The Supreme Court has deemed the controversial “cigarette fee” passed by the Oklahoma Legislatures during the 2017 session unconstitutional.
The fee, which was expected to generate $254 million for the state by adding a $1.50 per pack fee on cigarettes, was deemed by the court a revenue generating bill that was not passed through the legal channels in Oklahoma.
“It doesn’t surprise me that the bill was deemed unconstitutional,” Rep. Pat Ownbey (R-Ardmore) said. “The reason I did not support that legislation is because it was unconstitutional. I wasn’t against what it was trying to do, but I thought it was a revenue raising measure.”
Senate Bill 845 not only added a fee to the purchase of cigarettes, but then reallocated the money raised from that fee to support various health related organizations. While the legislature claims the goal of the bill was to curb smoking habits of youth by making smoking too expensive for them, it became suspect when legislators voted to raise the taxes on cigarettes by dubbing it a fee.
Under the Oklahoma constitution, “no revenue bill should be passed during the five last days of session,” and no revenue bill can become law without a 75 percent majority in the House and Senate. State Question 640, the rule saying that there must be a supermajority to enact revenue laws, was voted on by the people in 1992 and has since made it difficult to pass revenue generating measures in the state, Ownbey said.
“It’s almost impossible to reach that threshold,” Ownbey said. “You have to have both parties in agreement. Oklahoma and Arkansas are the two toughest states in the nation to raise any taxes and revenues in.”
Sen. Frank Simpson (R-Springer) said he was disappointed in the Supreme Court’s decision, but not surprised.
“I knew when we passed that legislation we were too close to the line on fee and revenue,” Simpson said. “This decision puts the budget in jeopardy, and if we don’t go into a special session it will just devastate some of our agencies.”
The Oklahoma Health Care Authority is an agency that will take a devastating blow as $70 million of their funding will be scraped away with the court’s decision. If a decision isn’t made to make up the funding in the special session, it won’t just be state funding that the Authority loses but also federal matching dollars. Providers that also accept SoonerCare will be hurt in the process.
In addition to funding to the OHCA, $75 million from the fee was budgeted to mental health organizations, $79 million to the Department of Human Services and $1 million to the Able Commission.
“Because of the haphazard way this year’s budget was crafted, the state has now essentially defunded the agencies responsible for Oklahoma’s adoption and foster care programs, for child health and nutrition, for mental health services that keep families safe and intact, and for basic access to medical care,” said Joe Dorman, CEO of the Oklahoma Institute for Child Advocacy, in a statement. “That is an outcome that can satisfy exactly no one, regardless of your political party or your priorities.”
Ownbey said if the legislature doesn’t go into special session, the state will have to declare a revenue failure across all of the agencies that the cigarette fee supported. Simpson agreed that something has to be done.
“The only thing we can do now is pass some revenue measures,” Simpson said.
Simpson said he didn’t have any ideas as to how to make up the gap yet, but planned to meet with others in the Senate today in order to brainstorm ideas. He hopes to have an agreement that is able to cross party lines before any impending special session begins.
As of now it remains to be seen whether or not Gov. Mary Fallin will order the legislature into special session, which will cost taxpayers more than $20,000 per day.