Oklahoma's governor and Republican legislative leaders agree in principle on cutting taxes, a multi-million dollar overhaul of the Capitol and revamping the pension system for state workers, but each side has different ideas on the specifics.
As the Oklahoma Legislature reaches its halfway point, Senate President Pro Tem Brian Bingman and new House Speaker Jeff Hickman are expected to begin working toward a compromise on some of those big-ticket items, and work with the governor's office on building a budget with a $188 million hole in it.
"We're just starting those discussions," said Hickman, R-Fairview, who was elected speaker just after the start of the 2014 session when former Speaker T.W. Shannon stepped down to focus on his U.S. Senate race.
Gov. Mary Fallin is continuing to call for a cut in the state's income tax, and the House and Senate each have passed separate plans. The Senate bill would drop the rate from 5.25 percent to 5 percent once overall general revenue collections return to 2013 levels. A second cut to 4.85 percent would occur if additional revenue triggers were met.
The House bill would also cut the rate to 5 percent, but only if income tax revenues first grow by enough to offset the lost revenue — a more difficult threshold to meet. The House also passed a bill to cut the state's corporate income tax rate.
"We're moving in the same direction," Hickman said. "(Both bills) have triggers and they're paid for in future years when there's growth. It's not like we're worlds apart on tax cuts."
Bingman, R-Sapulpa, said he expects top-level negotiations between his Senate leadership team and House leaders to begin in the next couple of weeks.
Both sides also will have to compromise on $6.9 billion in available revenue for state agencies and programs, which is about $188 million less than lawmakers had to appropriate last year.
Hickman said increased funding for common education and pay raises for targeted state employees like corrections officers, child-welfare workers and Highway Patrol troopers is a priority for members of his caucus. He said House Republicans would like to see as much as $125 million in additional funding for K-12 schools, which will likely lead to cuts in other areas of state government.
"The House position is that we're going to have to find some money, but when you're starting $188 million down ... that's going to cause some cuts in some other areas," Hickman said.
Fallin's proposed budget included a $50 million increase for the Department of Education, as well as increases for child-welfare programs and trooper pay hikes. But Fallin's proposal also recommended 5 percent cuts to most other agencies, including $47.7 from the Oklahoma Health Care Authority, which provides health care to the poor, and $49.4 million from the Regents for Higher Education.
The House and Senate also differ on how to pay for repairs to the state Capitol. The Senate passed a bill authorizing up to $160 million in bonds to pay for the project, while the House supports a more modest $120 million for repairs, but wants it to first go to a vote of the people.
The House and Senate also each have separate proposals to change the retirement system for newly hired state workers from a traditional pension to a 401k-style retirement plan, and Hickman has said the House won't support such a move without targeted pay hikes for some of the lowest-paid state workers.
The governor's chief negotiator on the budget, Finance Secretary Preston Doerflinger, urged legislators to be cautious about passing bills that will further reduce how much revenue is available for appropriations. In recent years, the Legislature has approved hundreds of millions of dollars' worth of tax giveaways and diverted some revenue streams away from the General Revenue Fund, the state's main operating fund for state government.
For that reason, even though Oklahoma's economy is doing well and overall revenue collections are rising, the Legislature has less money to appropriate to state programs.
"We have to be mindful of legislation that gets passed or discussed outside of the budget talks," Doerflinger said. "We can't have legislation that would take even more money off the top ... while we're trying to discuss what a budget would look like.
"We have to think past our noses in this building, and sometimes we have difficulty with that."