Oklahoma session looms as court strikes cigarette 'fee'

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DALLAS – Oklahoma Gov. Mary Fallin is expected to call a special session of the legislature after the state Supreme Court struck down a $1.50 per-pack cigarette fee that helped balance this year’s budget.

The “fee,” which was ruled a “tax,” was passed under Senate Bill 845 in the last day of the 2017 legislative session, providing $215 million for state health agencies.

The court agreed with plaintiffs that Senate Bill 845 ran afoul of the state constitution because it originated in the Senate instead of the House, passed with less than a three-fourths majority and violated a ban on revenue-raising measures in the last five days of the session.

“SB 845 is the Legislature’s single largest revenue bill of 2017,” attorney Robert McCampbell wrote in the petition to hear the case. “Yet SB 845 became law even though it originated in the Senate, passed on the final day of the legislative session, and secured bare legislative majorities.”

The state contended that the fee was designed to discourage smoking rather than raising revenue to balance the budget, an argument the court rejected.

“My belief is we will have to come into special session to address this issue,” Fallin said in a statement after the ruling.

SB 845 ended a legislative session in which lawmakers had to overcome a $900 million revenue shortfall.

State Treasurer Ken Miller said the state’s fortunes continued to improve in July, with revenues rising 9% over the same month last year.

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Budgets Lawsuits Tax-related court cases Mary Fallin Oklahoma Development Finance Authority Oklahoma