Shortly before midnight Monday, Henry announced he had signed the tax cut measure after reaching an agreement with GOP lawmakers on a state budget plan for the fiscal year that begins July 1, likely avoiding a special session to write the budget.
A budget agreement for 2008 has eluded the governor and legislative leaders since March, when the Democratic governor vetoed much of a $6.9 billion budget plan that was negotiated by the House and Senate without his input.
Henry, who had until midnight Monday to sign the tax cut bill or veto it, announced his decision at 11:45 p.m - 15 minutes before the deadline. Henry met with GOP House Speaker Lance Cargill for about an hour Monday afternoon to discuss budget priorities and budget negotiators worked throughout the night to hammer out a budget plan.
“We have made significant progress on the major pieces of a budget framework and will work together to implement the details in the days to come,” Henry said in a statement. “We are on track toward an orderly adjournment and a final budget that addresses the needs of all Oklahomans.”
GOP leaders also praised the budget agreement, but neither Henry nor GOP lawmakers revealed details of the budget plan. The Legislature is required by the Constitution to adjourn its four-month regular session on May 25.
“This is a positive step forward in achieving a final budget agreement,” said Cargill, R-Harrah. “Tax relief has been a cornerstone issue for us, and we're glad we can once again deliver for the people who work for a living in this state.”
“We've made significant progress in achieving a final budget agreement, and enactment of this tax relief package goes a long way toward moving Oklahoma forward,” said Senate President co-Pro Tem Glenn Coffee, R-Oklahoma City.
Henry said he signed legislation that accelerates income tax cuts approved last year, eliminates the franchise tax for small businesses and authorizes a back-to-school sales-tax holiday and a tax credit for stay-at-home parents.
Henry had indicated his decision to sign or veto the bill was tied to the progress he made with lawmakers on negotiating a state budget for 2008. He said to sign the tax cut bill without an overall budget agreement “would be irresponsible.”
The tax cut measure will reduce revenue next year by about $15 million and will cost about $74 million a year when fully implemented.
The Alliance for Oklahoma's Future, a coalition of almost 40 organizations, had asked the governor to veto the bill because it would further erode the state's revenue base and prevent adequate funding of essential public services.
Among other budget priorities, Henry has pushed a plan to lift teacher pay raises to the regional average. Oklahoma is in the fourth year of a five-year program to increase teacher salaries, and Henry wants to lift teacher salaries by $2,000 a year by next year to meet the goal of achieving the regional average, officials said.
The budget plan Henry vetoed included a $600 annual pay raise for state teachers, about half the $1,100 raise Henry proposed in his executive budget. Raising the salaries of Oklahoma's 46,500 certified teachers by $600 would cost about $32 million a year, according to the Oklahoma Education Association.
The Legislature approved a $1,200 annual teacher pay raise in 2005 and $3,000 last year.
The average teacher salary in Oklahoma this year is $42,124, according to the Oklahoma Education Association. The regional average is about $43,600, according to calculations by The Associated Press based on figures provided by state teacher associations in Oklahoma and its six border states: Texas, New Mexico, Colorado, Kansas, Missouri and Arkansas.