The Edmond Sun

February 21, 2014

New speaker says tax structure needs close look

James Coburn
The Edmond Sun

OKLA. CITY — The state Legislature needs to take a comprehensive look at the entire tax structure, Speaker of the House Jeff Hickman said this week.

More attention is needed in examining solutions to increase Oklahoma’s competitiveness with other states, he said. How to best restructure state taxes will not be resolved within one year, Hickman said.

Texas does not have an income tax, but heavily taxes dry cleaning, landscaping, oil changes, diapers and other services, said Hickman, R-Fairview. Kansas lowered its taxes but pays higher property taxes.

“Do we greatly reduce or eliminate the income tax and do we replace it with taxes on services or other things?” he said.

The House needs to be more involved in examining the state’s 7-percent gross production tax for vertical wells, Hickman said. Horizontal wells pay a 1 percent tax rate incentive that will expire in 2015, he said.

A decision needs to be made about whether horizontal drilling should return to a 7-percent tax rate, keep it at 1 percent or put other incentives in place, he said.

“That program used to be at a reduced rate until the well paid out,” Hickman said. “And then it went back up to the 7 percent. Now you have a four-year incentive and then you pay 1 percent.”

Conversations will continue not only with the oil and gas industries but also with mineral owners, Hickman said. There is more to consider than the oil and gas companies, he said

“Where I come from, people in my district that have oil and gas interests get a check. And that gross production interest is being paid by them out of their check,” Hickman said. House District 58 borders Kansas while representing Alfalfa, Major, Woods, Woodward counties.

“I want those wells drilled on the south side of that line,” he said. “So we have to be very thoughtful. We don’t want to do anything that pushes that drilling just across the border into Kansas or Texas or our neighboring states.”

As the state faces a $188 million budget shortfall this year, Gov. Mary Fallin proposes to cut $47.7 million from the Oklahoma Health Care Authority and $49.4 million from the State Regents for Higher Education.

Fallin has called for an income tax reduction that will return $100 million to the state’s economy, she said. A one-quarter of a cent cut in state income taxes has been proposed by the governor.

“That’s part of the discussion,” Hickman said. “It’s definitely complicated that discussion to have a $188 million budget hole.” | 341-2121