Leadership bill to cut Oklahoma income tax stalls

OKLAHOMA CITY (AP) -- The chairman of the Senate Finance Committee on Tuesday stalled a leadership-backed proposal to cut Oklahoma's income tax and then declined to explain why he held up the bill.

The decision by Sen. Mike Mazzei came one day after a separate income tax proposal Mazzei sponsored was soundly rejected by a House committee. Thursday is the deadline for the bill to receive a hearing in a Senate committee before proceeding to the full Senate, but a spokesman for House Speaker T.W. Shannon said the bill is expected to advance.

"We're aware (the bill) will be moved to a different committee and we're confident it will pass," said Shannon spokesman Joe Griffin. "It has (Senate President Pro Tem Brian) Bingman's name on it, and we're confident in his leadership."

When approached by reporters after the meeting, Mazzei, R-Tulsa, declined to respond to questions and said he had a meeting to attend.

The Senate and the House have two separate proposals to cut the state's top income tax rate. The bill that Mazzei stalled Tuesday, sponsored by Shannon and Bingman and endorsed by Gov. Mary Fallin, would slash the top income tax rate from 5.25 percent to 5 percent. Mazzei had a separate bill that would have cut the income tax rate even further, to 4.75 percent, but offset much of the lost revenue by eliminating dozens of income tax credits and deductions. That bill was defeated Monday on an 11-2 vote in a House subcommittee.

Eliminating tax credits and deductions would limit the impact that a tax cut would hav e on the state's general revenue fund, but those credits and deductions are worth millions of dollars to the businesses and industries that receive them and are fiercely protected by teams of lobbyists hired to keep them in place.

After Mazzei delayed the bill, Fallin issued a statement in which she said she's working closely with Shannon, Bingman and individual legislators to "deliver a responsible, meaningful tax cut this year."

"I am confident that a tax cut plan will eventually pass and be signed into law by the end of the legislative session," Fallin said.

Rep. Earl Sears, the chairman of the House Appropriations Subcommittee on Revenue and Taxation, sponsored Mazzei's bill in the House and said he remains confident legislators will reach a consensus on a tax cut this session.

"The actions that have been taken in the last 24 hours, it's obvious people are frustrated over how their bills are being received in their respective chambers," said Sears, R-Bartlesville. "What needs to happen now, everybody just needs to keep cool heads, not get frustrated, and continue the dialogue to develop and implement an income tax cut for all the people of Oklahoma.

"The last thing we need right now is a repeat of last year, when no income tax cut moved forward."

Fallin last session proposed a bold initiative to slash Oklahoma's top income tax rate from 5.25 percent to 3.5 percent, reduce the number of income tax brackets from seven to three, and offset much of the lost revenue by eliminating various deductions and exemptions. But that proposal fell apart in the waning days of the session after lawmakers balked at getting rid of popular deductions and couldn't agree on how the cut would be implemented.

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Sean Murphy can be reached at www.twitter.com/apseanmurphy