Manic Monday: As cigarette tax boost falls short in Oklahoma House, Senate plan would enact $510 million in tax hikes

OKLAHOMA CITY – The Oklahoma House of Representatives fell a few votes short of approving a cigarette tax increase on Monday (May 15). Meanwhile, the Senate passed, on a 36-9 vote, increases and changes in law aiming to increase government revenues a total of $516 million. 
Advocates say the cigarette tax hike, projected to raise $215 million, is a key element in plans to avoid major budget cuts to cover a roughly $1 billion gap between projected and actual tax revenues for state government.
House Bill 2372 gained 63-34 support, short of the 76 members needed to enact the tax hike.
Although a higher cigarette levy was included in a Democratic budget proposal submitted several weeks ago, members of the minority party at the Legislature did not rally to back the levy. They have insisted on higher taxes for the state’s oil and gas industry before supporting the higher tobacco tax. 
In the lower chamber, 51 Republicans supported the tobacco tax hike, while 20 opposed it. Meanwhile, 12 Democrats backed the tax hike; 14 opposed it. 
Governor Mary Fallin, a Republican who campaigned in both 2010 and 2014 as an advocate of smaller government and lower taxation, decried defeat of the tax increase. 
In a statement, Fallin said, “I’m disappointed in those legislators who put political games and Washington-like gridlock ahead of the lives of Oklahomans and the core services our citizens expect.
“It’s personal to those of us who have lost loved ones to smoking-related illnesses. It’s personal to teenagers in Oklahoma who would have been saved from lives of tobacco addiction if the bill had passed. It’s personal for citizens who would have received health care from the new revenue.
“I encourage all citizens to contact legislators and urge a yes vote on a smart way to protect the health of our citizens and the health of our state services.”
On the other side of the state Capitol, President Pro Temp Mike Schulz, R-Altus, and fellow Republicans insisted their package of tax hikes is a “responsible” plan which manages to hold harmless education agencies, the Corrections Department and the Department of Human Services.
House Bill 2360, amended to incorporate the Senate plan, features $510 million in tax increases. According to a state Senate staff press release, it includes:
• $239 million through reforms to “off-the-top” transportation funds, includes $125 million from increasing tax on gasoline and diesel by $0.06 per gallon;
• $215 million from increasing the cigarette tax $1.50 per pack;
• $43 million by eliminating oil and gas gross production tax rebates;
• $16 million by eliminating manufacturing sales tax exemption for the wind energy.

Speaker of the House Charles McCall, R-Atoka, said in a prepared statement:
“The Senate budget plan has already been proposed by House Republicans, and it was found to have no bipartisan support for the fuel tax. The Senate has known this for weeks, so what they proposed today is not a real solution to the budget problem. Per our Constitution, revenue raising measures must start in the House. We have a bipartisan plan in place in the House that, with Senate approval, would unlock $436 million in revenue for the budget.”