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December 21, 2013

Income-tax ruling may send lawmakers back to start

Ada — Lawmakers will have to figure out a new way to reduce state income taxes and finance improvements at the Capitol complex after the Oklahoma Supreme Court struck down a bill that would have accomplished those goals, Rep. Todd Thomsen said Friday.

“I think there was an attempt to do something wise and planned out, but they balked at having two different subjects combined in one issue,” the Ada Republican said. “So we’ll have to address that.”

Last week, the Supreme Court tossed out a law from the 2013 legislative session that called for incremental cuts in the state income tax, tied to economic growth.

The court ruled that House Bill 2032 was unconstitutional because it also contained language setting up a fund to pay for repairs to the state Capitol building. The state Constitution bars lawmakers from combining two unrelated subjects in a single bill.

HB 2032 called for reducing Oklahoma’s top income tax rate from 5.25 percent to 5 percent on Jan. 1, 2015. Under the bill, the top rate would have dropped to 4.85 percent in 2016 if state revenues equaled or surpassed the fiscal impact of that tax cut.

The bill included provisions establishing a fund for Capitol building repairs, starting with a $60 million allocation in fiscal year 2014, which began last July 1. The state would have earmarked another $60 million for repairs in fiscal year 2015.

The state Supreme Court ruled that HB 2032 violated the single-subject rule, which was designed to prevent a practice known as logrolling. The practice combines two subjects in a single bill — in this case, tax cuts and repairs to the Capitol — forcing lawmakers to approve an unpopular bill along with a popular one.

“Taxation policy and the appropriation of state funds for Capitol improvements are not germane, relative or cognate to a readily apparent common theme and purpose,” Justice James Winchester wrote for the unanimous court. “A voter could certainly be for one measure and not the other but forced to approve the entire bill in order to pass the desired legislation. The single subject rule prohibits this unpalatable choice.”

The ruling will send lawmakers back to the drawing board if they decide to tackle both issues again in 2014. Gov. Mary Fallin was noncommittal last week about whether her budget proposal for next year will include income-tax cuts after receiving predictions that the Legislature will have $170.8 million less to spend in 2014.

Thomsen said that tax cuts are a perennial hot topic in the Legislature. He predicted that lawmakers will take up the issue again in 2014, but he added that they will have to balance the prospect of tax relief against the need to fund essential services.

“I think we also have to be cautious and be wise so we also take care of state functions,” he said.

State Sen. Susan Paddack, D-Ada, said it was difficult to predict whether lawmakers would consider tax cuts again in 2014.

“I am hopeful that lawmakers will be very cautious about further tax cuts, in light of the fact that we’re already $170 million down,” she said.

EDITOR’S NOTE: The Oklahoman contributed to this report.

Reach Eric Swanson at adanewsreporter@cableone.net.

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