’s specifics. Here’s a quick summary of those tax increases:
• Cigarettes — $1.50 per pack; estimated revenue – $243.9 million;
• Little cigars — taxed like cigarettes; chewing tobacco – 10 percent tax; and taxes on e-cigarettes; estimated revenue – $12.9 million;
• Gross Production Tax (current wells {at 2 percent} increased to 4 percent; all future wells to begin at 4 percent for the first 36 months, then to 7 percent) estimated revenue – $133.5 million;
• Increase tax rate on diesel and gasoline by 6 cents; estimated revenue –
$170.4 million;
• Transferable and Refundable Income Tax Credits (wind power generation) — beginning in the tax year for 2018, caps credits and cash refundability for coal, wind and railroads;
• Gaming Changes — casinos authorized to use dice (craps) and balls (roulette); estimated revenue – $22 million;
• State Income Tax Simplification:
o Caps itemized deductions at $22,500;
o No cap on charitable contributions;
o Adds two intermediate rates:• 4.60 percent on taxable income between $7,200 to $17,999 (single) and between $12,200 and $35,999 (joint/head of household);
• 4.80 percent on taxable income between $18,000 and $49,999 (single) and between $36,000 and $99,999 (joint/head of household);o Reduces standard deduction amounts and disallows personal exemption;
o No change to top marginal rate of 5 percent;
o Retains all available credits;
o Retains several current deductions, including:• Charitable contributions
• Capital Gains
• College savings
• Military pay
• Retirement and pension incomeo Estimated net revenue is $144 million;
• 15.3 percent of filers pay no tax (AGI of less than $12,000);
• 6.4 percent of highest income filers represent over 50 percent of the increase (AGI of $200,000 and higher);
• 32.3 percent of highest income filers represent over 75 percent of the increase (AGI of $70,000 and higher).
As we’ve continued to make bankers aware of this very important issue we’ve tried very hard not to be biased in any manner in our presentations. If you think we have been biased, please: we need to know how to do it better, so let us know!