Newspaper article THE JOURNAL RECORD

Governor, Legislature Reach Budget Agreement

Newspaper article THE JOURNAL RECORD

Governor, Legislature Reach Budget Agreement

Article excerpt

Republican Gov. Frank Keating and leaders of the Democrat- controlled Legislature have reached a budget agreement that will give Keating some of his targeted tax cuts while breaking into the state Rainy Day Fund to reimburse growing school districts.

The state will use $22.7 million -- the maximum allowed by law -- from the state's Constitutional Reserve, or Rainy Day, Fund to pay for specific needs, including what state leaders are calling a permanent fix for the on-going issue of school mid-term adjustments.

In turn for the agreement on expenditures, the state's low-income retirees, heirs to farms and businesses, investors in agricultural processing ventures and oil producers will enjoy tax relief of $5.2 million during the fiscal year that begins July 1.

The tax cut agreement will cost the state $40 million a year when the impact is annualized.

The agreement includes the "largest tax cut in Oklahoma history," Keating said.

A third leg of the agreement provides $17 million for rural economic development, including $7.5 million for rural highways, roads and bridges, $4.5 million for projects through the state Water Resources Board and $5 million for a new program -- the Rural Economic Assistance Plan.

The tax cuts include raising the state estate tax exemption from $175,000 to $600,000 -- the same as the federal estate tax exemption -- tax incentives for investing in agricultural processing facilities, gross production tax relief on marginal energy wells and extending the $5,500 income tax exemption, now enjoyed by public-sector retirees, to private-sector retirees with taxable income of $25,000 or less.

The agreement includes $42 million, a mix of Rainy Day and general revenue monies, for growing school districts during three years.

Beginning in the 1997-98 school year, state aid would be based on current year growth and chargeable formula. Student movement from district to district would be tracked, and funds would be set aside for mid-term adjustments based on average daily membership.

State leaders hope those measures will provide a permanent solution to providing state money for school districts that grow mid- term.

"We want to see this not a nagging controversy every legislative session," Keating said. …

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