Capitol Insider: Revenue Battles Head To Oklahoma Supreme Court

Aug 4, 2017

The Oklahoma Supreme Court will hear oral arguments in three lawsuits challenging revenue raising measures passed last legislative session. The nine-member court will decide on the constitutionality of the $1.50 cigarette fee and the 1.25 percent sales tax increase on vehicles, among others on Tuesday.

R.J. Reynolds Tobacco Co. and Philip Morris USA Inc. filed a brief with the Oklahoma Supreme Court, along with several Oklahoma companies and individuals in June.

In the brief, plaintiffs argue the $1.50-per-pack cigarette fee, or the “Smoking Cessation Act,” “flagrantly violates” the Oklahoma constitution.

The fee is estimated to generate about $215 million per year for the state.

The plaintiffs argue the cigarette fee should have been passed with a three-quarters supermajority, rather than the simple majority vote it received.

eCapitol’s Shawn Ashley says the State Supreme Court could move quickly.

“The tobacco cessation fee is scheduled to take effect on August 25, in just a few weeks. It is one of the larger revenue raise measures in this package of bills. So, they may move rather quickly in terms of moving on it,” Ashley told KGOU.

The suit asserts the cigarette fee is really a tax, and was relabeled only because lawmakers struggled to pass revenue-raising measures requiring three-quarters of lawmakers to vote in favor.

The Oklahoma Automobile Dealers Association also filed suit in June over the state’s new motor vehicle sales tax.Legislators who supported the measure say the law rolls back a long-standing sales tax exemption for vehicles, and is not a new tax. Under the law that went into effect July 1, both a 3.25 percent excise tax and the 1.25 percent sales tax must be paid.

Like the cigarette fee, the vehicle sales tax was passed in the last few days of the session when revenue-raising measures are prohibited, and failed to gain the necessary three-quarters vote needed to pass a tax.The bill is expected to generate more than $123 million.

Two other laws have been challenged. They are a fee on electric and hybrid vehicles, and a law which uncouples the state’s income tax standard deduction from the federal standard deduction.

If the laws are struck down, Ashley says lawmakers will likely return to the state capitol.

“I believe Governor Mary Fallin will call the legislature back into session in order to deal with what will essentially be a budget shortfall,” Ashley said.


State Scandal

The prosecutor who alleged State Superintendent Joy Hofmeister broke campaign finance laws-dropped all charges against her Tuesday.


Last November, Oklahoma County District Attorney David Prater charged Hofmeister with four felonies, alleging she had illegally accepted campaign donations and had conspired to break campaign finance laws. But on Tuesday, Prater dropped the charges, giving no explanation.  

Hofmeister says she is happy to have her name cleared, and she never did anything wrong.  

“For nine months I have had to conduct my life in the shadow of unjust and untrue accusation. But I knew the truth. I knew I was innocent,” Hofmeister told reporters.

Prater also dropped charges against the four others involved in the case. These dismissals come just two weeks before the preliminary hearing for the case was set to begin.  

The Oklahoman newspaper reports former Senator Kyle Loveless pleaded guilty Thursday to embezzling his own campaign funds. The newspaper reports Loveless also pleaded guilty to filing false campaign reports with the state Ethics Commission and to committing perjury when he certified they were correct.

Investigators found Loveless used more than $100,000 from his campaigns for personal use. He resigned from the state senate four months ago.


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