Of tax increases, revenue bills, SQ 640… and ducks

With Oklahoma facing a gaping budget hole for the upcoming fiscal year of anywhere from $850 million to $1.6 billion,  depending on one’s calculations, the search for new revenues to fill the gap and avoid devastating cuts to services has assumed real urgency. The Governor in his FY ’11 Executive budget proposed a long laundry list of revenue enhancing proposals that were estimated to generate over $700 million in additional revenue for FY ’11. His proposals ranged from appropriating unused balances in agency revolving funds and issuing bonds to raising fees, eliminating tax credits, and collecting taxes on online purchases.

But what about SQ 640? Few discussions of revenue options in Oklahoma get very far before being met with: “But what about SQ 640″?. Last week, for example, House Democrats tried unsuccessfully to argue that a bill containing a fee increase should be ruled out of order due to SQ 640. But while the specter of SQ 640 casts a giant shadow over policy discussions, its actual scope is not always well understood.

SQ 640, which was proposed in an initiative referendum and approved in a 1992 referendum, is generally taken to require a vote of the people or a 3/4 vote of the Legislature to raise taxes.  In fact, SQ 640 didn’t mention the word “tax” at all.  Instead, it added two new sub-sections, C and D, to Article V, Section 33 of the State Constitution that places limits on the passage of revenue bills:

A.  All bills for raising revenue shall originate in the House of Representatives.  The Senate may propose amendments to revenue bills.

B.  No revenue bill shall be passed during the five last days of the session.

C.  Any revenue bill originating in the House of Representatives shall not become effective until it has been referred to the people of the state at the next general election held throughout the state and shall become effective and be in force when it has been approved by a majority of the votes cast on the measure at such election and not otherwise, except as otherwise provided in subsection D of this section.

D.  Any revenue bill originating in the House of Representatives may become law without being submitted to a vote of the people of the state if such bill receives the approval of three-fourths (3/4) of the membership of the House of Representatives and three-fourths (3/4) of the membership of the Senate and is submitted to the Governor for appropriate action.  Any such revenue bill shall not be subject to the emergency measure provision authorized in Section 58 of this Article and shall not become effective and be in force until ninety days after it has been approved by the Legislature, and acted on by the Governor.

The relevant question for determining whether any measure is subject to SQ 640 and the other requirements of Article V, Section 33, is whether or not it falls under the definition of a revenue bill.  Because SQ 640 used the same terminology as the existing language in Section 33, the courts assume that the drafters intended to keep the same meaning which had been applied to the language in Section 33 for over 80 years. A landmark Oklahoma case from the 1950s, Leveridge v. State of Oklahoma, interpreted the existing Section 33 language and asserted that:

“Revenue Bills” are those laws whose principal object is the raising of revenue and which levy taxes in the strict sense of the word, and said phrase does not cover laws under which revenue may incidentally arise (emphasis mine).

Leveridge’s two-part standard – 1) that the principal object of a bill must be to raise revenue, and 2) that it levy taxes in the strict sense of the word – has been used both prior to and since passage of SQ 640 to determine if bills are subject to the provisions of Article V, Section 33.

In a 1992 article in the Oklahoma Bar Journal, Mark Ramsey, then a staff attorney for the State Senate, reviewed how the Courts have applied this standard for defining a “revenue bill”.  Ramsey showed that Oklahoma Courts have generally adopted a narrow interpretation of what constitutes a revenue bill, upholding a whole range of legislation in which revenue increases were determined to be incidental to the bill’s primary purpose, or which involved revenue but was not deemed to levy a tax. For example, all of the following measures were among those ruled not to levy a tax:

  • Elimination of tax exemptions;
  • Mandatory contributions to retirement programs;
  • Addition of property to tax rolls;
  • Penalties on delinquent tax payment;
  • Court costs and filing fees.

In general, Ramsey concluded:

It is quite clear that a bill which creates or increases a tax which is for the general revenue of the state is a “revenue bill.” It is also quite clear that a bill which imposes a license fee on a discrete group of persons and activities and which is reasonably related to the cost of regulating the persons or activities is not a “revenue bill.” Between these extremes is a wide gulf of shark infested waters.

Obviously, SQ 640 has real relevance in shaping which options could be decided by a majority legislative vote and  which are subject to requirement of the super-majority or vote of the people. But as discussions and negotiations on the budget heat up, it will be worth remembering that in trying to determine whether a measure is or is not subject to SQ 640, just because something quacks, has webbed feet, or swims in the water, that doesn’t necessarily make it a duck.


Former Executive Director David Blatt joined OK Policy in 2008 and served as its Executive Director from 2010 to 2019. He previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers.

4 thoughts on “Of tax increases, revenue bills, SQ 640… and ducks

  1. Thank your for taking the time to write about this. I love your analogy at the end. Didn’t it used to be just the opposite of that? If it looks like a duck and quacks like a duck it must be a duck.. LOL

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