Compromise? Senate asks Oklahoma House to approve budget deal with gross production tax increase

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OKLAHOMA CITY – Less than a day after a budget proposal failed to pass the Oklahoma House of Representatives, there is some hope a compromise may be on the horizon.

House Bill 1035 includes a tax on cigarettes, a motor vehicle fuel tax and an additional tax on beer, while giving a pay boost to teachers and state employees. It failed as a revenue measure Wednesday by a final vote of 54 to 44. Of the 54 votes in support, not a single one came from Democrats.

On Thursday, Oklahoma Senate leaders passed a resolution urging the House to add a 4 percent gross production tax. The resolution itself does not specify exactly how many months the tax increase would apply, however the Republican leadership is pushing for 36 months.

According to Senate Majority Leader Greg Treat, it would generate about $15 million a year.

"That’s the reason we left it out of our package. It’s not a lot," Treat said. "4 percent is where we were at the end of last session. 4 percent is what we have talked about for a long time. 4 percent is what the Senate Republican Caucus has been comfortable with for a while. We are not comfortable going higher than that."

Rep. Eric Proctor, D-Tulsa said House Democrats may get behind the measure if 4 percent GPT was added at 12 months rather than 36.

"For horizontal drilling, the first 36 months are currently at 2 percent. Anything above that goes to seven so, if you take it and have everything go to seven after 12 months, it's a substantial difference rather than just two percent," Proctor said. "The difference between 36 months at 4 percent to 12 months at 4 percent over a $100 million annually that could be invested in education, criminal justice, public safety."

Both sides agree a deal must be reached.

"If the House Democrats refuse to advance this package, cuts will be larger," Treat said.

Oklahoma Independent Petroleum Association released a statement Thursday amid the resolution saying they were 'disappointed'. In the statement, they said in part: "With 20 percent of Oklahoma’s workforce tied to the oil and natural gas industry, decreased drilling caused by any increase in the state’s gross production tax would negatively impact toolpushers, roughnecks, pipeliners, welders and other oilfield workers who rely on continued drilling to support their families in communities across the state."

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