Lawmakers expect court to strike down new revenue measures
Two lawmakers said Wednesday they believe the Oklahoma Supreme Court will strike down revenue-raising measures passed by the state Legislature during this year’s session.
State Sen. Ervin Yen, a Republican, and Democrat Collin Walke told members of the Northwest Oklahoma City Chamber that the court likely will side with the challengers.
“I’m going to predict that the Supreme Court does nullify what we did,” said Yen, who sat on a panel with other lawmakers who represent northwest Oklahoma City. “So will we have to have a special session? I presume we will or it will cut our current budget dramatically.”
There are three lawsuits at the court challenging four measures passed in the last days of session this year. All three will be argued at the court next month.
Yen voted for all four bills.
The measures include an automobile sales tax, a cigarette fee, a fee on electric and hybrid vehicles and a freeze in standard income tax deduction. In all, the measures being challenged are expected to generate $343 million in state revenue, mostly for health care programs.
In the past, Oklahoma has exempted the purchase of vehicles from sales tax, but a law passed this year reset the rate at 1.25 percent. Motor vehicle buyers will pay the sales tax along with the usual 3.25 percent excise tax. The new revenue source is expected to bring in more than $123 million over the next 12 months.
The tobacco industry sued to block a new $1.50 per pack cigarette fee charged to wholesalers and, in a separate lawsuit, automobile dealers asked the court to overturn the motor vehicle sales tax.
Companies and individuals who filed the lawsuits, including gubernatorial candidate Gary Richardson, argue that the bills are unconstitutional tax increases that weren’t properly adopted.
Democrats also warned their colleagues that the bills were unconstitutional. Walke said Thursday that the Legislature’s Republican leaders called the $1.50 charge on cigarettes a fee because it would not have received enough votes to pass as a tax.
“So they wanted to get cute with the language and they changed the language up. It’s a fee in name only,” Walke said. “I’m fairly confident the Oklahoma Supreme Court is going to strike this down. And when it does, that will be a $225 million blow to our budget.”
He said that if the cigarette fee falls, legislators will be coming back to a special session sometime this fall.
Regardless of how the court decides the cases, lawmakers will begin budget negotiations next year under the cloud of another shortfall because so much of this year’s budget was created with revenue that is only available for one year.