KGOU

In Defense of Revenue Bills, State Mounts Technicalities Argument

Jul 29, 2017

Two of the three court challenges seeking to overturn $343 million worth of revenue bills that the Legislature passed during the final days of this year’s session could face a quick demise if the state has its way.

The Oklahoma Attorney General’s office responded this week to a pair of lawsuits  – one brought by GOP gubernatorial candidate Gary Richardson and one by a group of automobile dealers. Lawyers for the state argued the court challenges should be rejected on procedural grounds, among other reasons.

Richardson and the Oklahoma Automobile Dealers Association contend that the laws violate a constitutional requirement that says “bills that raise revenue” must pass with three-fourths of the vote in the House and Senate and must be signed into law before the final week of the session.

Neither occurred, as lawmakers scrambled to find last-minute revenue to shore up the state’s budget.

Richardson’s challenge refers to laws that create a 1.25 percent state sales tax on vehicle purchases, add a new fee for electric or hybrid vehicles and freeze the state’s standard income-tax deduction amounts. In a separate lawsuit, the Automobile Dealers Association also seeks to overturn the vehicle sales tax law.

Combined, the three bills are expected to raise $128 million for this year’s budget.

The Oklahoma Supreme Court is set to hear oral arguments in the two cases on Aug. 8. It also will hear a third lawsuit from cigarette manufacturers challenging a $1.50–per-pack cigarette fee increase that’s expected to raise $215 million next year.

If any or all of the laws are overturned, it would trigger deep state budget cuts or require legislators to return for a special session to find new revenue solutions.

In its responses to the lawsuits, the state argued that the four bills are not true “revenue bills” and therefore aren’t subject to the constitutional requirements.

But in Richardson’s lawsuit, Solicitor General Mithun Mansinghani argued that the court doesn’t have to even rule on that issue.

Because Richardson fails to show that he’s looking to buy a new vehicle, owns an electric or hybrid vehicle or plans to itemize his deductions, he lacks standing for the Supreme Court to consider the case, Mansinghani argued.

“In fact, based on the allegation in the petition, there is no reason to believe they affect him at all,” he wrote in the state’s July 17 response.

Richardson, a Tulsa trial lawyer, and his attorney could not be reached for comment.

But in his initial filing, he maintained he has standing because he is bringing the lawsuit “on behalf of all Oklahoma taxpayers” and is a “taxpayer aggrieved by the precipitous legislation” in violation of the constitution.

The state has a separate issue with the lawsuit from the automobile dealers. Instead of taking issue with who is suing, the state says the problem is how the lawsuit was filed.

Oklahoma Watch is a nonprofit journalism organization that produces in-depth and investigative content on a range of public-policy issues facing the state. For more Oklahoma Watch content, go to www.oklahomawatch.org.

The association’s suit seeks a writ of prohibition, which is essentially a court order, to force the Oklahoma Tax Commission to not collect the tax.

But Mansinghani wrote in a filing, also published July 17, that the lawsuit suffers a “fatal defect” because writs of prohibition only apply to judicial or quasi-judicial authorities and the duties the Tax Commission carries out in this case are an executive function.

Whether the Supreme Court ultimately decides the matters on procedural grounds instead of the merits of the lawsuits could have ramifications beyond whether the individual laws stand.

The debates in the three lawsuits touch on different areas of what is considered a revenue bill, such as when eliminating a sales exemption qualifies or when a fee is considered to be a tax. Because of this, a decision on the merits of a case could provide legal precedent that would dictate what lawmakers can or cannot do for years to come.

Mansinghani wrote in the reply in the car dealers lawsuit that an “abrupt” change of course from previous court precedent could “replace certainty and progress with legal chaos in which state government would come to a standstill while the political branches painfully try to sort out the consequence of a change in the court’s jurisprudence.”

But Richardson’s attorney, Stanley Ward, argued that not overturning these laws would diminish the will of the voters in these and future cases.

“The public has a clear interest in not being subjected to unconstitutional laws that have the potential to have harmful, long-term consequences,” he wrote.