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‘Plan B’ state budget plan advances if compromise on GPT hike, revenue package fails

OKLAHOMA CITY - Oklahoma house and senate budget committees advanced backup legislation Thursday if a tentative compromise on increasing the tax on oil and gas wells fails to pass, along with a larger revenue package, to fix the state's budget shortfall.

The Republican-backed bills, passing mostly along party lines, would include using the state's rainy day fund for cash and include as deeper cuts to state agencies. That is if an agreement to increase the state's gross production tax (GPT) to four percent for 36 months fails to pass, according to Republican leadership.

"This is the extent of which we are capable of going. This is as high and the best offer that is coming," said House Majority Floor Leader Jon Echols, R-Oklahoma City. "We are now moving forward with the cash and some cuts."

Echols says that plan, considered "Plan B," will move forward if "Plan A-plus" fails.

"Republicans are willing to give them this opportunity to cast it on the board, but we’re not going to go so high we’re going to cost Oklahomans jobs."

Echols says the GPT increase will be packaged along with a previously failed house bill and go before house and senate budget committees Friday. If passed, that would set up a vote for either plan on Saturday.

HB 1035, which includes a $1.50 tax on cigarettes, $0.06 increase in the motor fuel tax and revising the tax structure on low-point beer, failed 55-44 Wednesday. Eighteen Republicans, as well as 26 Democrats, voted against the revenue plan to fix the state's $215 million budget hole, pay for teacher and public employee pay raises and fund earned income tax credits.

Democrats have held out votes in an effort to see the state's GPT increased on new oil and gas wells.

On Thursday, the senate passed a bipartisan resolution asking the house to add a four percent increase of GPT to HB 1035 in an effort to get past the legislative stalemate.

The Oklahoma Supreme Court struck down a $1.50 tax on cigarettes this past summer, opening the budget hole.

"I think it’s fair that this morning’s resolution indicates that an increase in the GPT is on the table as part of a larger discussion, as part of the larger grand bargain between all of the parties," said Senate Minority Leader State Sen. John Sparks, D-Norman.

Republicans plan on offering a GPT increase of four percent for 36 months. However it's unclear if Democrats will accept the length of the incentive rate.

"We don’t like the cigarette tax, we don’t like gasoline tax, we don’t like a large majority of the plan but we’re willing to compromise for what’s best for Oklahoma," said State Rep. Eric Proctor, D-Tulsa. "

"We’ve come from seven percent all the way to four percent at 12 months, which is substantial, and we’ve even gone above and beyond saying we would accept what the Republicans want, which is the cigarette tax and the gasoline tax."

Oil and gas groups were quick to condemn the resolution.

"We are being treated worse than the ‘sin taxes’ that have a large majority of support from Oklahoma because of it reducing unhealthy behaviors," said Oklahoma Oil & Gas Association President Chad Warmington in a statement.

As a crucial vote likely looms Saturday, Republicans say their "Plan B" is not a bluff.

"This is not a threat," said Senate Majority Floor Leader Greg Treat, R-Oklahoma City. "This is reality if we do not pass the revenue package that was taken up in the house (Wednesday), plus the four percent GPT."