Budget & Tax, Law & Principles

Court upholds taxpayer protections

August 10, 2017

Trent England

The Oklahoma Supreme Court today struck down the revenue provisions in Senate Bill 845 and, in so doing, upheld limits on legislative power that were added to the Oklahoma Constitution by voters a quarter century ago. Those who passed State Question 640 “did not intend that the Legislature could blatantly tax them without complying with [the amendment] by merely wordsmithing their bills,” writes Justice Patrick Wyrick.

Writing for the Court, Justice Wyrick points out that the Oklahoma Constitution contains several provisions all designed to limit the taxing, spending, and borrowing power of state government. (State Question 640, when passed, became Article V, Section 33, of the Oklahoma Constitution.)

Read together with Article V, Section 33, these constitutional provisions mandate fiscally responsible government that operates on a strictly pay-as-it-goes basis, and they indicate—by strictly limiting the Legislature's ability to enact laws that generate additional revenue—the people's preference that when revenues shrink, so too does their government. Easy to dismiss as mere procedural or technical requirements, these various constitutional provisions in fact create the substantive framework for how our state government extracts and spends the people's money.

The opinion points out that the state’s position would create a massive loophole in these constitutional protections.

The position taken by the State Respondents is ... extraordinary. In their view even a measure that explicitly levies a massive new tax, can evade Article V, Section 33's "revenue bill" requirements so long as the tax is enacted for a "regulatory" purpose. ... The logical end point of this position is that the Legislature can impose by bare majority any tax whose purpose is to discourage behavior disfavored by the government. One can imagine the gasoline tax being doubled "to reduce traffic congestion and wear and tear on our roads, the costs of which are overburdening the Department of Transportation," or the income tax on the top 1% being tripled "to reduce the societal ills that arise from income disparities among our citizens." Surely the people did not intend that the Legislature could blatantly tax them without complying with Article V, Section 33, by merely wordsmithing their bills to describe some "regulatory" purpose for the tax.

The Court stood up for the rule of law and for the people, who established the state Constitution for our own benefit. The legislature’s powers come from the people, as granted in the Constitution, and can be limited as we, the people, see fit. In the case of State Question 640, the people preferred tax increases to require a vote of the people. As a secondary method for increasing state revenue, the constitutional provision also allows the legislature to pass a measure with three-fourths super majorities in both chambers.

If this quintessential excise tax can be transformed into a fee merely by calling it a fee and adding some regulatory gloss to the measure enacting it, then the promise of Article V, Section 33-a promise made to citizens in 1992 when they went to the polls and enacted the amended version-will be an empty one. The "tax relief" to be expected from the requirement that all "future bills 'intended to raise revenue' ... be approved by either a vote of the people or a three-fourths majority in both houses of the Legislature" will have been illusory. And that, we think, would be an abject failure to carry out "the manifest purpose of the framers and the people who adopted it."