Oklahoma Supreme Court Strikes Down Cigarette Fee

Aug 10, 2017

The Supreme Court of the State of Oklahoma has ruled that a fee on cigarettes approved during the 2017 legislative session is unconstitutional.

In a ruling released Thursday morning, the court concluded that the "Smoking Cessation and Prevention Act of 2017," which included a $1.50-per-pack fee on cigarettes, was a revenue-raising measure and therefore a violation of the state constitution.  Article V of the Oklahoma Constitution states that all revenue-raising legislation must be passed before the last five days of the legislative session, originate in the House of Representatives and be subject to either a three-quarters majority vote by lawmakers or a vote of the people.  

The cigarette fee originated in the Senate, was approved on the last day of session and passed with only a seven-vote majority in the House and a 10-vote majority in the Senate. The legislation was expected to generate $215 million in revenue for the state, helping to fill a projected $878 million fiscal year 2018 budget gap.

The state legislature narrowly avoided a special session when it passed a handful of revenue measures before the end of its regular session in May.  Those measures included the cigarette fee, a tax on motor vehicle sales, a registration fee for hybrid and electric vehicles and a freeze on standard deductions for the state income tax. Now, those measures are being challenged in the state Supreme Court. The court heard arguments on Tuesday, and the decision on the cigarette fee is the first to be handed down.

With $215 million now missing from the state budget, Gov. Mary Fallin may declare a special legislative session to find new ways to generate revenue.

In a statement released on Thursday, Fallin expressed her disappointment in the Supreme Court's decision and her concern about the the Department of Human Services, the Department of Mental Health and Substance Abuse Services and the Oklahoma Health Care Authority, the agencies that would have received most of the revenue generated by the fee.

"These agencies and the people they serve cannot sustain the kind of cuts that will occur if we do not find a solution. My belief is we will have to come into special session to address this issue," Fallin said.

Lt. Gov. Todd Lamb said the decision of the court is a chance for state lawmakers to collaborate with each other to find funding for essential state services. "It is my belief this can be done without drastic cuts to agencies. State government can and must operate more efficiently, and this ruling provides an excellent opportunity to start that process," he said in a statement released on Thursday.