Special session stalls due to arguments over tax hikes

The Special Session of the Oklahoma Legislature is spinning its wheels because of obstructionism from the Democrat minority and a veto threat from Gov. Mary Fallin.

The unified Democrats have pledged to not vote for a $1.50 tax increase on cigarettes unless the Republicans include a permanent increase on the production of oil and natural gas. Fallin has vowed to veto any bills that force agencies to trim their budgets.

As a result, House Speaker Charles McCall on September 27 announced the House will recess to the call of the chair to allow the Legislature and governor to continue negotiating a plan to address the budget without wasting additional taxpayer dollars.

“It is clear that House Democrats continue to play politics and do not intend to vote in support of the cigarette tax to address the budget hole created when the Supreme Court struck down the cigarette fee,” McCall said in a statement. “The court was clear that the Legislature must pass the tax with a 75 percent majority vote. House Republicans stand ready to deliver 75 percent of our caucus to pass the cigarette tax, but House Democrats have so far given no indication that they are willing to deliver 75 percent of their caucus so we can pass the tax and use other resources to fill the hole. The cigarette fee is what the court struck down, so the first priority is to address that by passing the cigarette tax.”

Some conservative members of the House GOP will not vote for any tax increase which means no tax hike can pass with Democrat votes. And the Senate is essentially in recess too because all spending bills must originate in the House according to the Oklahoma Constitution.

“House Republicans do have a plan to address the hole without House Democrats, but we will need the support of the governor and the Senate, who we have continued to negotiate with this week,” McCall said. “While we are closer to an agreement, we are not going to waste $30,000 a day negotiating. We pledge to continue negotiating in good faith with the governor and Senate, but we are going to do that off the clock. When there is an agreement in place, we will return and take care of the people’s business.”

Before the session started on September 25, Oklahoma Senate President Pro Tempore Mike Schulz announced the Senate Republicans’ plan for massive, permanent tax increases to address the $215 million hole in the Fiscal Year 2018 state budget because the cigarette “fee” was ruled unconstitutional by the Oklahoma Supreme Court.

“This plan not only addresses the immediate need of $215 million for critical health care agencies that was struck down in court, but it also provides recurring revenue streams to help us address the long-term stability of the budget and prevent further cuts to core government services,” said Schulz, R-Altus.

“Oklahoma Senate Republicans have proven our willingness to address the state’s long-term budget problems by passing a similar revenue package during the regular session. The elements of this plan for special session were fully vetted by the Senate during the regular session, and all received the necessary votes to pass constitutional muster..”

The Senate plan is as follows:

  • $1.50 per-pack tax increase in the cigarette tax, which generates $128.9 million in 2018;
  • A six-cent increase in the motor fuels tax, which generates $71 million in 2018; and
  • The elimination of the wind manufacturer sales tax, which generates $10.97 million in 2018.

The Senate plan also calls for a drawdown of $15,200,000.00 from the Rainy Day Fund to entirely plug the hole in the current budget.

“Senate Republicans have said all along we must first address the short-term budget issues before acting on a teacher pay raise plan. Once we take care of the budget, Senate Republicans would consider a teacher pay plan that includes a permanent funding source,” Schulz said.

Before the session, Fallin issued a call for higher taxation.

“This special session is an opportunity for lawmakers to solve lingering, critical structural problems in our state budget,” said Fallin. “Certainly, the most pressing need is to address the immediate budget shortfall created by the loss of the $215 million cigarette fee revenue. The cigarette tax alone will not fill this year’s hole because it would be implemented much later in the fiscal year than originally proposed. We will need to identify other revenue sources to make up the difference. If we do not, additional cuts to core government services will occur.

“Additional cuts to agencies will further harm state services. I will veto a proposal that calls for cuts to state agencies. Also, sending the cigarette tax to a vote of the people is not an option. The earliest the issue could be decided by voters is June, the last month of the current fiscal year. It doesn’t fix the budget hole because it would not generate any revenue for this fiscal year.”

McCall disagreed with Fallin.

“As for the tobacco tax, I have no reason to believe the Democrats are willing to do the right thing on that issue,” McCall said. “They have played politics with the health care of thousands of Oklahomans, putting access to care at serious risk. Without the Democratic Caucus voting to increase the tobacco tax, it is, quite frankly, dead on arrival.

“I would also note one more thing relating to the tobacco tax: It takes 75 percent to pass it in the Legislature, but only 51 votes to send it to a vote of the people. While approving it on the ballot would not help matters this fiscal year, the additional revenue certainly would help address long-term budget issues. The House will vote to give Oklahomans this opportunity if the Democratic Caucus once again kills the tobacco tax in special session.”