Future of cigarette tax bill uncertain

The level of support for a bill that would raise Oklahoma’s cigarette tax by $1.50 per pack changes every day, leading to concerns about the future of funding for state health services, leaders say.

House Bill 1841, authored by Rep. Leslie Osborn, R-Mustang, would provide more than $200 million in cigarette tax money for several health-related state agencies.

The bill passed 17-10 out of the House appropriations and budget committee Feb. 13 and awaits a vote in the full House.

However, the bill faces a few key barriers: It must pass the House and Senate by a three-fourths majority before making it to the governor’s desk; House Democrats are using the bill as leverage for policies they say would help Oklahoma’s middle class; and some GOP lawmakers remain staunchly opposed to any bill that raises taxes, especially after Lt. Gov. Todd Lamb’s resignation from Gov. Mary Fallin’s cabinet last week, citing Fallin’s tax plan as his reason for leaving. Plus, at least nine tobacco lobbyists remain active at the Capitol.

“It is certainly not a slam dunk,” said Craig Jones, Oklahoma Hospital Association president. “We were pleased with the results of it coming out of the House appropriations committee, and I think clearly with the strong majority of the Republicans in the Legislature, the idea of ‘raising taxes’ is not something they fall in line wanting to do, but I think with the current state budget situation ... this (bill) makes a huge amount of sense.”

In a news conference with reporters Tuesday, Gov. Mary Fallin said if the Legislature had acted on the cigarette tax last year, Oklahoma wouldn’t be facing such a significant budget shortfall, an estimated $878 million.

Last year, Democrats argued that they would support the cigarette tax if Republican leaders agreed to expand Medicaid, a key provision of the Affordable Care Act that would provide health coverage to thousands of low-income adults. Neither side budged, and the cigarette tax bill was shelved to this session.

Fallin said she was willing to look at the Democrats’ proposal, but it would require their willingness to compromise.

“They’re going to have to step up to the table and not lock up as a group and demagogue and criticize the Republicans who are in control without providing solutions and being a part of the solution versus just blocking everything,” Fallin said.

House Minority Leader Scott Inman, D-Del City, said during a news conference Tuesday afternoon that his caucus was willing to cast their 26 votes in support of the cigarette tax if the Republican leadership would compromise with them on other issues, including indexing the gross production tax to the price of oil.

However, it would be “fiscally irresponsible” for House Democrats to simply support the cigarette tax without fighting against policies implemented by Fallin and her administration that have hurt middle class Oklahomans, he said.

“A $150-million cigarette tax increase is not going to close a more than $900-million budget hole,” Inman said. “It just isn’t. It’s going to take much more than that, and our caucus is willing to say we’ll help you on the cigarette tax if you’ll help us with the gross production tax, or if you’ll help us with restoring income tax cuts to those folks that make over $150,000 a year. We’re willing to work with them. So far, they have refused to admit fault, let alone come to the table.”

Still, even with the 26 Democrats voting in support of the cigarette tax, there might not be the 50 Republicans needed for the bill to pass by a threefourths majority in the House, Inman said.

Lobbyists and health advocates at the Capitol said after Lamb — who is considering a run for governor next year — resigned from Gov. Mary Fallin’s cabinet over her tax plan, that made some GOP lawmakers reconsider their support of the cigarette tax, for fear of upsetting the potential next governor of Oklahoma.

However, when asked if Lamb supported the cigarette tax, Keith Beall, Lamb’s chief of staff, said: “Before and after Lt. Governor Lamb’s announcement last week his discussions with legislators has been specifically focused on the tax on services.”

House Floor Leader Jon Echols, R-Oklahoma City, said if lawmakers are unable to find bipartisan support for the cigarette tax increase, the state Constitution still demands that lawmakers balance the budget.

“The question is — how will we balance the budget?” Echols said. “Will we have legitimate government consolidation, legitimate elimination of government waste, but still have the money to fund core functions of government, or will we cut in a manner that starts to affect core functions of government?”

Health advocates remain a mixture of hopeful and frustrated about the potential for a cigarette tax increase.

If the bill passed, it could reduce prevalence of adult smoking by 5 percent, with 30,400 adults who likely would quit smoking in the first year, and prevent 28,200 kids alive today from becoming adult smokers, according to the state Health Department.

“I’m hoping reason will prevail, and we will end up with a successful bill,” State Health Commissioner Terry Cline said. “It would be hard for me to imagine a bill that could save literally thousands of lives, raise millions of dollars and costs nothing to implement would not pass, and I’m just hopeful it will. It’s hard to imagine it would not. It’s like the triple crown of health bills — there’s not a downside to this bill.”

House Bill 1841 allocates the money raised from the $1.50 increase to health agencies, including the state’s Medicaid agency, the Oklahoma Health Care Authority, along with the Oklahoma Department of Human Services, state Health Department and the state mental health agency.

For example, the Oklahoma Department of Mental Health and Substance Abuse Services would receive 28 percent of that revenue.

Commissioner Terri White, of the state mental health agency, said although there appears to be support for increasing funding for drug and mental health treatment, it remains unclear how lawmakers will provide that money.

White said if lawmakers don’t pass a cigarette tax increase, and her agency’s funding is cut, it could force her department to cut programs officials avoided reducing, such as crisis centers, drug court, mental health court and prescription drug prevention efforts.

“The consequences for not treating mental illness and addiction are more expensive, and include things like increased criminal justice involvement, increases in the number of families involved in the foster care system, more calls to local law enforcement with people in crisis,” White said. “When people don’t get treatment for mental illness and addiction, it can become life-and-death issues.”