High court to rule on revenue-raising bills

High court to rule on revenue-raising bills

BY BARBARA HOBEROCK
Tulsa World barbara.hoberock@tulsaworld.com

In a crowded courtroom on Tuesday, the Oklahoma Supreme Court will hear oral arguments on a series of legal challenges to measures the Legislature passed last session to fund state government.

The outcome, one way or another, could be monumental.

According to several of the plaintiffs, if some of measures are allowed to stand, a 1992 state question that put restrictions on tax increases will be gutted.

State Question 640 requires tax increases to receive three-fourths support in both chambers of the Legislature or go to a vote of the people. State law says revenueraising measures can’t be enacted in the last five days of session and they must start in the House.

If the court deems one or more of the measures invalid, lawmakers could be called into a special session to attempt to fix a gaping budget hole.

In June, tobacco companies and others filed suit against Senate Bill 845, which puts a $1.50 “fee” on a pack of cigarettes effective Aug. 24. The action came after failed attempts to pass it as a tax increase.

The measure originated in the Senate, did not receive three-fourths support and was passed in the last five days of the session.

It is expected to generate $257 million to help close a budget hole of $878 million. Lawmakers put $215 million of that revenue into the fiscal year 2018 budget, which began July 1.

Also in June, auto dealers filed suit challenging House Bill 2433. The measure removes the sales-tax exemption on vehicles, thus imposing a 1.25 percent sales tax on top of the existing 3.25 percent excise tax.

The law is expected to generate slightly more than $123 million for the fiscal year 2018 budget. It did not receive a super majority and secured final approval on May 26, the last day of the session.

Also in June, Republican gubernatorial candidate Gary Richardson, a Tulsa attorney, filed a legal challenge against three bills, including the new sales tax on cars.

He also challenged House Bill 1449, which puts a $100 fee on electric-drive motor vehicle registration and a $30 fee on hybrid-drive motor vehicle registrations. The law is expected to generate slightly more than $1 million.

Richardson alleges the measure was passed in the last five days of session and did not secure a super majority required for a tax increase.

He is also challenging House Bill 2348, which uncouples Oklahoma’s annual tax deduction from the federal deduction level. It is expected to raise $4.4 million. He alleges it is a tax increase that did not receive a super majority.

“This is going to be a really critical decision, and there are a lot of Oklahomans’ eyes on what the potential outcome of this decision could mean for our state and state funding,” said Rep. Meloyde Blancett, D-Tulsa. ”Do we want to fund basic government services with one-time, what I think are unconstitutional fees, or do we want to address this in a responsible, strategic way?”

She said people are angry and believe lawmakers are not doing their jobs.

“We’re all kind of on pins and needles waiting to see if we’re going to be in special session,” Blancett said.

David Blatt, executive director of the Oklahoma Policy Institute, says lawmakers could be left scrambling to find other ways to fund the government.

“Obviously, there are several bills being challenged, and they have widely different fiscal impacts,” Blatt said. “I think that if the court strikes down either the tobacco measure or the measure adding a sales tax to motor vehicles, it would create a large enough budget shortfall the Legislature should immediately come back into special session to find more revenue.”

Jason Sutton, a spokesman for House Speaker Charles McCall, R-Atoka, said a majority of lawmakers, as evidenced by their votes, believe the measures adhere to the law.

Due to widespread interest, the Oklahoma Supreme Court’s website, oscn.net, will provide a streaming link for watching the oral arguments.

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