Five weeks after calling a special session, Gov. Mary Fallin announced Monday that Republicans in the state House and Senate have reached a budget deal to fill a $215 million shortfall.
Updated Oct. 23 at 1:43 p.m. with Democratic response.
Fallin said the agreement would increase the cigarette tax by $1.50 per pack of cigarettes, hike the motor fuel tax by 6 cents, and change the alcoholic beverage tax. It would also provide a $3,000 teacher pay raise, a $1,000 pay raise for some state employees, and restore the Earned Income Tax Credit.
“It’s been very difficult to find agreement, but we can’t let the perfect be the enemy of the good. We have to find a resolution to close the 215 million dollar budget gap and to put our state on a sustainable, stable path forward,” Fallin said.
Speaker of the House Charles McCall, R-Atoka, said he believes the people of Oklahoma will want this plan.
“People in our state have been telling us that they want a teacher pay raise, they want health care. They want good roads and bridges in this state,” McCall said.
Fallin, McCall, Senate President Pro-Tem Mike Schulz, R-Altus, and other Republican leaders did not take questions from the capitol press corps after the announcement.
The $215 million budget shortfall was created by a state Supreme Court ruling that invalidated a $1.50 cigarette tax. The court ruled the tax was illegal because it did not pass by a three-quarters majority in the legislature.
In order to pass, the proposal will need support from Democrats. House minority leader Scott Inman, D-Del City, had been advocating for an increase on the gross production tax on oil and gas companies, which was not included in the Republican plan.
“What you saw today was a dog and pony show,” Rep. Emily Virgin, D-Norman, said.
Virgin said Democrats were in talks with Fallin’s office and Republicans leadership last week. However, the plan contained none of the proposals that Democrats asked for, and Monday’s announcement caught her by surprise.
“Raising the cigarette tax and raising the fuel tax ... hits low and middle income Oklahomans the hardest, while asking oil and gas companies and those at the top not to contribute a single penny,” Virgin said.
Senate Minority Leader John Sparks, D-Norman, says he would like to give teachers and state employees a pay raise. However, he doesn’t believe the Republican plan would generate enough money to fund the state’s health agencies, provide money to the Oklahoma Department of Transportation to fully implement its eight-year plan, and grant teachers and state employees a raise.
“Saying somebody deserves a raise and identifying a responsible way to pay for it are two different things. We only saw part of that this morning. We didn’t see the responsible part,” Sparks said.
When the cigarette tax was initially passed, it was projected to raise $215 million dollars. Fallin, McCall and Schulz did not provide details about how much money would be raised by the fuel tax or alcoholic beverage tax.
Last week, the Oklahoma Department of Mental Health and Substance Abuse Services announced they would have to cut $75 million dollars from their budget during the current fiscal year. The agency would be forced to end funding for all outpatient programs. The Oklahoma Healthcare Authority announced it may have to reduce its Medicaid reimbursement rate to providers by 9 percent.