Okla. Tax Hike To Raise $300 Million for Schools

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Gov. George P. Nigh of Oklahoma--who warned that the legislature's failure last year to increase taxes could imperil recent reforms in the state's education system--last week signed into law a temporary tax increase that will guarantee the state a balanced budget for the rest of the fiscal year.

The Governor signed the legislation, which will increase the state sales tax from 2 percent to 3 percent until the end of the 1985 calendar year, two weeks after signing into law $125 million in cuts to the state's general-revenue budget for the current fiscal year.

The votes in favor of the tax increase and the accompanying legislation that made it effective immediately were overwhelming. The vote in the House of Representatives was 83-to-18, and the vote in the Senate was 37-to-10.

The legislature is expected to consider this spring a number of other measures to cope with revenue shortfalls, including consolidation of some state agencies and school districts, revamping of the state's accounting system, and taxing sales of cigarettes and beer. The legislature also will consider legislation to increase the taxing authority of localities, including school districts.

Special Session

The state has been hit hard in recent years by a slump in gas production and prices, and the Governor last fall called a special session of the legislature to address a $155-million deficit in the current budget. The general-revenue budget for fiscal-year 1985, which ends on June 31, is $1.69 billion.

Aid to education accounts for about two-thirds of the state budget, and educators feared that the budget problems would jeopardize a series of education-improvement initiatives enacted by the state in the early 1980's. (See Education Week, Dec. 14, 1983.)

Douglas J. Eneboldsen, director of the fiscal division of the House of Representatives, said the sales-tax increase would raise more than $300 million before it expires on Dec. 31, 1985.

Observers said the legislature's swift action this session after its earlier failure to act resulted from the introduction of a more modest tax package and a demonstration that state agencies "couldn't cut their budgets any more."

Most of the state's major education organizations lobbied legislators to vote for a tax increase, and public opinion slowly moved toward support of tax increases, observers said.

"Many members of the legislature were pulled into pta meetings [and persuaded to vote for the tax increase] who would not have dreamed of voting for a tax increase before," said Mr. Eneboldsen.

John 'Folks, associate deputy superintendent of education, said the legislature's budget cuts paved the way for a tax increase. "Once they made those cuts, they showed they couldn't cut any more and needed to raise taxes," said Mr. Folks. "They did what the public wanted--they cut first."

The newly enacted tax package is also smaller than Governor Nigh's original proposal, which would have increased the sales tax from 2 percent to 4 percent and increased or imposed several other, smaller levies. The Governor's package would have raised $650 million.

Vol. 03, Issue 22

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