State lawmakers will head into special session Sept. 25 to address the $215 million budget hole created from the Oklahoma Supreme Court’s overturn of the state Legislature’s $1.50-per-pack cigarette fee.
In February, legislators began the 2017 legislative session facing a nearly $900 million budget shortfall. A wide variety of revenue-raising measures were considered including a gross production tax increase, a cigarette tax increase, a fuel tax increase and a reduction in the earned income tax credit.
Gov. Mary Fallin officially called the special session on Sept. 15, asking the state Legislature to address the immediate budget shortfall, find long-term solutions to continuing state budget problems, and uncover inefficiencies in state government.
Based on the debate during the regular session, here are three things OKFB will be monitoring throughout the special session.
1. Gas and diesel tax
During the regular legislative session, an increase in state fuel taxes was proposed to replace funds removed from the Oklahoma Department of Transportation. Though red diesel is exempt, an increase in fuel taxes could disproportionately affect farmers and ranchers who live in rural Oklahoma.
OKFB policy states, “We are opposed to any increase in taxes or fees on diesel or gasoline.”
As the special session begins, OKFB policy staff will be monitoring any proposals to increase gas and diesel taxes.
2. Agricultural sales tax exemption
A key part of the state budget was the Legislature’s removal of the sales tax exemption on new and used vehicles at 1.25 percent. The measure was challenged by the Oklahoma Automobile Dealers Association and others who believed state lawmakers passed the measure unconstitutionally.
Yet the state’s highest court upheld the bill as constitutional, arguing the measure was not a revenue bill–because it removed an exemption–and therefore was not subject to the constitutional requirements of a revenue bill.
Why does this matter? As the legislature again attempts to fix the budget, sales tax exemptions are on the table as revenue-raising options not requiring a super majority vote. For farmers and ranchers, that could spell trouble for the agriculture sales tax exemption.
OKFB policy states, “Protecting existing sales tax exemptions for agriculture uses should be a top priority.”
3. Rural healthcare
Revenue from the cigarette fee was earmarked for four state agencies: the Oklahoma Health Care Authority, the Department of Human Services, the Department of Mental Health and Substance Abuse Services and the Alcoholic Beverages Law Enforcement Commission. Losing the revenue from the cigarette fee could cost state agencies face additional cuts along with the loss of federal funding matches.
A reduction in funding will most likely have a large impact on the many already struggling hospitals in rural Oklahoma. OKFB members should monitor and make legislators aware of the significant need for adequate healthcare access in rural Oklahoma.
As always, OKFB will work diligently to protect the priorities of its members in the special session. Have questions or concerns? Contact OKFB Public Policy at 405.530.2681.