Terrill: State income tax still too high

OKLAHOMA CITY — While University of Oklahoma President David Boren is calling for a moratorium on further state tax cuts, the chairman of the House’s Revenue and Taxation Committee believes Boren’s request is premature.

State Rep. Randy Terrill said Thursday he still believes the state’s income tax is still too high, but wants to gather information from a series of interim studies scheduled later this fall, before deciding “whether or not additional tax relief is needed or necessary.”

“Boren’s call was premature,” Terrill, R-Moore, said. “We haven’t begun our interim studies yet. We want to look at whether or not additional tax relief is needed or necessary and, if so, what type of tax relief is preferable.”

Terrill said Oklahoma must balance tax cuts against the “right set of priorities” and targeted spending increases.
“It’s about respect for taxpayers, too,” he said.

In an interview last week with the Associated Press, Boren urged lawmakers to sideline future tax reduction proposals and, instead, invest in higher education to create a knowledge-based economy which he believes will produce long-term benefits in new businesses and good jobs.

“I think we ought to have a moratorium on tax reductions right now,” Boren said last week. “I think we’re bumping the limits and I think we certainly don’t need to proceed down that path.”

Boren said that when he served as governor 30 years ago, more than 40 percent of OU’s budget came from appropriations by the Legislature, with the balance coming from tuition and fees, grants and contracts, private donations and other sources.

This year, the AP reported, state tax dollars will provide only 21.5 percent of the $713 million operating budget for the OU campus in Norman and just 7 or 8 percent of the $632 million budget for the OU Health Sciences Center in Oklahoma City.
And as public funding for OU declined, tuition and fees paid by students have increased.

“It’s almost a dollar for dollar trade-off,” Boren said.

Yet Terrill — an OU alumnus, himself — says certain tax cuts will “have the effect of generating more revenue for the treasury.”

“The higher business taxes are, the more they are a deterrent to growth and job creation,” he said. “We want to invest in higher education, but we want a business-friendly climate here as well.”

Additionally, he said, the state should establish clear lines of accountability, so taxpayers can see exactly where their money is going and how those funds are spent.

“The clearer the lines of accountability are, the more voters can see if their tax dollars have been spent well and whether or not there is a need for more revenue,” he said. “But when the pot gets blended and mixed, the voters get skeptical.”

And while Boren said an investment of state tax dollars in colleges and universities — and other research institutions — will produce economic results, Terrill said recent tax cuts have not caused a reduction in government services.

“We paid for the tax cuts purely out of surplus,” he said. “There has not been one reduction in state government.”

Boren countered, saying that some temporary tax cuts “won’t amount to much.”

“It’s very tempting to give in to the siren song of tax cuts. I realize that,” he said. “I always want to keep taxes as low as they can possibly be. If we really want to put more money in the pockets of Oklahoma citizens so they can spend it the way they want to, ironically, I think investment is the best way to do that right now than some temporary tax cuts that won’t amount to much. Most people won’t even notice.”

Terrill, however, said he would prefer those cuts to go directly to taxpayers.

“Again, it’s about respect,” he said. “I believe when we had the type of economy we have and when we have record surpluses, we should return some of that surplus back to the public.”