Motor fuel, cigarette tax and liquor tax revisions part of Republican plan to fix $215 million budget shortfall

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OKLAHOMA CITY - In the midst of a special session to fix the state's budget shortfall, Republican leadership announced Monday its plan which includes a tax on cigarettes and increasing the state's motor fuel tax while paying for teacher and public employee pay raises.

Gov. Mary Fallin, House Speaker Charles McCall and Senate President pro tem Mike Schulz, R-Altus, made the announcement - flanked by legislators - at the capitol Monday morning.

"It's been very difficult to find an agreement, but we can't let the perfect be the enemy of the good," Fallin said. "We have to find a resolution to close the $215 million budget gap and to put our state on a sustainable, stable path forward. We can't keep having budget shortfalls year after after year."

"This is a plan that we believe the people in the state of Oklahoma want," said McCall, R-Atoka.

If passed by the Legislature, the governor's office said the agreement would:

· Place a $1.50 tax on a package of cigarettes
· Provide for a 6-cent fuel tax increase
· Revise taxes on alcoholic beverages
· Restore the Earned Income Tax credit
· Provide for a $3,000 teacher pay increase (Effective Aug. 1, 2018)
· Provide for a $1,000 increase for state employees (Effective Aug. 1, 2018)

The teacher pay raise doesn't include higher education, legislators or constitutional officers (such as statewide elected officials and judges).

Legislators didn't offer specifics on the numbers or take questions from the press after the roughly 20-minute press conference.

“Food and everything is going up. But, minimum wage didn’t get raised," said Jurea Colbert while stopping at the Shell gas station at Waverly and W. Britton Rd. Monday afternoon. "You got people leaving (the state) because they’re not making enough money, so raising gas is not going to solve the problem.”

“I can’t pay my bills, if I can’t buy gas to go to work to make money. It kills the little guy," said Delmar Goff, who works as a handyman. “I think they need to get it from the liquor stores; if they raise the tax on liquor, there will be less drunk drivers out there on the road. If they raise the tax on cigarettes, it’s going to raise a big stink, like it has been. As far as gas, gas is high enough.”

The Oklahoma Supreme Court ruled a cigarette fee, passed at the end of session by a simple house majority, unconstitutional this past summer. The Oklahoma constitution requires a three-fourth's vote to pass revenue raising measures. The court's ruling created a $215 million budget hole, leaving state agencies unsure about their immediate and long-term future.

“We don’t have numbers on this plan, all we’ve heard is components," said State Rep. Emily Virgin, D-Norman, after Republicans announced their plan.

House Republicans currently have a 72-28 majority but would require at least four Democrat votes to raise taxes. Democrats called Republican leadership's announcement "no new news."

“That’s why it’s so baffling that they wouldn’t try to reach across the aisle and reach some sort of bi-partisan compromise," Virgin said. "Because, they know that they have to have our votes.”

“In our estimation, the only thought is to set the stage for the next week or so," said Oklahoma Senate Minority Leader John Sparks. "If they’re going to press votes on this, to try to shift the blame for bill not passing.”

House and senate budget committee meetings are scheduled for Tuesday.

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