Budget bills advance, legality questioned (Journal Record)

By Catherine Sweeney

OKLAHOMA CITY – After weeks of relative quiet on the new revenue front, lawmakers finally started getting some measures out of committee, but there’s one problem: They could all be illegal.

The Oklahoma Constitution states that the Legislature can’t pass any new revenue-raising measures during the last week of the session. That’s this week, and the Republican leadership is pushing a handful of bills through. They include incentive adjustments on oil and gas production, a new fee on cigarettes and a sales tax increase on new cars.

No one argues the constitution’s ban on last-week bills. Republicans said the bills are policy changes that just so happen to bring in new revenue, and that the mechanisms they use back up that claim. Democrats said most, if not every one of those measures will get challenged in court, and many of them would get stricken down. If that happened, it would mean a sudden budget emergency and a late-summer or early-fall special session. Those working outside 23rd and Lincoln said they weren’t sure either side was right.

Although most bills are filed in January and start the committee process in February, late-session revenue measures can go through Joint Committees on Appropriations and Budget, or JCABs. The rules are considerably less stringent. However, they are subject to the state constitution. In Article V, Section 33, it states, “No revenue bill shall be passed during the five last days of the session.”

During a JCAB meeting that started at 11 p.m. after being rescheduled several times on Monday, House of Representatives members voted on House Bill 2429, which adjusts a tax break on oil and gas wells drilled between 2011 and 2015.

The measure is projected to bring in about $95 million in 2018, its supporters said in the committee meeting. Democrats noted that because it is raising new revenue, it is a revenue-raising measure. State Rep. Kevin Wallace, R-Wellston, disagreed. He said that it’s an incentive adjustment, not a tax hike, and that it just happens to bring in additional money.

He made a similar argument on the House floor Monday, where the measure passed 54-44. Because the leadership contends it isn’t a revenue-raising measure, the bill needs a simple majority to pass instead of the two-thirds majority that would be required otherwise.

“Let’s get this straight; the (gross production tax) rate in Oklahoma is 7 percent,” he said.

His measure wouldn’t change the rate, he said. It wouldn’t even change the original incentive language, which first expired in 2015.

Democrats weren’t sold.

“It doesn’t take a legal scholar to see this is a revenue bill,” state Rep. Emily Virgin, D-Norman, said during the floor proceedings on Tuesday.

She said the bill flies in the face of the Oklahoma Constitution, and that signing it would set this year’s budget up for failure.

During a press conference Tuesday afternoon, House Minority Leader Scott Inman, D-Del City, said passing the gross production tax measure and the other bills that went to JCAB late on Tuesday would be catastrophic later in the year.

“All of them, we are confident, will be challenged in court,” he said. “It will blow an enormous budget hole.”

One measure has already been challenged. The Oklahoma Council of Public Affairs announced this week it would challenge House Bill 2403, which caps itemized deductions. Republicans argued the measure drops tax breaks but doesn’t raise taxes, so it needed a simple majority to pass off the House floor. The OCPA disagrees, and a statement read that the organization will take the issue to the Supreme Court if Gov. Mary Fallin signs the bill.

If the Supreme Court were to rule that the measures were unconstitutional, Oklahoma would have to stop collecting those taxes. That would suddenly drop hundreds of millions of dollars out of the state’s budget.

But the Supreme Court has been reluctant to strike those measures down, said David Blatt, executive director of the Oklahoma Policy Institute. He noted that he isn’t an attorney, but has read up on past cases in Oklahoma.

“The definition for revenue bill is complicated,” he said.

There is a two-part test. Is the primary intent to raise revenue? Does the measure raise taxes?

He said the Supreme Court has been slow to kill measures such as this. Senate Bill 1604, last year’s earned income tax credit reduction, was challenged in court. This month, the judges ruled 5-4 that it was legal.

Republicans said the incentive change on oil and gas just happens to raise revenue, and because it’s only an adjustment, it’s not raising taxes.

Blatt said this bill, like the others, likely falls in a gray area and that dropping a large chunk of the state’s revenue into a gray area might not be for the best.

“The majority is definitely skating on thin ice,” he said.



Margaret (Maggie) den Harder obtained a Bachelor of Arts in Christian Theology from Seattle Pacific University and a Master of Public Administration from the University of Oklahoma. Originally from the Pacific Northwest area of Washington state, Maggie has called Tulsa home for the past 8 years. Since living in Tulsa, Maggie has worked in the legal field, higher education administration, and the nonprofit sector as well as actively volunteering in the community. Maggie also recently spent time at the City of Tulsa as a consultant and wrote the content for Resilient Tulsa, an action-oriented strategy designed to better equity in Tulsa. Through her work, community involvement, and personal experiences, Maggie is interested in the intersection of the law and mental health and addiction treatment issues, preventative and diversion programs, and maternal mental health, particularly post-partum depression and post-partum psychosis. While working at Oklahoma Policy Institute as a research intern, Maggie further developed an interest in family dynamics and stability, economic security-related stress, and intergenerational trauma.

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