DALLAS -- Oklahoma Senate President Pro Tempore Mike Schulz is calling on lawmakers to raise fuel taxes along with a $1.50 per pack cigarette tax to fill a budget gap after a state Supreme Court ruling that killed the cigarette levy.

The legislature is meeting in special session after Gov. Mary Fallin called lawmakers back to Oklahoma City after the court ruling created a $215 million shortfall in the current year’s budget.

"Today is not to look over our shoulder," Oklahoma Gov. Mary Fallin said in her final state-of-the-state address.
Oklahoma Gov. Mary Fallin.

“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.

Fallin’s call for special session included other issues like a teacher pay raise and finding more efficiency in government spending. Schulz said that while the immediate need is addressing the current fiscal year’s budget hole, Senate Republicans were open to considering those issues during the special session.

“Once we take care of the budget, Senate Republicans would consider a teacher pay plan that includes a permanent funding source,” Schulz said. “Additionally, Senate Republicans will keep working on making government more efficient and effective. We’ll keep pouring over agency spending and look at options like consolidation to improve the quality and delivery of services.”

While Fallin agreed that the budget crisis requires lawmakers’ immediate attention, “this special session is an opportunity for lawmakers to solve lingering, critical structural problems in our state budget,” she said.

Schulz's Senate plan would raise the motor fuels tax by 6 cents per gallon, generating $71 million in the current fiscal year and leaving $67.45 million for appropriation in the next session. Schulz also calls for elimination of the wind manufacturer sales tax, which generates $10.97 million in current year revenue.

Because lawmakers are meeting in the fourth month of the current fiscal year, the Senate plan also calls for a drawdown of $15.2 million from the Rainy Day Fund to entirely plug the hole in the current budget.

Legislators met for about 15 minutes on Monday, but substantive debate is not expected until Wednesday.

Bills must be read twice in chambers on separate days before votes can be cast, under Oklahoma's constitution. The cigarette tax was struck down because it was a revenue-raising measure passed in the last week of the regular session, a move specifically prohibited by the state Constitution.

While state officials called the $1.50 per pack levy a “health fee” designed to reduce cigarette smoking instead of a “tax,” the court said the measure clearly qualified as a tax designed to raise revenue.

“If we do not get the (cigarette) tax implemented through the House of Representatives this week, there will likely be cuts,” said House Speaker Charles McCall, R-Atoka. "If nobody wants to get serious on the cigarette tax, what they're really saying is we're not serious about anything."

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