OKLAHOMA CITY — About $140 million in surplus revenue will be reallocated proportionally to state agencies after Gov. Mary Fallin acknowledged Thursday she couldn’t reach an agreement with Republican lawmakers on a strategy for a special session.

Fallin wanted to use the $140.8 million as a starting point for negotiations on a teacher pay hike as an alternative to a state question in November that calls for a 1 percent sales tax increase for public education, including a $5,000 pay raise for teachers. Fallin also wanted lawmakers to consider distributing the surplus revenue to targeted agencies facing the most severe budget problems, including the Department of Public Safety and the Department of Human Services.

“With so many legislators terming out and a large number of new legislators who will be elected and sworn into office in mid-November, it was decided to continue to develop a teacher pay raise plan with reform that will be introduced at the beginning of the next legislative session,” Fallin spokesman Michael McNutt said in a statement released late Thursday.

McNutt also said lawmakers couldn’t agree with the governor on how the money might be divided among agencies with some of the most pressing needs. As a result, the money will be returned to agencies beginning later this month.

The state ended up with a $140.8 million surplus when the fiscal year ended in June after mid-year cuts were ordered to state agency budgets amid dwindling tax collections. It turned out those cuts were deeper than necessary.

Republican lawmakers, many of whom face tough re-election battles in November, have been lukewarm to the governor’s proposal since she initially floated the idea in July.

“The members of the House I have heard from continue to believe the $140 million needs to be returned to agencies as soon as possible based on the same allocation the Legislature used when we appropriated it in the 2015 session,” said House Speaker Jeff Hickman, R-Fairview.

Among the larger agencies, public schools will receive an additional $40 million, while the Health Care Authority will get about $23 million, Department of Human Services will get $16 million, and the Department of Corrections will get about $10 million.

Some members of Oklahoma’s business community have voiced concern about the proposed 1 percent sales tax increase for public education that is being pushed by University of Oklahoma President David Boren, a former U.S. senator and governor. That proposal will be on the November ballot after Boren spearheaded a signature gathering drive.

The sales tax hike would give Oklahoma the highest combined state and local tax rate in the nation at 9.82 percent, according to the Tax Foundation, a Washington, D.C.-based think-tank that advocates for broad-based, low-rate tax policies.


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