"Tax equity, not a tax hike" was the theme that resulted in an
override Thursday by the Oklahoma Legislature of the governor's
veto of Senate Bill 1121.
Walters struck back by appointing Norman attorney Stan Ward to
represent the governor as special counsel to challenge the
constitutionality of the Legislature's action in court.
The bill, which would raise the income taxes of out-of-state
residents who work part time in Oklahoma, was viewed as a
revenue-raising measure by opponents.
According to State Question 640, approved by state voters, the
Legislature can't raise taxes without a vote of the people or a
three-fourths vote of the membership.
Proponents, however, said the bill would merely change the tax
calculation formula so that out-of-state residents would pay
Oklahoma taxes in a proportion equal to Oklahomans.
The Senate easily overrode the veto on a 43-2 vote. It was
harder fought in the House, where 68 votes were needed, and the
roll call was stuck on 66 for nearly two hours before the votes
were obtained. The final vote was 68-30.
Walters bitterly opposed Senate Bill 1121, saying it would put
a damper on outside investment in the state.
"Historically, Oklahoma has been starved for capital to fuel
its economy," Walters said in his veto message. "Much of our
success in economic development over the past three years has
depended upon our businesslike ability to balance our budget,
hold taxes in line and engender confidence in our state through
"Simply stated, a 75 percent income tax increase on
nonresidents who have demonstrated their faith in Oklahoma by
investing here flies in the face of all that we have
accomplished," Walters wrote.
"It is my genuine fear that passage of this single bill, which
will affect almost 90,000 taxpayers, will seriously erode our
successful efforts to position Oklahoma nationally as a
pro-business state worthy of sizable outside investment."
But legislators who favored the bill, which would raise about
$18.2 million, pointed out that it would affect individual income
taxes and not investment income.
"What we're trying to do in this bill is not give the
nonresident a break over the residents in the state of Oklahoma,"
said Sen. Jack Bell, D-Idabel.
"Aren't your constituents and my constituents just as good as
the residents of Kansas and Texas? I think so," said Sen. Keith
Leftwich, D-Oklahoma City.
"If they earn a total of $50,000 in two states, they're going
to pay in Oklahoma on a $50,000 tax bracket. We're discriminating
against Oklahomans if we do not pass this bill," he said.
"How the governor can say we're discriminating against
out-of-state investors when we're not taxing investment income is
Leftwich noted that there was a separation of powers between
the governor and Legislature, "but there should also be some
unity and teamwork."
Citing a "barrage of press releases" from the governor's
office against Senate Bill 1121, Leftwich said: "It seems to me
that throughout life we all have to be able to work and play well
with each other."
Walters should state his position through his veto message,
rather than press releases, Leftwich said, referring to "an
attempt at using the media to intimidate and stampede the
Sen. Bruce Price, D-Hinton, said lawmakers had a
responsibility to their constituents to level the playing field,
"which this bill does. It won't have the effect the governor says
it will. . .these people are here because they want to be here
and earn income in this state," he said.
Sen. Don Williams, D-Balko, the bill's Senate author, said a
tax accountant and certified public accountant had asked him how
long the "loophole" would remain in Oklahoma law for the
part-time residents. …