‘That sort of puts me in a bind,’ Consumers fear governor’s proposed utility tax

OKLAHOMA CITY - Officially, Michael Todd is a part-time custodian, but his passion lies in what he calls "junkin'" -- collecting scrap metal and trash and turning it into something worth selling.

"I got it from the junk pile," he said, showing off two refurbished bikes. "I break them down, I rebuild them."

Without "junkin'," Todd would only make about $750 a month, so he fears a new sales tax that would add an extra 4.5% to his $125 monthly utility bill.

"It adds up, it really adds up," he told NewsChannel 4. "I do my best to keep the bills down but the rates go up that sorta puts me in a little bind. You take into consideration a lot of people that's in the same category that I am and trying to make it that's really a strain on my pockets."

Todd is one of millions of Oklahomans who figure to be affected if the legislature makes reality the tax plan Gov. Fallin laid out in Monday's State of the State address.

Fallin has proposed broadening the state's sales tax base, by imposing new fees on more than 100 services, such as plumbing, barbers and attorneys.

That includes a state tax on residential utility customers. Utilities already pass on city and county taxes. Municipal utilities and co-ops would not have to pay the state tax.

Her chief of staff told NewsChannel 4 it's time for the state to clean up an outdated tax code that has seen little fundamental change since it was implemented in 1933.

"We are a service-oriented economy," that has moved away from manufacturing, said Chris Benge. "The philosophy behind it, or the logic, is that you broaden the base and lower the rate."

Most, if not all of the seven states that border Oklahoma have already implemented similar measures, Benge said. A broader sales tax base means a more stable economy and ensures everybody pays their fair share, he said.

The state is staring down a more than $800 million budget deficit.

"There are really just some true funding needs out there that we need to address," said Benge, adding the state needs new revenue if it wants to keep core services in place. "There's a real fine line in making sure that your state is competitive and growing an economy and being able to facilitate the growing of that economy."

To tiptoe that line, Gov. Fallin has proposed eliminating sales tax on groceries, a move her office estimates will save the average family of four $350-$676 a year.

The Governor also wants to eliminate the corporate income tax, long a headache for the state's budget officers trying to make estimates, Benge said. Rolling back the tax would provide more stability while also doing away with tax credits those corporations receive.

"Removing that volatility out of the budget will be very helpful for us," he said, while also noting the move will attract more business to the state. "You are saying to businesses around the country that Oklahoma does appreciate corporations here. Let's not forget, corporations are job creators and I think too many times people look at corporations as some ugly animal when in fact a corporation hires people and pays people wage and allows them to provide for their families."

Michael Todd, though, still feels like he's getting the short end of the stick.

"When they decide they want to write these bills and pay these taxes and give the big corporations a break and stuff, think about the little people and stuff because it's not that easy out here," he said.

Oklahoma Gas & Electric has not taken a position on the Governor's idea to tax residential utilities, but expressed concern about the tax's impact on customers.

A spokesperson also told NewsChannel 4 there is concern about inequality in the industry, since municipal utilities and co-ops would not be forced to pay the same taxes.

Gov. Fallin's proposals are only suggestions. It is now up to lawmakers to craft legislation and implement her ideas.