OKLAHOMA CITY — Lawmakers must return in special session to deal with the $215 million shortfall caused when the state’s high court struck down a smoking cessation fee, Gov. Mary Fallin said Wednesday.
The Oklahoma Supreme Court determined that lawmakers failed to follow the law in passing the measure, Senate Bill 845, and struck it down as unconstitutional. Tobacco companies were among those who challenged the $1.50-a-pack fee as an unconstitutional tax.
The smoking cessation fee would have generated about $215 million for the fiscal year 2018 budget, which began July 1. The court’s action leaves the state short on projected revenue with no way to supplement the affected agencies without a special session.
“No money can be spent from any state fund unless the Legislature specifically appropriates it,” Fallin said.
Office of Management and Enterprise Services Director Preston Doerflinger does not have the authority to transfer monies to the affected agencies from different sources without legislation directing him to do so, Fallin said.
The Oklahoma Constitution says no money shall be paid out of the state treasury, except through an appropriation by law.
Fallin said state law allows the Doerflinger to borrow money from treasury funds to satisfy monthly allocations of appropriations made from the General Revenue Fund, but the appropriation has to be made by the Legislature.
The three agencies that received the bulk of the money from the proposed smoking cessation fee are: the Department of Human Services, $69 million or 10 percent of its appropriation; the Department of Mental Health and Substance Abuse Services, $75 million or about 23 percent of its appropriation; and the Oklahoma Health Care Authority, $70 million or about 7 percent of its appropriation.
Without legislative intervention, DMHSAS said it would run out of state appropriations in November, according to Fallin’s office. The OHCA said it would run out of state funds in January, while the DHS said it would out of state funds in May, Fallin’s office said.
Two other lawsuits challenging revenue-raising measures are pending before the state Supreme Court. Both challenge a 1.25 percent sales tax added to the purchase of vehicles by eliminating an exemption. Fallin said Wednesday in Tulsa that no special session will be called until the court rules on those lawsuits.
She said she and her staff have been discussing options with legislative leaders of both parties.
“A special session is the best option,” the governor said. “Failure to meet in special session would mean $215 million would be cut mostly from these three state agencies. These agencies and the people they serve cannot sustain the kind of cuts that will occur if we do not find a solution.”
Senate President Pro Tem Mike Schulz, R-Altus, said if the governor calls a special session, “the Senate will abide by her call.”
“While a special session seems inevitable, there are still court cases pending. Just as important as addressing this quickly, we must address this correctly and completely, he said.
House Minority Leader Scott Inman, D-Del City, agreed a special session is needed. “We agree special session is absolutely necessary in order to find recurring and constitutional revenue to help balance the budget and avoid devastating cuts to core services in Oklahoma,” he said. “Likewise, we agree the OMES director doesn’t have the authority to move money around willy-nilly like House Republicans would like him to do.”