Senate passes bill ending vehicle sales tax hike they passed in 2017

They want you to congratulate them on cutting your taxes, when in reality the folks who were opposed to raising your taxes in the first place have been more than vindicated over the past several years.

For reference, here are the candidates for higher office who voted in 2017 to raise this tax on Oklahomans:

• State Sen. Kim David (running for Corporation Commissioner)
• State Rep. Avery Frix (running for 2nd District Congress)
• State Rep. Leslie Osborn (incumbent Labor Commissioner)
• State Rep. Dustin Roberts (running for 2nd District Congress)
• State Rep. Todd Thomsen (running for Corporation Commissioner)

Here are the candidates for higher office who were taxpayer champions and voted in 2017 against raising this tax on Oklahomans:

• State Sen. Josh Brecheen (running for 2nd District Congress)
• State Sen. Nathan Dahm (running for U.S. Senate, special election)
• State Sen. Marty Quinn (running for 2nd District Congress)
• State Rep. John Bennett (running for 2nd District Congress)
• State Rep. Kevin Calvey (running for Oklahoma County District Attorney)
• State Rep. Sean Roberts (running for Labor Commissioner)
• State Rep. Todd Russ (running for State Treasurer)

Remember their record, not their rhetoric, at the ballot box.

Senate approves bill eliminating motor vehicle sales tax

OKLAHOMA CITY – On Wednesday, the Senate approved Senate Bill 1075 to reinstate the full sales tax exemption on motor vehicles and tractor trailers. The Legislature removed the 1.25% of the exemption in 2017, but Sen. Kim David, R-Porter, said with revenues at record highs, it’s time to restore the much-needed tax relief for Oklahomans.

Senate kills trucking exemption; end of Special Session today?

Yesterday, the State Senate defeated a measure (HB1074) that would have exempted the trucking industry from having to pay the new 1.25% sales tax on new vehicles that average citizens like you and me now have to pay. The tax came when the Legislature passed HB2433 at the end of the regular session in May, and the Supreme Court upheld it as constitutional after it received a legal challenge.

Supporters of HB1074 argued that the intent of the sales tax was for personal vehicles like cars, pickups, and vans, not tractor-trailers, and that this tax will hurt the trucking industry here, as under current exemptions many trucking companies register their vehicles in Oklahoma. Legislators claim that big trucking companies and other corporations like Walmart are now moving their truck registration from Oklahoma (where it was very inexpensive prior to HB2433) to elsewhere.

Allow me to point out the irony that taxing something more oftentimes results in getting less of what you want.

The House had passed HB1074 63-20, with only Democrats opposing, but the Senate voted 17-20, with 14 Republicans opposing and 17 Republicans supporting.

State Sen. Marty Quinn (R-Claremore) said this in opposition to the bill on the Senate floor: "What bothers me about this is that we don’t want to allow this burden to continue on a special group of corporations or businesses, but it’s going to be fine and dandy to leave that burden on the common man you and I represent."

Quinn is exactly right.

In other legislative news, it appears that the House and Senate may finish the Special Session today, as the Senate will take up the budget cut-and-reallocate measures that the House has passed. The plan cuts about $60M in spending (HB1019), raises about $48M in speeding up the GPT on some older wells (HB1085), and shifts around enough money in leftover funds, rainy day funds, and revolving funds (HB1019) to cover the rest of the $215M hole.

If the Senate passes these measures as expected, today should be the final day of this extended special session.

Court ruling is dangerous for the Oklahoma taxpayer

The recent ruling by the Oklahoma Supreme Court has opened a dangerous can of worms for the Oklahoma taxpayer. By essentially eviscerating Article V, Section 33 of the Oklahoma Constitution, the Court now has given the Legislature free rein to hike taxes on Oklahomans in complete disregard of the will of the people as expressed in passage of SQ 640, which was intended to place strict limits on the increasing of Oklahomans' tax burden by the Legislature.

Governor Fallin, who plans to issue a call for a special session, began the year by pressing for nearly $2,600,000,000 (2.6 Billion with a B) in new and increased taxes. $1.7B of that would have come by removing the sales tax exemption on services. Armed with this ruling, she may feel emboldened to continue that push for higher taxes. Legislators should resist her, and Oklahomans should flood the State Capitol with calls against raising taxes or fees or removing tax exemptions, or whatever other loophole the Governor and Legislature may try to use to squeeze more money out of taxpayers for the state's coffers.

Justice Combs said this in his dissent, and I am in full agreement with him:

The aim of the people in adopting State Question 640 must not be thwarted by such parsing of words and definitions. The Legislature must not be allowed to circumvent the requirements of Okla. Const. art. 5, § 33 when the clear principal object and purpose is to raise new revenue.

$10 billion worth of tax exemptions in the Oklahoma tax code are now subject to removal by a bare majority vote, rather than the 3/4ths vote intended by the petitioners and voters who wrote and approved SQ 640 in 1992. Hold on to your wallets, folks, because Governor Fallin and the Legislature will be coming for them.

Former OKGOP National Committeeman Steve Fair wrote this on his blog in response to the ruling:

[W]e need a statute of limitations on removal of exemptions. If a good or service has not been taxed for eighty years, then it should be considered a new tax or fee. [...] This was clearly a loophole the legislature was looking for to fill this year’s budget hole.

I think that's a great idea. Hopefully, some taxpayer-defending legislator will take up the mantle next session and work to advance a measure along these lines.

Oklahomans will need to keep a close eye on the Special Session that will begin on September 25th. Your wallet will be placed on the table by a pack of hungry vultures who have complete disregard for the intent and purpose of Article V, Section 33 of the Oklahoma Constitution.

Richardson blames Lamb for Car Sales Tax Increase

Richardson Lays Blame of Car Sales Tax Increase on Lt. Governor Lamb

Tulsa, OK, August 31, 2017 – Gary Richardson today expressed his disappointment in the 5-4 decision upholding the Oklahoma Car Sales Tax.  However, Richardson laid the responsibility of the tax increase squarely at the Lt. Governor, Todd Lamb for not doing his job as the President of the State Senate.

"I'm surprised that our State Supreme Court in a 5-4 vote can look at a law which brings millions more into the state coffers and say it doesn't increase revenue," said Richardson.  "But what shouldn't be lost with today's decision is that our Lt. Governor, Todd Lamb, could have stopped this tax from becoming law in the first place."

Richardson then explained how the Oklahoma Lt. Governor is the one constitutionally in charge of the State Senate.  "According to Article 5, Section 28 of the State Constitution, the Lt. Governor is the one who presides over the State Senate," said Richardson.  "Lamb could have taken the gavel of the State Senate and refused to let any of the tax bills be heard."

"If stopping the tax increases was important to our Lt. Governor, believe me, he could have gotten it done and protected the citizens of our state from all of these new taxes," continued Richardson.  Richardson then explained when Mary Fallin was Lt. Governor in 2000, she used the same power that Todd Lamb has to take over the State Senate to have Right to Work legislation heard.

"Now, because of the failure of our Lt. Governor to execute his constitutional duties and the State Supreme Court effectively gutting State Question 640 that was passed by an overwhelming majority of Oklahomans in 1992, the Oklahoma Legislature now has over $10 billion in tax exemptions that they can eliminate without a vote of the people, all in violation of the people's intent when they passed State Question 640," said Richardson.

Richardson continued,  "The one silver lining I take from the Oklahoma Supreme Court's decision today is that they made the stakes for the next Oklahoma Governor crystal clear :  Oklahoma needs Governor who will be a defender of the Constitution;  Oklahoma needs Governor who will audit every State Agency, Trust, and Authority; and Oklahoma needs a Governor who will stand on our conservative principles."

"I believe I am that person and as Governor of Oklahoma, I promise to oppose any attempt by the Oklahoma Legislature to increase revenue without a vote of the people or 3/4 of the legislators' votes," said Richardson.  "I will honor State Question 640 and our Constitution, no doubt about it."

Fallin, Inman comment on Vehicle Sales Tax ruling

Gov. Mary Fallin (R)

Governor Mary Fallin Statement on the Oklahoma Supreme Court Upholding Vehicle Sales Tax

OKLAHOMA CITY – Governor Mary Fallin today issued the following statement after the Oklahoma Supreme Court ruled that the vehicle sales tax implemented this year is constitutional:

“I appreciate the Supreme Court ruling on this matter in an expeditious manner. This ruling provides us with clarity in dealing with this fiscal year’s budget. While pleased with today’s ruling, it’s important to keep in mind we must still deal with the immediate problem of the loss of $215 million from the earlier high court ruling that struck down the proposed smoking cessation fee. The $215 million represents just state funds, but with the loss of matching federal funds state agencies estimate the total is nearly $500 million.”

House Minority Leader Scott Inman (D-Del City)

Inman Responds to Supreme Court Ruling on Vehicle Sales Tax

OKLAHOMA CITY – State Rep. and House Minority Leader Scott Inman, D-Del City, released the following statement today after the Oklahoma Supreme Court upheld removing a vehicle sales tax exemption as constitutional.

"Today’s court ruling presents a mixed bag for Oklahoma voters. While avoiding another loss of $100 million to the current year’s budget, the ruling has empowered this Republican majority to raise the taxes of middle class families without honoring the will of the Oklahoma citizens who passed State Question 640 in 1992.

"While I disagree with the majority opinion, in that the new car tax was clearly passed exclusively for the purposes of raising revenue, it’s important to note that we still have a $215 million gap for this fiscal year created by the unconstitutional cigarette tax and an even bigger hole to fill when we begin the Legislative session next year.

"A potential silver lining in today’s ruling, it appears the Court has now opened the door to increasing, with only a majority vote in the Legislature, the gross production tax exemption that has served as a road block to the Oklahoma standard rate of 7 percent. The time is right to remove the artificially low gross production tax rate of 2 percent.

"I call upon the governor and Republican leaders of the House and Senate to continue negotiations with House and Senate Democrats and come to an agreement on a long term, bipartisan budget solution for a Special Session that will ensure our teachers and public employees receive a raise, shore up our rural hospitals, protect our public safety, and improve our roads and bridges so that we can rebuild our state from the devastating fiscal policies of the last seven years. Oklahoma cannot continue to wait."

Senate Pro Tem Schulz comments on new vehicle sales tax being upheld

Senate Pro Tem Comments on Win in Vehicle Sales Tax Lawsuit

Senate President Pro Tem Mike Schulz, R-Altus, released the following statement after the Oklahoma Supreme Court upheld as constitutional House Bill 2433, a bill modifying Oklahoma's vehicle sales tax:

“As the Senate has maintained, this measure is constitutional and it’s gratifying to know that the Oklahoma Supreme Court agrees. With the decision finalized, we now know the full extent of the revenue picture that needs to be addressed during a potential special session. The Senate will continue to work closely with the Governor and the House to finalize a plan to make up the $215 million in revenue lost in an earlier court decision.”

Richardson Issues Statement in Response to Denial of Car Sales Tax Stay

Richardson Issues Statement in Response to Denial of Car Sales Tax Stay 

Tulsa, OK, June 30, 2017 – Gary Richardson issued a statement today in response to the Oklahoma Supreme Court denying his stay on the implementation of the car sales tax before the case is heard on August 8th.  “I’m extremely disappointed that the justices didn’t stay the implementation of 1.25% sales tax on auto sales,” said Richardson.

Richardson discussed the impact of the tax increase and how it will affect the small business owners who run the auto dealerships across the state.  “Folks, this decision will depress auto sales and potentially stall our fragile economy hurting small businesses and consumers across the state. This is why I filed the lawsuit to challenge the car sales tax in the first place.”

“Hundreds if not thousands of Oklahomans are now going to have to make the difficult decision of whether to pay a higher tax at their local, Oklahoma car dealer or wait until after the court hearing in August.  Until then, Oklahoma suffers,” said Richardson.

The Supreme Court will hear the challenge to the car sales tax along with the other two revenue bills being challenged by Richardson on behalf of the Oklahoma taxpayers on August 8th at 11 a.m.

Third lawsuit filed over last-minute tax hikes

House Bill 2433 passed in the final hours of the legislative session, putting $123M more in taxes on Oklahomans through adding a 1.25% sales tax on vehicle sales, in addition to other taxes already charged on sales. That measure is now being challenged in court by the Oklahoma Automobile Dealers Association, Battison Honda and Caitlin Cannon of Ponca City.

This becomes the third lawsuit filed that challenges the constitutionality of several last-minute tax hikes passed by the Legislature last month.

The first lawsuit was on the $257M cigarette tax Smoking Cessation Fee (SB 845). The second suit was filed by Republican gubernatorial candidate Gary Richardson, challenging HB 1449 (~$1.4M electric/CNG fuel tax), HB 2348 ($4.4M-$11M standard deduction freeze), and HB 2433 ($123M auto sales tax).

Richardson to Challenge Tax Hikes in Supreme Court

Richardson to Challenge Tax Hikes in Supreme Court

Tulsa, OK, June 22, 2017–  Gary Richardson held  a press conference at the Tulsa Press Club today at 3 p.m. to announce his plan to file a lawsuit in the Oklahoma Supreme Court challenging the constitutionality of House Bills 1449, 2348, and 2433.

House Bill 1449 creates the “Motor Fuel Tax Fee” which charges a fee to owners of electric and compressed natural gas vehicles in order to make up for the fact that they don’t pay the motor fuel tax; House Bill 2348 effectively raises taxes on the millions of Oklahomans who take the standard deduction when filing their tax returns by uncoupling the state deduction rate from the federal rate; and House Bill 2433 adds a new 1.25% sales tax on motor vehicle sales on top on the existing excise tax already charged on car sales.  All three of these laws were enacted in violation of Article 5, Section 33 of the Oklahoma Constitution which was enacted by State Question 640 in 1992.

Transcript of press conference

Good afternoon ladies and gentlemen.  I’m here today to talk about the recent “tax increases” that were passed by our legislators.

Our state constitution reads in Article 5, that “the people reserve to themselves the power to propose laws and amendments to the Constitution and to enact or reject the laws and amendments at the polls, independent of the legislature.”

In 1907, when writing our State Constitution, our state founding fathers held that the will of the people is “sacred”. They made clear that the legislature only has the legislative powers expressly delegated to it and that all other legislative power is vested in the people exercised by the initiative and referendum processes. It was this holding and right to the use of an “initiative petition” that Norman, Oklahoma attorney Stan Ward headed a citizen’s group to gather enough signatures to put State Question 640, in 1992, to the vote of the people that amended Article 5 of our State Constitution requiring all “revenue increases” to have at least 3/4ths majority of the legislators to pass a tax or to be voted on by the people, that the bill was to originate in the State House, and not to be voted on in the last 5 days of the session.

This past legislative session, our leaders violated Article 5, Section 33 of our State Constitution when they passed House Bills 1449, 2348 and 2433.

In order to attempt to make up for the fact that owners of electric vehicles and compressed natural gas vehicles don’t pay the motor fuel tax, our state legislators passed House Bill 1449, attempting to create a “motor fuel tax fee”.  The authors of the bill knew this wasn’t a fee because they put “tax” in the name of their fee! House bill 1449 failed to get the 3/4ths majority needed to pass legislation that raises revenue in both the state house and senate and it was voted on in the last five days of session, both of which violate Article 5, Section 33 of the Constitution.

House Bill 2348 enacted by our state leaders raised taxes on the 70% of Oklahomans who take the standard deduction when filing their tax returns by freezing the state deduction rate, which normally is increased every year to match the federal rate.  Again, this bill didn’t get the 3/4th votes needed in the State House which violates Article 5, Section 33.

HB 2433 is an effort by our legislators to add a new sales tax of 1.25% tax on motor vehicle purchase.  This, on top of the existing excise tax already charged on car purchases.  This bill, if left unchallenged, would take close to $125 million from Oklahomans purchasing vehicles.  Again, the bill didn’t receive three fourths majority in either the State House or Senate, it was voted on in the last five days of session, and they added an emergency clause to the bill, all in violation of Article 5, Section 33 of our Oklahoma Constitution.

Folks, when our Legislators and Governor willfully disregard our State Constitution, it’s up to the people of our state to take a stand, which is why I am standing here today, for the citizens of our state.

Since 1981, I have been standing as a warrior for the citizens of our state.  First as a United States Attorney, appointed by President Reagan and then in the private practice of law.  I can think of no better way, at this time, to continue the fight than by challenging the constitutionality of these new taxes that are clearly in violation of Article 5, Section 33 of our State Constitution.

This is why I will be filing a law suit in the next few days, on behalf of the citizens of Oklahoma, asking the courts of Oklahoma to invalidate House Bills 1449, 2348 and 2433.  I have hired Norman, OK lawyer Stan Ward, again, the author of Article 5 Section 33, to be my attorney of record in this constitutional challenge.

We are a nation of laws and when our lawmakers refuse to follow our Constitution, then we the people must rise up and ask the courts to defend our Constitution.  It’s not "We the Legislators," it’s "We the People!"

Click here for audio of the press conference.

Sine Die: Legislature passes budget, new taxes, adjourns

"There is nothing that will upset a state economic condition like a legislature. It's better to have termites in your house than the legislature [in session]."

"The only difference between death and taxes is that death doesn't get worse every time Congress meets."

"Never blame a legislative body for not doing something. When they do nothing, they don't hurt anybody. When they do something is when they become dangerous."

The above quotes from Will Rogers, Oklahoma's favorite son, come to mind when thinking about the potential from the 2017 legislative session that adjourned sine die today.

The House passed the $6.8B FY2018 budget by a vote of 57-42, with 16 House Republicans (mostly from the conservative wing) and all 26 Democrats voted against it. The Senate had previously passed the appropriations bill on Wednesday. Shortly after that vote, the House narrowly passed a $257M cigarette tax smoking cessation fee 51-43. 18 Republicans and 25 Democrats opposed that measure, which I believe fails to meet constitutional muster.

On the Senate side, they passed a $123M tax hike on vehicle sales, which also likely fails the constitutionality test. 14 Republicans and 4 Democrats voted against that bill, which passed 25-18.

Conservative think-tank OCPA had fairly positive comments about the end of session, noting that "the Legislature deserves credit for passing a budget that minimizes damaging tax increases on Oklahomans compared to what was called for at the start of session."

Governor Mary Fallin kicked off the year with proposals to raise a variety of taxes by nearly 2.6 billion dollars. While she did get her cigarette tax smoking cessation fee increase of $257M, she didn't get her $635M fuel tax increase, or her $1.7B sales tax hike. That is a positive that we can take from this session.

However, a real and very dangerous question must be answered by the Oklahoma Supreme Court. The Legislature very clearly and brazenly defied Article 5, Section 33 of the Oklahoma Constitution, which states that "No revenue bill shall be passed during the five last days of the session," as well as "Any revenue bill originating in the House of Representatives may become law without being submitted to a vote of the people of the state if such bill receives the approval of three-fourths (3/4) of the membership of the House of Representatives and three-fourths (3/4) of the membership of the Senate and is submitted to the Governor for appropriate action." The aforementioned tax/fee hikes were passed within that 5-day window and without 3/4ths approval, clearly breaking the spirit and letter of the law, which is in the State Constitution by virtue of the Oklahoma voters passing State Question 640 in 1992 in response to the Legislature passing tax increases.

If the courts do not clearly respond to this action, future legislatures will be able to raise revenue at any time and in any manner with complete impunity.

Three takeaways:

1. It was not a good legislative session. There were difficulties resolved in poor ways.
2. It could have been much worse. Even greater damage was averted.
3. It could be much worse in the future if Article 5 Section 33 of the Oklahoma Constitution is not properly enforced.

House JCAB passes $381M in "new revenue"

The House Joint Committee on Appropriations and Budget met late this evening and, among other measures, passed two bills that raised over $381,000,000 in new revenue.

SB845: Creates the “Smoking Cessation Act of 2017”. Bill proposes to assess a fee of $1.50 per pack of cigarettes to be paid by the wholesaler. Estimated Fiscal Impact: $257,841,000

HB2433: Bill proposes to amend the sales tax exemption for motor vehicles to provide that a portion of the state sales tax levy (1.25%) will apply to sales of motor vehicles. Estimated Fiscal Impact: $123,383,000

How this gets around the State Constitution Article 5, Section 33 (SQ640) is beyond me: