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Governor Fallin to call special session to address budget loss after cigarette fee shot down

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Gov. Fallin plans to call a special legislative session in the coming days.
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OKLAHOMA CITY- Governor Mary Fallin said Wednesday that she will call a special session of the Oklahoma Legislature to convene on Sept. 25 to address a budget loss of $215 million after the Oklahoma Supreme Court called a fee on cigarette sales unconstitutional.

According to a statement issued by her office on Wednesday, Fallin said she would issue a formal call for a special session in the next few days.

“I am planning on calling a special session beginning September 25 for legislators to adjust the current fiscal year budget,” Fallin said in the statement. “A formal call for a special session will be issued in the next few days, but I wanted to announce my intention to call a special session for planning purposes. I also want Oklahomans to know we are working diligently to address the fiscal matters of our state.”

In August, the Oklahoma Supreme Court ruled that a measure that added a $1.50 smoking cessation fee for every pack of cigarettes that passed in the last few days of the legislative session was unconstitutional. The fee was expected to generate $215 million and was earmarked for health and human services agencies, including the Department of Mental Health and Substance Abuse Services, the Oklahoma Health Care Authority, the Department of Human Services and the Alcoholic Beverage Laws Enforcement Commission.

With the loss of matching federal funds, state agencies estimate the total loss is nearly $500 million.

Oklahoma State House Democratic Leader and 2018 Candidate for Governor Scott Inman (D-Del City) issued a statement saying that the Democratic caucus was grateful that the governor has begun preparations for a special session, but was still concerned that Republican leadership has yet to put forth a plan to fix the budget.

“After almost a month since the Supreme Court ruled the cigarette ‘fee’ unconstitutional, the clock continues to tick on finding a path forward,” he said. “House Democrats, along with the Governor and Senate leadership have met in good faith to come to an agreement that will allow us to improve our state.”

Inman said the Democrat caucus was urging House Speaker Charles McCall to provide a detailed, bipartisan plan to ensure that the upcoming special session is productive and beneficial and “not just window dressing to appease wealthy special interests at the expense of everyday Oklahomans.”

McCall (R-Atoka) issued his own statement, saying that a cigarette tax is “the only feasible tax option Oklahomans have said they would support.”

In addition, he said the legislature would likely take up the cigarette tax and use existing cash to address the $215 million budget hole created by the Oklahoma Supreme Court’s decision.

“The cigarette tax, if passed in special session, would generate approximately $122 million for the Fiscal Year 2018 budget. The House also likely would use a combination of $70 million of the $83 million available in Fiscal Year 2017 prior year cash and $23 million from the Rainy Day Fund, which would backfill the $215 million hole and prevent cuts to education, health care and other agencies,” he said.

 “House Democrats have shown time and again they are not going to help pass the cigarette tax despite it being the most feasible among Oklahomans,” McCall said. “They have not supported the cigarette tax during either of the last two legislative sessions, and we have no reason to believe the special session will be any different. If they refuse to support the cigarette tax again, any further cuts to state agencies will be on them. The Court struck down the cigarette fee, so the easiest path to replacing the funds is to pass the cigarette tax.”

House Democrats, however, have urged the state to raise the gross production tax on oil and gas wells to boost Oklahoma’s budget woes, especially with an additional $500 million shortfall expected for the 2018 legislative session. 

The Oklahoma House Democrats issued a “Restoring Oklahoma Plan” with funding sources stemming from an increase of Gross Production Tax to 4 and 5 percent; restoring the top income tax at 6 percent for income over $100,000 for single filers or $200,000 for joint filers and adding a top bracket at 7 percent for income over $200,000 single or $400,000 joint. Between those two measures, the revenue would be expected to generate $516,284,000.

Other measures in the plan include eliminating the capital gains exemption, converting itemized deductions to a credit, capping the New Jobs Tax Credit at $25 million annually, ending the coal credit, eliminating the vendor discount on sales taxes, eliminating the Equal Opportunity Education Scholarship Credit and increasing the cigarette tax, to name a few.

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Red Dirt Report was launched July 4, 2007 as an independent news website covering all manner of news, culture, entertainment and lifestyle stories that affect and interest Oklahoma readers and readers outside of our state. Our mission is to educate, promote civic engagement and discourse on public policy, government and politics. Our experienced journalists provided balanced in-depth coverage of news stories that affect Oklahomans. Our opinion/editorial stories come from a wide range of political view points. We carry out our mission by reporting, writing, and posting news and information. read more

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