Ask Gov. Mary Fallin to list the key achievements of her first term and she touts her efforts to streamline government, make Oklahoma friendlier for businesses and improve the state’s financial picture.

Oklahoma was facing a $500 million budget shortfall and had only $2.03 in the bank when Fallin took office in January 2011, she said Tuesday. Since then, lawmakers have taken steps to improve Oklahoma’s business climate and bolster the state’s coffers.

“We’ve been able to focus on doing things like lawsuit reform, workers’ comp reform, education reform, putting a bit more money toward some social programs, especially substance abuse and drug abuse — those types of things,” Fallin said. “So because of the job growth and new companies coming to our state, now we’ve reached a high this past summer of over half a billion dollars in our savings account.

“And then when we had that rainy day in May with the tornadoes, the Legislature was able to take $45 million out to give to those local communities to get them back on their feet, because they really suffered. It still left us with $530 million in our savings account.”

Fallin is seeking re-election in 2014, four years after she became the state’s first female governor. She formally launched her bid for a second term in October 2013.

Earlier this week, the governor spoke with the Ada News about her priorities for the 2014 legislative session, her proposal to cut the state’s top income tax rate and other issues. Here are excerpts from the interview.

The Ada News: I’d like to turn to the legislative session, which has just started. What are your top three priorities for the session?

Mary Fallin: The top three priorities are to continue to focus on making Oklahoma more business friendly, and one of the things we think is important to grow Oklahoma’s economy is keeping our taxes low on our citizens. I have proposed a quarter percent income tax cut this year.

We had two income tax cuts that got passed and signed into law last year, but the Supreme Court overturned those.

We still believe that Oklahoma ... needs to be competitive in their income tax rates. And since Kansas really lowered their income taxes by a good amount last year and Texas has no income tax, we’re kind of in an income-tax sandwich between the two states.

We know we need to have enough money to help government function in the sense that it should, and we have needs within state government, too. But we also believe — and we can track it through history — that as we have reasonable tax cuts to allow people to keep more of their money, that they invest that back into the economy. We do see that return through the revenue growth that we have in our state. We can track it over the last 20 years.

Pension reform is another thing we think is very important for our state. We have a piece of legislation going through the session this year that would take new, brand-new state employees — not current employees, but new state employees coming into the system — into a more modern, 21st-century pension system that would create, it’s called a 401(k) defined-contribution pension for them, which would make that pension portable.

We know by data that state employees stay on the job about five years, and then they may move on to a different type of profession or different entity to work for. And so, by having a 401(k), that pension system can go with them.

It also helps secure the current pension systems that we have for all of our state employees and also puts relief forward for the taxpayer, because in the end, it’s the taxpayers that are helping to pay for those pensions for all of our state employees. So it helps shore up the financial stability of our pension system.

Education is another key segment that we think is critical to growing Oklahoma’s economy and improving our quality of life. We’ve really been focusing on having accountability and standards and inspecting what we expect from our school systems.

Last year, between all of our education systems combined, I was able to allocate $120 million more toward education institutions in our state. This year, I proposed another $50 million for K-12 education with money to go toward reading sufficiency programs, making sure our third-graders can read at grade-appropriate level. And also, our other accountability standards that we put and to help with the school funding shortages that we’ve had in our state.

TAN: Of those priorities, which do you think is most likely to win legislative approval?

MF: I think there’s good support for all three.

I think everyone understands that it’s important that we have the best-skilled, educated work force possible in our state and that we’ve been, frankly, over the decades not doing as good as we should have in preparing our children to either be college or career ready. We’ve got to step up our efforts with our education system.

We’ve been making some great strides in education reform. We certainly saw some challenges with funding where we went through our national recession back in 2009-2010, when all states in the nation had budget shortfalls. And we did too, in the state of Oklahoma.

I’ve been trying to grow the economy so that we would have more money for things like education, corrections, trooper pay raises, other important priorities of our state. It’s just so Oklahomans can do better financially.

TAN: I understand in your State of the State address, you called for most state agencies to trim their budgets by 5 percent to help offset the impact (of an income tax cut). Could you elaborate on that?

MF: We are anticipating this year, based on our December revenue projections, a $170 million shortfall in revenue streams. However, next week we do have what’s called the Board of Equalization certification of revenue streams into our state. We do believe that after we get our December numbers in and January numbers in that we’ll have a little bit more money, and that shortfall will be smaller than what was projected in December. So that will help.

But we also, as conservatives, believe that we need to make sure that government is running as efficiently and effectively as possible and focus on eliminating government waste. That’s been a big part of my administration, is trying to save taxpayer dollars and then either give that money back to the taxpayers through tax cuts or to put that money toward our priorities like education, health care, public safety and transportation infrastructure issues. That’s where I’ve focused our budgetary increases in money that we’ve seen.

So I’ve asked agencies to take anywhere from 2 to 5 percent in revenue cuts to create more efficiency, because I still think that there’s room for improvement in government. There is government waste out there.

But there are programs that need a bump up in their spending allocations, which we’ve put into our budget this year. Like education once again, or public safety or corrections or even DHS’ (Department of Human Services) Pinnacle Plan.

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