Supreme Court rejects challenges to nonprofit’s tax increase proposal
The Oklahoma Supreme Court ruled Monday a group trying to give teachers a pay raise by getting voters to approve increased oil and natural gas taxes can state law to set a flat 7 percent gross production tax on oil and natural gas wells drilled and produced in Oklahoma.
The tax rate currently is 2 percent for the first three years of a well’s production. After three years, the production is taxed at the 7 percent rate.
If voters approve the change, Restore Oklahoma Now estimates it would generate an additional $333 million a year.
State Question 795 proposes using about $240 million of that increase to provide each public school teacher a $4,000 annual raise.
The group also proposes providing Oklahoma’s early childhood education programs with about $30 million a year and using the remaining $63 million generated by the increase to hire additional teachers.
The Oklahoma Oil and Gas Association and the Oklahoma Independent Petroleum Association challenged the initiative petition proposal’s constitutionality before Oklahoma’s Supreme Court, claiming it proposes creating a
retroactive tax and that it violates an Oklahoma constitutional requirement that state questions embrace only one subject.
They also argued gist language written for the proposal’s signature page was misleading.
But all of the court’s justices, with the exception of Justice Tom Colbert who recused himself, rejected those arguments.
If the ruling stands, Restore Oklahoma Now Inc. will get 90 days to collect about 124,000 signatures from registered
Oklahoma voters to get the question on November’s ballot.
That’s not much time, because once the signatures are delivered to the Secretary of State for review, potential challenges and potential additional court hearings could be required.
Mickey Thompson, a co-founder of Restore Oklahoma Now who is a former president of the Oklahoma Independent Petroleum Association and a longtime oil industry spokesperson, said Monday he thought the court ruled fairly in allowing the process to proceed.
He said the signature
gathering process could start in mid-April, provided that isn’t delayed by additional court hearings opponents might seek.
“We think we can gather the necessary signatures in less than 90 days,” he said.
Despite that estimate, Thompson said, he still believes the fight to get the state question on November’s ballot will be an uphill battle.
Arguments ahead
While they didn’t win before the Oklahoma Supreme Court, representatives of the Oklahoma Independent Petroleum Association and the Oklahoma Oil and Gas Association said they are prepared to take their case to Oklahoma’s voters, if needed.
“Should this measure make it to the ballot, we will educate the public on the consequences of passing such an initiative, including the job losses it will cause in the energy sector,” Chad Warmington, the oil and gas association’s president, stated in a news release reacting to the Supreme Court ruling.
While Warmington indicated his organization remains willing to work with state leaders and educators to find a sustainable way to
address the state’s education funding issues, he said Monday his group doesn’t believe raising the gross production tax is a long-term solution.
Meanwhile, a representative of the independent petroleum association said Monday there are both economic and constitutional reasons for voters to be wary of this proposal.
Economically, the association asserts the measure could put a damper on the state’s strengthening oil and gas industry. Constitutionally, it argues State Question 795 would alter the state’s separation of powers because it would
give the state’s Board of Equalization the power to halt the legislative appropriation process for the entire government if the Legislature didn’t appropriate the raises it would require.
A.J. Ferate, the association’s vice president of regulatory affairs, said, “There are a number of different policies and topics of discussion that can be raised.
“I have no doubt we will be prepared to share the issues and concerns with the voters,” he said. “Oklahomans generally don’t like tax increases, and I think this will be a story that’s pretty receptive to them.”