Committee Kills Measure to Broaden State’s Tax Base

The Senate Finance Committee killed legislation earlier this week that would have helped boost economies in rural communities. House Bill 3126, authored by Senator Ron Justice (R-Chickasha) and Speaker of the House Todd Hiett (R-Kellyville), would have helped broaden Oklahoma’s tax base and attract out-of-state residents into communities that have declining populations.

HB 3126 provided for a 60-month income tax exemption for certain individuals establishing residency and purchasing a single-family dwelling in certain counties or incorporated cities or towns experiencing a population loss.

“I’m troubled that this measure, that could have had such a tremendous economic impact, wasn’t approved in committee,” said Justice. “This bill would have done incredible things for our state. Not only would it have helped our counties and smaller communities that are struggling economically because of declining populations, it would have ultimately broadened the tax base pumping thousands of new dollars into those economies through sales and property taxes.”

Justice also noted that local schools would have benefited from increased student enrollment which would have increased their federal aid.

The bill would have gone into effect January 1, 2007. In order to qualify for the income tax deduction, an individual would have had to:
- acquire or construct (within 12 months of establishing residency) a single-family home in a qualifying rural area
- occupy the home as a principal residence for more than six months of each calendar year
- be a resident of another state or states for at least four consecutive years prior to the residency in a qualifying rural area.

Under the provisions of HB 3126, a qualifying rural area is a county with a population that is less than 200,000 according to the latest census data. It could also be an incorporated city or town having a population of at least 500 people and less than 50,000 and located in a county with a population that is less than 200,000 people.

“The money individuals would have saved with the income tax exemption would have been spent in these communities through the construction of new homes or restoration of older homes, and let’s not forget the money they’d spend in local stores, restaurants and gas stations,” said Justice. “This vote is a loss for Oklahoma. I hope next session this issue is presented again and given adequate consideration and approval for the sake of our struggling cities and counties.”