With Oklahoma’s cigarette ‘fee’ gone, what’s next? (News OK)

By Dale Denwalt

The Oklahoma Supreme Court ruled Thursday that a $1.50 cigarette fee scheduled to go into effect this month is an unconstitutional tax, setting the stage for another fight over spending at the state Capitol.

The decision strips $215 million from the state budget, specifically from agencies that provide health services. Gov. Mary Fallin said she thinks a special legislative session is inevitable, and several lawmakers have called for another mid-year gathering to fill the new shortfall.

“These agencies and the people they serve cannot sustain the kind of cuts that will occur if we do not find a solution,” Fallin said. “My belief is we will have to come into special session to address this issue.”

The Department of Mental Health and Substance Abuse Services will lose nearly a quarter of its entire state-appropriated budget.

The Oklahoma Health Care Authority, which oversees Medicaid, will lose 7 percent and the Department of Human Services will lose 10 percent from state revenue. Those figures don’t include federal matching funds that rely on state funding.

“Oklahoma agencies stand to lose a combined $519 million with the federal matching funds,” warned Craig W. Jones, president of the Oklahoma Hospital Association. “This will likely result in at least an 8 percent provider rate cut, on top of 18 percent in unrestored cuts since 2010, closing rural hospitals and eliminating health and mental health/substance abuse services in many areas.”

Fallin said she will talk with legislative leaders from both parties about the best way to proceed, and whether to call a special session. Meanwhile, state finance officials will direct agencies to reduce their budgets now.

“We could see some serious damage to our health care providers and clients before the Legislature is able to respond,” said David Blatt, executive director of the Oklahoma Policy Institute think tank. “Agencies will have to make real decisions based on this ruling.”

In an opinion that drew support from every justice, the court noted that the Legislature introduced four bills this year that would have created a similar cigarette “tax,” but the bills were abandoned because of little support. In the final week of session, lawmakers finally adopted the “smoking cessation fee.”

Writing for the court, Justice Patrick Wyrick said the legislature passed its annual spending bill but hadn’t yet created the revenue to pay for all of it. Because the bill was created to balance the budget and not just as an anti-smoking bill, he wrote, it had to be struck down.

The Oklahoma Constitution puts limits on how the Legislature can raise revenue.

In a statement saying the government must “live within its means,” House Speaker Charles McCall confirmed the fee was meant to raise revenue.

“The tobacco fee for health care was passed in an effort to avoid significant budget cuts,” McCall wrote. “After House Democrats refused time and again to support increased revenue measures, the fee was our only opportunity to balance the budget without deeper cuts. The minority party decided to play games with the budget, and now that opportunity has passed.”

The government has one week to ask for a rehearing. “We do not feel that it would be a successful undertaking. It is not under consideration,” said Attorney General Mike Hunter.

Before the court heard the case Tuesday, some lawmakers warned the Legislature would have to convene a special session if the fee didn’t survive.

After learning of the court ruling, House Democratic Leader Scott Inman urged the governor to call lawmakers back to the Capitol.

“Once again, Gov. Fallin and Republican legislators have failed Oklahoma,” Inman wrote in a news release. “My caucus and I sounded every alarm bell we could to stop this from happening, yet here we are, just as we warned.”

Lt. Gov. Todd Lamb said he wasn’t surprised by the ruling, and said lawmakers must shift existing state funds toward the shortfall instead of creating new revenue.

“It is my belief this can be done without drastic cuts to agencies,” he said. “State government can and must operate more efficiently, and this ruling provides an excellent opportunity to start that process.”

Inman and Lamb, a Republican, are candidates for governor next year.




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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