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House and Senate Republicans reach agreement on plan to fill budget hole

House and Senate Republicans join Governor Mary Fallin for an announcement on the state budget crisis Oct. 23 in Oklahoma City. (KOKH/Julie Calhoun)

House and Senate Republicans have reached an agreement on a plan to fill the state's budget hole.

Governor Mary Fallin announced the agreement on the fifth week of a special session that convened to fill a $215 million hole in the state's budget. The plan includes a $1.50 cigarette tax, a six-cent fuel tax, revises alcohol taxes, the restoration of the Earned Income Tax Credit and also funds a teacher and state employee pay raise.

The plan was set to begin working its way through the legislature on Monday beginning with a Rules Meeting but that meeting was later cancelled.

"We have to put our state on a sustainable path...We need to fix the structure of our budget," Gov. Fallin said.

The plan will provide for a $3,000 pay raise for teachers beginning Aug. 1, 2018 and a $1,000 pay raise for state employees on the same date. The raise doesn't apply to state employees in higher education, legislators or constitutional officers.

The governor says her office has worked to find ways to make the government more efficient.

"There comes a point when we have to think what kind of government we want to provide," Gov. Fallin said.

The budget hole drastically impacted three agencies: Department of Human Services, the Oklahoma Department of Mental Health and Substance Abuse Services and the Oklahoma Health Care Authority. Last week, the ODMHSAS announced they would have to eliminate most of their outpatient services.

"You have to provide essential services for the state." Gov. Fallin said. "We can't let the perfect be the enemy of good."

Democrats have wanted a raise in the Gross Production Tax as part of the budget plan, that was not included in the current plan. Fallin was joined at the announcement by House Speaker Charles McCall and Senate President Pro Tempore Mike Schulz.

“We believe this plan gives us the best opportunity to pass the House and Senate, and provide the state with needed revenue to stabilize mental health and substance abuse programs, keep rural hospitals open, and provide a pay raise that would make Oklahoma teachers the highest paid in the region for starting pay," McCall said.

The plan will need the support of some Democrats to pass. Sources tell FOX 25 that a 51 vote solution has been prepped to pass the legislation if the original plan cannot garner enough votes.

The House Democratic Caucus stated they would not support a budget deal that "balances the state's checkbook on the backs of Oklahoma workers while refusing to ask the oil and gas industry to pay their fair share."

"It is obvious that this budget is meant to meet one objective, which is to find a way out of this budget shortfall without restoring the gross production tax on oil and gas wells. Instead of asking the oil and gas industry to pay a fair and just tax, Republican lawmakers would rather tax working class Oklahomans." The caucus said in a statement.

The House Democrats "demanded" the Republican caucus halt their plan and return to the table to negotiate a budget that "works for all Oklahomans".

"We believe that offering teachers and state employees a pay raise while simultaneously raising their taxes to pay for the raise is both disingenuous and a terrible way to balance a budget."

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