Revenue bills sent to Fallin on last day

Beginning July 1, buying a car or truck could cost Oklahomans a little more money.

And in about three months, it may cost $1.50 more to buy a pack of cigarettes.

The Oklahoma Legislature passed two major revenue producing measures on the final day of the Legislation session.

One would add a 1.25 percent sales tax to new and used vehicle purchases. The other would tack a $1.50 per pack smoking “cessation fee” to the price of cigarettes.

Debate on both bills was contentious,

with opponents describing them as relying on revenue-raising gimmicks that were likely to have their constitutionality challenged in the courts.

If the courts rule them unconstitutional, the Legislature will either have to come back in a special session to find more revenue, or cuts will have to be made in state agency budgets.

The bills will now go to the governor where they will await her signature.

“All in all, it’s been a difficult legislative session,” Gov. Mary Fallin said.

“We knew it was going to be.”

The governor said she has no plans to veto the state budget bill and will wait to see what the courts do with the revenue bills before deciding whether to push for a special session.

“There are opinions on both sides,” the governor said, adding that some think the bills are constitutional and some think they’re not.

“If some of them get kicked out, we can either have a special session ... or we can just go home and we can have even further cuts to our agencies,” the governor said.

Oklahomans currently pay a 3.25 percent excise tax on motor vehicles, but have been exempt from having to pay the 4.5 percent state sales tax, which applies to most purchases.

Vehicle buyers would still have to pay the excise tax under a bill lawmakers approved Friday, so the combined taxes on vehicle purchases would total 4.5 percent, which is the same amount as the sales tax residents pay for most other purchases.

Republicans are describing the new 1.25 percent charge as the partial removal of a sales tax exemption rather than a new tax, because a new tax would require a three-fourths vote of lawmakers in both the House and Senate in order to pass.

Removal of an exemption only takes a majority vote, Republican leaders contend.

House Bill 2433 only passed by a narrow 52-47 vote in the House, with all 26 House Democrats and 21 House Republicans voting against it. The bill also fell short of a threefourths supermajority in the Senate, where it passed 25-18.

The sales tax is scheduled to take effect July 1, unless the courts rule it unconstitutional before then.

The bill is projected to raise between $111 million and $123 million a year in new revenue.

Any assertion that House Bill 2433 is not a tax increase is “ludicrous,” argued state Rep. Forrest Bennett, D-Oklahoma City. “We wouldn’t be doing this if we weren’t in a $900 million shortfall.”

Debate over the constitutionality of the cigarette cessation fee was equally contentious, with House Minority Leader Scott Inman calling it a “backdoor tax” that is “unconstitutional” because the House was unable to get a threefourths majority vote.

“Are you concerned ... that this is a way to get around State Question 640?” asked state Rep. Steve Kouplen, D-Beggs, referring to a ballot measure passed by Oklahomans which prohibits tax increases without the approval of threefourths of lawmakers in both Houses or a vote over the people. “Are you concerned that this is actually thwarting the will of the people?”

Leslie Osborn, House Appropriation and Budget chair, said it will be up to the state Supreme Court to determine whether the measure is constitutional.

“To be honest, I don’t know how they will interpret this, but our belief is because of the way this is set up with all policy and the directives, that it will be interpreted as a fee,” Osborn said.

Commenting on the session overall, Fallin expressed some frustrations.

“I am disappointed that we didn’t get more of our criminal justice bills signed and passed into law,” Fallin said, noting there was a lot of “game playing.”

“Hopefully those bills will be heard next year and hopefully we will be able to do more,” she said.

The governor said she also wishes the Legislature could have passed a teacher pay raise bill and made more structural changes to increase recurring state revenues.

Fallin said when the Legislature begins work next year, she expects lawmakers will be looking at a $400 million shortfall, “which will make it another difficult year.”

“As I kept telling the legislators, ‘You need to put our state on a more solid, structural foundation for our budget in light of the energy sector not coming back the way it used to be with the high price of a barrel of oil and also the online shopping that we’re losing revenue on.’”

“But we didn’t do that this year,” she said. “We did make some progress, but all in all we did get a budget done and there were days and weeks when I didn’t think we were going to get any budget done.”