OKLAHOMA CITY — Gov. Mary Fallin urged Oklahoma legislators Monday to approve a broad swath of tax increases endorsed by business and industry leaders to pay for a $5,000 pay raise for teachers and stabilize a state budget plagued by years of shortfalls.

Instead of touting her legacy during her eighth and final State of the State address, Oklahoma’s first female governor asked lawmakers to back a package of policy and tax changes dubbed “Step Up Oklahoma .” It’s been endorsed by a group of some of Oklahoma’s most powerful civic and business leaders.

“Because of the urgency of the situation, this outside group, in a very short time, has endorsed both reforms and revenue,” Fallin said. “They support ideas that are against their own financial interests in order to further our state’s interest.

“Our state is at a crossroads. The actions that we take will be a game-changer.”

The plan includes increased taxes on cigarettes, motor fuel and oil and gas production, among other things. It also calls for policy changes like a new layer of oversight for state agency funding, extending term limits for lawmakers from 12 to 16 years and giving the governor more power to hire and fire agency heads.

Legislative leaders have said they expect to vote on some version of the plan early in the legislative session, which began on Monday and is expected to continue until the final Friday in May.

House Democrats will provide critical votes to ensure passage of the plan, since Republicans cannot approve a tax increase without support of at least some Democrats.

Several House Democrats said Monday they could not agree to support the Step Up plan without some changes. Specifically, House Democratic Caucus Chairman Emily Virgin said her caucus members want to see a restoration of the state’s individual income tax rate to 5.25 percent and several deductions that benefit low- and middle-income earners.

“We haven’t walked away from the table,” said Virgin, D-Norman. “And we haven’t said, ‘no.'”

The governor and Republican-controlled Legislature also still haven’t fully funded the current year’s budget and must resolve that issue before working on funding levels for the next fiscal year, which begins July 1.

A cigarette tax approved last year was tossed by the Supreme Court as unconstitutional. As a result, the Legislature hasn’t fully funded three major agencies: the Department of Human Services, Department of Health and Substance Abuse Services and the Health Care Authority, the state’s Medicaid agency.

On top of that, the Legislature is facing an unexpected $30 million bill this year to support the medical schools at the state’s top two universities after a loss of federal Medicaid funding. That amount is expected to grow to $142 million for the upcoming fiscal year.

As Fallin closed her speech, a group of protesters heckled the governor. Two young women unfurled a large banner from the top of the House gallery that included a likeness of Fallin and read: “State of Despair.” Another woman holding a toddler accused Fallin of being a “liar and murderer” in shouts from the gallery before House sergeants were able to usher her out of the chamber.


Follow Sean Murphy at www.twitter.com/apseanmurphy