Cigarette Tax Ruled Unconstitutional

The Oklahoma Supreme Court ruled the cigarette tax passed late in the legislative session unconstitutional Thursday morning.

8/8/17 Related Story: State Supreme Court Hears Arguments On Constitutionality Of Last-Minute Tax Bills

The tax was expected to bring in more than $200 million of revenue for the state budget by tacking on an extra $1.50 per pack of cigarettes. The budget was planned and passed assuming the tax would hold.

The tax was originally passed after the deadline for revenue raising bills, but Republican lawmakers tried to eke it through as a fee. A tax would have required a three-fourths majority to pass. Justices on Thursday ruled that, because the funds raised could be used for non-smoking related programs, the bill could not go through as a regulatory fee.

 The State now has a week to seek a rehearing. If it does not, the ruling is final.

Gov. Mary Fallin issued a response to the Supreme Court’s ruling:

I am disappointed to hear the Supreme Court struck down the smoking cessation fee, but I certainly respect the justices’ authority. I will be discussing with legislative leaders from both parties the need to address the $215 million shortfall this will create for the Department of Human Services, the Department of Mental Health and Substance Abuse Services and the Oklahoma Health Care Authority, the three agencies that received the bulk of the money that was to be generated by the cessation fee.

These agencies and the people they serve cannot sustain the kind of cuts that will occur if we do not find a solution. My belief is we will have to come into special session to address this issue.

House Minority Leader Scott Inman released the following statement on the ruling:

Once again, Governor Fallin and Republican legislators have failed Oklahoma. My caucus and I sounded every alarm bell we could to stop this from happening, yet here we are, just as we warned.

Today, I'm urging Governor Fallin to call for a special session and for Republican leaders to come together with myself and Sen. Sparks and draft a truly bipartisan and constitutional budget plan that will help to restore, reinvest in, and rebuild Oklahoma.

With our state agencies facing more budget cuts and with even more rulings waiting, the time is now to work out a budget agreement before a special session of the legislature. By coming together now and putting a plan in place, we can save precious time and taxpayer dollars to fix the mess that their failed leadership has put us in because of their failed policies to cut taxes for the wealthy and well-connected.

This cigarette tax was just a Band-Aid put on their gaping wound of a budget hole. Schools are down to 4-day weeks, hospitals are closing down, and public safety is in a crisis, not because cigarettes are too cheap, but because Republican policies benefitting their donors have failed us.

 The solution to our budget problems is much larger than a cigarette tax. We must address the structural problems with our budget by increasing the Gross Production Tax to 7%, eliminating wasteful tax credits, and actually balancing our budget in a constitutional way.

OSMA president Kevin Taubman, M.D., issued the following statement:

Oklahoma State Medical Association, on behalf of its more than 3,000 members, is obviously disappointed that the Oklahoma Supreme Court struck down the cigarette fee, a measure with such proven benefits for public health.  We hope a special session of the legislature will allow us to work with legislative leaders to pass a new measure that will save lives.

Now, legislators have to find a way to fill that gap.