OKLAHOMA CITY (AP) — The Oklahoma Supreme Court on Thursday overturned a $1.50 per-pack fee on cigarettes, ruling that lawmakers adopted the fee in violation of constitutional rules that dictate how and when revenue-raising measures can be approved.
The decision rejects the state's claim that the fee — which was expected to raise more than $250 million a year — was designed to protect the public by helping to reduce smoking rates and to compensate the state for the harm done by smoking. Tobacco manufacturers argued the bill's primary purpose was to raise revenue to operate state government.
The cigarette fee was among several revenue-related bills adopted in the final days of the 2017 legislative session to help close an $878 million hole in the budget and avoid catastrophic cuts to state agencies and services.
Republican Gov. Mary Fallin said she was disappointed by the ruling. She said lawmakers will likely have to convene a special legislative session to fund agencies that were designated to receive the bulk of the tobacco fee revenue, including the Department of Human Services, the Department of Mental Health and Substance Abuse Services, and the Oklahoma Health Care Authority.
"These agencies and the people they serve cannot sustain the kind of cuts that will occur if we do not find a solution," Fallin said in a written statement.
The cigarette fee was narrowly approved on the last day of the legislation session. The court's 31-page decision, written by Justice Patrick Wyrick, said the move violated guidelines in the Oklahoma Constitution that bar lawmakers from approving revenue-raising bills in the final five days of a legislative session and without a 75 percent majority vote.
Wyrick said the money-raising $1.50 fee was "the linchpin" of the legislation, not health concerns.
"The measure was motivated by the Legislature's need to raise revenue so that it could satisfy its constitutional obligation to enact a balanced budget," wrote Wyrick, the newest member of the nine-member court.
Seven other justices concurred, while two — Justices Joseph Watt and Tom Colbert — concurred in part and dissented in part.
The state has until Aug. 17 to request a rehearing.
Lawmakers reacted quickly to the court's decision. House Democratic Leader Scott Inman of Oklahoma City, a candidate for governor next year, said lawmakers should address structural problems with the state budget by increasing oil and natural gas production taxes, eliminating wasteful tax credits "and actually balancing our budget in a constitutional way."
Senate Democratic Leader John Sparks of Norman added that lawmakers "need to approach a special session thoughtfully with real plans for revenue measures."
"We cannot continue to let the most vulnerable Oklahomans suffer because of a continued lack of leadership among the Republicans at the Capitol and their unwillingness to do the hard work and take the hard votes necessary to properly and fully fund our health care agencies," Sparks said in a statement.
Republican Senate President Pro Tem Mike Schulz of Altus said the Legislature and Fallin now have "several options available," though he didn't elaborate.
Legal challenges have also been filed against the removal of a 1.25 percent tax exemption on auto sales and a fee on electric and compressed natural gas vehicles. The Supreme Court has not yet handed down a decision in those cases.