Capitol Insider: Cigarette Companies Sue Over Fee, Governor Finishes Signing And Vetoing Bills

Jun 9, 2017

Catch up with what happened this week in Oklahoma state politics.


Tobacco Companies Sue State Over Cigarette Fee


Two of the largest tobacco companies in the U.S. are suing Oklahoma over the state’s new $1.50-per-pack cigarette fee.


R.J. Reynolds Tobacco Co. and Philip Morris USA Inc. filed a brief with the Oklahoma Supreme Court Wednesday, arguing the fee “flagrantly violates” the state’s constitution.


Several Oklahoma companies and individuals are also plaintiffs in the suit.


The suit argues the cigarette fee is really a tax, and so should not have been voted on in the final few days of the legislative session and should have required a three-quarters majority vote to pass.




The Oklahoma constitution prohibits lawmakers from passing revenue-raising measures, like tax increases, in the last five days of session. The constitution also requires a three-quarters supermajority vote to pass any tax increase.


In the lawsuit, the cigarette companies argue the “Smoking Cessation Act,” which includes the cigarette fee, was relabeled only because lawmakers struggled to pass revenue-raising measures needing three-quarters of legislators to vote in favor.


State Attorney General Mike Hunter said in a statement his office has has received the lawsuit and it is “under review.”



Governor Finishes Signing And Vetoing Bills


Gov. Mary Fallin signed 393 bills this legislative session and vetoed 17.


“It was a pretty average year,” said eCapitol news director Shawn Ashley in his Capitol Insider interview with KGOU’s Dick Pryor.


Three bills Fallin vetoed were related to administrative rules, which control how state agency boards and commissions implement the bills signed by the governor.  

State Sen. Dan Newberry Announces Resignation


State Sen. Dan Newberry (R-Tulsa) announced June 6 he will resign in January 2018 to accept a senior management position at TTCU The Credit Union.


Newberry’s resignation creates the seventh vacancy in the legislature this year.


A special election will be held to fill his state Senate seat, likely while he is still in office.






Dick Pryor: This is Capitol Insider, an insider's guide to Oklahoma politics and policy. I'm Dick Pryor with eCapitol news director Shawn Ashley.


Shawn, it didn't take long for the new tobacco cessation fees passed in the final days of the legislative session to get a legal challenge.


Shawn Ashley: That's correct. A couple of tobacco manufacturers as well as some local distributors, retailers and some individuals filed suit challenging the constitutionality of the bill.


They point out that the primary purpose of the bill is to raise revenue and therefore, rather than being a fee, that makes it a tax. And that it violates some of the three provisions necessary for a revenue-raising measure to be constitutional. That being that it must originate in the House, it cannot be passed the last five days, and it requires a three-quarters vote of the legislature in order to be approved. They argue that this bill did none of those things.


Pryor: Why is the fee versus tax distinction important?


Ashley: The court ruled some time ago that the way to distinguish a tax from a fee is the purpose of the revenue that it generates. If the purpose of that revenue is for, more or less, general government operations, it then qualifies to be a tax.


If the money is sort of incidental to receiving a service, or helps pay for that service, then its labeling as a fee is important. What this lawsuit points out numerous times throughout it is that the purpose of this bill was to raise money for general government operations, and therefore it qualifies as a fee and should be found unconstitutional.


Pryor: The suit itself makes for interesting reading.


Ashley: It certainly does. For one thing, it picks apart every aspect of Senate Bill 845, the bill that implemented the tobacco cessation fee. Secondly, it addresses many of the things you and I have talked about here. In fact, I would say there are probably some quotes from legislators that you and I have cited in our discussions here in talking about that legislation. And then finally, it is a terrific lesson in government finance. It tells you how the process is supposed to work, what the court has looked at in the past, And then, as far as the plaintiffs are concerned, what should be done about this particular piece of legislation.


Pryor: And the state attorney general will defend it on behalf of the state.


Ashley: That's correct.


Pryor: Gov. Fallin has finished signing and vetoing. Did anything stand out?


Ashley: It was a rather quiet year in the grand scheme of things, with the budget being at the forefront of all the discussions in the end. I think one of the more interesting things that happened in terms of the governor's action were three bills she vetoed related to administrative rules.


We don't talk much about administrative rules because it's really off in the weeds--and many would say quite boring--but it is through administrative rules that the various agency boards and commissions implement the laws that the legislature passes and that the governor signs. Several years ago, that process was amended in terms of the way the legislature reviews those rules for approval, and that process hasn't worked at all. As a result, they've been looking at trying to modify it again and make it work.


The proposals that came up this year did not meet the governor's approval and she vetoed those three bills. Those three were 17 of the bills which she vetoed this year, which is about average for her.


In the end, she signed 393 measures--again, fairly close to average. So in the end, it was a pretty average year.


Pryor: Another member of the state legislature is leaving. State Sen. Dan Newberry has announced he will resign next January.


Ashley: That's right. Sen. Newberry is taking a promotion at the credit union where he works and it appears the time that will be necessary for that job will prevent him from being a legislator. This creates the seventh vacancy this year, so that spot will be filled with a special election.


He will remain in office until the end of January. More than likely the election will take place while he's still in office and he has promised to be helpful to whoever is elected to fill that spot.


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