In late March, on the eve of an anticipated teacher walk-out, Oklahoma lawmakers approved a series of bills intended to provide pay raises for teachers, school support staff, and state employees. To pay for the raises, lawmakers approved a number of revenue measures, including HB 1010xx, which managed to overcome the three-quarter supermajority requirement for tax increases established under State Question 640.

In May, a group called Oklahoma Taxpayers Unite launched a veto referendum petition drive that, if successful, would submit HB 1010xx to a vote of the people to approve or reject the new law. This effort has been designated Repeal Petition 25 (R.P. 25); if it gets on the ballot, it will be State Question 799. On June 22nd, the Oklahoma Supreme Court struck down the referendum petition, ruling that it was misleading and fatally flawed. The organizers subsequently announced that they were abandoning the petition effort, ensuring that both the tax increases and the pay raises would take effect on schedule.

This post addresses key questions related to the veto referendum effort. Language in bold reflects the Supreme Court’s June 22nd ruling, which renders moot much of the discussion on this page.  (Last Updated: July 9th)

[arve url=”https://youtu.be/kJmqxytDONQ” align=”left” maxwidth=”500″ /]

What is a veto referendum?

The veto referendum is a little-known provision of the Oklahoma Constitution (Article V, Section 3) that allows a referendum petition to be filed challenging any bill passed by the Legislature. To put a veto referendum on the ballot requires collecting signatures equal to 5 percent of voters in the last Gubernatorial election; the current requirement is 41,242 signatures.

There have been 20 veto referendums in Oklahoma history but none since 1970. In 1991, an initiative petition was launched to overturn HB 1017, the landmark education reform legislation of 1990, but this was not a veto referendum. 

The current petition is designated as Repeal Petition 25 (R.P. 25); if it is placed on the ballot, it will be State Question 799.

What legislation is being challenged by the current veto referendum?

On May 1st, a veto referendum petition was submitted by Oklahoma Taxpayers Unite, challenging HB 1010xx. The bill passed the House of Representatives by a vote of 79-19 on March 26th, passed the Senate 36-10 on March 28th, and was signed into law by Governor Mary Fallin on March 29th. The law takes effect 90 days after it was signed by the Governor, which is June 27th.

HB 1010xx provides for several tax increases:

  • An additional excise tax of $1.00 per pack of 20 cigarettes (Section 2);
  • A change in the tax treatment of little cigars (Sections 3-5);
  • An additional motor fuel tax of $0.03 per gallon for gasoline and $0.06 per gallon for diesel fuel (Section 6);
  • Raises the gross production tax rate on oil and natural gas from 2 percent to 5 percent for the first 36 months of production (Section 7-8).

The bill as enacted also included a $5.00 per night occupancy tax for hotel rooms (Section 9-15); this tax was subsequently repealed by HB 1012xx.

HB 1010xx is projected to generate $428.5 million in FY 2019, of which $403.6 million was available for appropriation to the General Revenue Fund. The FY 2019 General Appropriation bill, SB 1600, includes revenue from HB 1010xx.

When is the deadline for collecting signatures?

The challengers have 90 days following adjournment of the session when the bill passed to collect and submit their 41,242 valid signatures. As the Special Session adjourned April 19th, the deadline is July 18th.

Can the veto referendum be challenged?

Yes, there are several ways to challenge the veto referendum as set out in Oklahoma Statutes (34 O.S. Section 8).

A protest of the petition’s language or its constitutionality must be filed within ten business days after the public notice of the petition’s filing has been published, which occurred on May 7th. Two protests to the petition were filed:

  • A group of individuals and organizations, including those representing teachers, school board members, and administrators, filed a protest to the petition on May 17th. Their challenge argues that the gist of the petition is insufficient and the petition fails to contain an exact copy of the bill that proponents seek to refer to a vote of the people. You can read the response to the challenge from Oklahoma Taxpayers Unite and Attorney General Mike Hunter’s brief urging the state Supreme Court to reject the challenge; click here for all legal materials related to this protest. The Court ruled in favor of the challenge on June 22nd (see below).
  • A separate challenge was filed by Professional Oklahoma Educators (POE) on May 10th. Click here for all legal materials related to this protest. The Supreme Court did not rule on the POE challenge.

The Supreme Court heard oral arguments on these protests on June 11th. On June 22nd, a majority of the Court struck down the petition, ruling it to be “to be legally insufficient and invalid.” On July 2nd, the petition organizers announced that they were abandoning the veto referendum effort.

After the signatures have been submitted, challenges can also be filed on the validity or number of the signatures or on the ballot title after it has been reviewed and rewritten by the Attorney General. The Supreme Court rules on challenges to the signatures and ballot title.

Click here to review all the steps in the veto referendum process.

When will State Question 799 be on the ballot?

This is unclear. The Constitution states:  “All elections on measures referred to the people of the state shall be had at the next election held throughout the state, except when the Legislature or the Governor shall order a special election for the express purpose of making such reference.” The timing of the veto referendum vote will depend on when signatures are submitted, the ballot title is reviewed, and any possible challenges have been resolved. The State Election Board requires any measure to be finalized roughly 70 days before an election in order to allow for ballots to be printed and to be distributed to absentee voters.

The earliest possible date for a vote on the referendum is the statewide runoff primary on August 28th, which would require the petition to be certified by June 19th, which seems extremely unlikely. For the vote to be held on the November 6th general election, the petition would need to be certified by August 28th.

It’s possible that either Gov. Fallin or the Legislature would call a special election to decide the veto referendum prior to the November general election. September 25th has been mentioned as a possible special election date. The Legislature would need to call itself into special session to set a special election, which requires a written call signed by two-thirds of the members of both the House and Senate. The cost of a statewide special election is estimated at $2 million.

What happens to the revenue increases in HB 1010xx if there is a veto referendum?

The Constitution states: “Any measure referred to the people by the initiative or referendum shall take effect and be in force when it shall have been approved by a majority of the votes cast thereon and not otherwise.” As noted above, the effective date for HB 1010xx is June 27th. Depending on the timing of the veto referendum petition, there are at least two possible scenarios:

  • HB 1010xx could be stayed before it takes effect on June 27th, either because the veto petition has been certified by that date or because of a ruling by a Court staying the law pending the certification of the petition; or
  • HB 1010xx could take effect on June 27th and subsequently be stayed when the petition is certified.

In a request for an Attorney General’s opinion on the veto referendum, one of the questions posed by State Superintendent Joy Hofmeister is when exactly a measure that is being challenged by a veto referendum is stayed. The Oklahoma Tax Commission has also requested an Attorney General’s opinion asking related questions about the impact of the veto referendum on tax collections.

What happens to pay raises if there is a veto override?

This is the most complicated and uncertain question.

Two of the pay raise bills approved by the Legislature in Special Session – HB 1023xx giving pay raises to teachers and HB 1024xx giving pay raises to state employees – contained language making them “contingent upon the enactment” of HB 1010xx. (HB 1023xx was also made contingent on enactment of HB 1011x,  a bill limiting itemized deductions. HB 1011xx had an effective date of January 1, 2018 and is not being challenged). The teacher pay raise bill has an effective date of August 1, 2018. The state employee pay raise bill has a July 1st effective date.

Superintendent Hofmeister’s request for an Attorney General opinion poses numerous questions related to the connection between HB 1010xx, the revenue bill,  and HB 1023xx, the teacher pay raise bill. The key questions include:

  • Was HB 1010xx enacted when it was signed by the Governor (March 29th) or upon its effective date (June 27th)?
  • If HB 1010xx is stayed by the veto referendum, are the provisions of HB 1023 – the teacher pay raises – also stayed pending the outcome of the vote on SQ 799?
  • Are school districts required to pay the increased salaries stipulated by HB 1023xx if HB 1010xx is stayed pending the outcome of the veto referendum?

In a brief filed in response to one of the challenges of the Oklahoma Taxpayer’s Unite petition (see above), the Attorney General argued that, “Regardless of whatever happens with a future referendum on HB1010xx, this would not affect the teacher pay raise provided by HB1023xx.” As the Oklahoma State School Boards Association notes, “This brief is not a formal opinion from the attorney general’s office and is not binding on schools. However, the brief foreshadowed what might be expected in an opinion.” The Attorney General’s brief recognizes that this is “a difficult question” and urges the Court “to provide a clear answer to whether referring H.B. 1010xx affects the continued validity of H.B. 1023xx.”

In its June 22nd ruling on the challenge to HB 1010xx, the Supreme Court ruled that HB 1023xx has been enacted and will take effect on its specified date, regardless of what happens with the veto referendum.

A Tulsa law firm that represents more than 300 school districts and technology centers is recommending that its clients hold off on signing any new teacher contracts for the 2018-19 academic year that include state-funded increases. Several Tulsa-area school districts have indicated they plan to move ahead with the raises but are uncertain as to whether they will be able to fully pay for them.

It’s important to note that the revenues in HB 1010xx are directed to the General Revenue Fund and are not earmarked for pay raises. Should the Attorney General or the Supreme Court rule that the pay raises have been enacted and remain in effect, even if HB 1010xx is stayed, the General Revenue Fund will face a shortfall, but that will not affect the raises, or common education budgets more generally, more than other functions of government. In that case, the state budget office (Office of Management and Enterprise Services) will need to determine if revenue collections are adequate to make monthly payments to state agencies from General Revenue, or if they must declare a revenue failure and implement across-the-board cuts to all agencies. The timing and extent of cuts would be at the discretion of OMES. Revenue from HB 1010xx amounts to about 6.5 percent of total FY 2019 appropriations from the General Revenue Fund.

If the Attorney General rules that the pay raise bills have been enacted and are not directly affected by the challenge to HB 1010xx, there is talk that the Legislature may still convene in Special Session to amend the pay raise bills to suspend them pending the revenue bill being decided by the voters. That would both prevent a revenue shortfall while HB 1010xx is being decided and give voters a clear choice on whether to approve funding for teacher pay raises.

If there’s a vote on HB 1010xx, will a Yes vote approve or reject the revenues?

This is also confusing. It appears that the challengers to HB 1010xx have misunderstood the law. In their proposed ballot title on the veto referendum, they wrote: “A ‘Yes’ vote is a vote in favor of this measure to repeal the higher taxes. A ‘NO’ vote is a vote against this measure to repeal the higher taxes.” However, the consensus among legal experts is that in a veto referendum, a Yes vote is a vote to uphold the law, a No vote is a vote to overturn or repeal the law. This apparent error in the veto referendum petition is one of the main grounds on which the petition is being challenged (see above).  The Supreme Court in its ruling on the challenge to the veto referendum confirmed that the petitioners erred and that a Yes vote approves, rather than rejects, a proposed law.