Tobacco companies file lawsuit, claim Oklahoma’s cigarette fee is unconstitutional

Oklahoma State Capitol

OKLAHOMA CITY – About two weeks after lawmakers passed a $6.8 billion budget for state agencies, it seems that several organizations are already challenging it.

This week, two of the country’s largest tobacco companies filed a lawsuit, claiming that the state’s new ‘cigarette fee’ is unconstitutional.

Even before the budget passed, many lawmakers were concerned about the measure’s constitutionality.

Rep. Jason Dunnington says that Oklahoma’s Constitution clearly states that lawmakers cannot pass revenue raising measures in the last five days of session.

“If this budget passes on the House floor either today or tomorrow when we run it, it has $350 million of revenue in it that could get held up in the courts. So if a citizen or a corporation or someone believes that what we did was unconstitutional and files a suit, it could go to the Supreme Court and they could rule that indeed, it was unconstitutional. That would take that money out of a budget that we just passed for the FY ’17-’18, which would mean mid-year cuts. And those cuts could be disastrous to our schools, to our rural hospitals, to DHS, to nursing homes,” Rep. Dunnington said in a Facebook video.

Oklahoma House Floor

The Oklahoma Constitution states “no revenue bill should be passed during the five last days of session.” It adds, no revenue bill can become law without a vote of the people or a three-fourths vote.

However, after negotiations between the parties broke down in May, Republicans unveiled bills that they said would not need Democratic support.

“We are guaranteeing that this budget is challenged in court and we come back here in, I don’t know September [or] October and try to fix it,” said Rep. Emily Virgin on the floor last month. “All the while schools are trying to figure out what to do, hospitals are trying to figure out how to take care of our sick. Nursing homes are trying to figure out how to take care of the elderly. Let’s give them some certainty.”

The budget that was approved by lawmakers late last month included a $1.50-per-pack “cigarette fee” that Republicans argued skirted around the law regarding revenue raising measures.

“We’re trying to follow both the spirit and the letter of the law of the Oklahoma Constitution,” Rep. John Echols told NewsChannel 4. “The Oklahoma Supreme Court has defined revenue-raising measures as measures whose primary purpose is to raise revenue or changes in the permanent tax code. Revenue-raising measures have not been when we’ve made changes to exemptions in the tax code.”

 

 

Credit: Ferre Dollar/CNN

“As this year’s session ends, I’m pleased that legislators approved a fee on cigarettes. Smoking is Oklahoma’s leading cause of preventable death. Lawmakers approving an additional $1.50 per pack is the most important thing they could do to improve Oklahoma’s health ranking,” Gov. Fallin said.

However, it seems that several business owners and tobacco companies feel differently.

On Thursday, R.J Reynolds Tobacco Co. and Phillip Morris USA filed a brief, arguing that the fee is unconstitutional.

According to the lawsuit, the plaintiffs are asking the court to declare the fee void and stop officials from enforcing it.

Click here to read the full description of the lawsuit.

The cigarette fee is expected to generate around $215 million.

Legal challenges could put the Supreme Court in an awkward position, legal analyst Al Hoch said.

“I know the Supreme Court’s not going to want to be in a position of ‘Are we going to have to shut down state government; Are we going to have to take away teacher pay; Are we going to have to stop from fixing the road?'” Hoch said. “What do you want to do? Put the Supreme Court in the position to shut down the state?”

If the court were to find the bills unconstitutional, lawmakers would have to find another way to raise the money they thought they had at the end of session, Rep. John Echols said.

Depending on when such a ruling was handed down, that could mean a special session.

“The office has received a copy of the lawsuit and it is under review,” a statement from Oklahoma Attorney General Mike Hunter read. “As outlined in Title 74, it is the duty and responsibility of the office of the attorney general to defend the state against lawsuits and other legal matters. Just as the office has handled lawsuits challenging legislation in the past, we will move forward to respond to this lawsuit as we look to provide the best outcome for our clients, which include the governor, the legislature and the citizens of the state of Oklahoma.”

“It now is up to the state Supreme Court to decide the matter, and I hope the justices will deal with it expeditiously. I’m confident the attorney general’s office will competently defend the issue. As we await the outcome of this matter, my office will continue to focus on ensuring state government operates in an efficient and effective manner,” said Gov. Mary Fallin.