Budget & Tax

Jonathan Small | September 16, 2014

Still waiting for transparency

Jonathan Small

It was recently announced that the Oklahoma Tobacco Settlement Endowment Trust Board of Investors certified $52.7 million in earnings for use in the coming year. This news is yet another testament to the fact that state revenues and spending are at all-time highs. The Board of Investors should be commended for their transparent process of informing the public about how much is generated by the endowment’s investments every year. The certification is an increase of $13.6 million over the prior year and due in part to the substantial size of the endowment of more than $975 million.

Given the substantial amounts available from the endowment and payouts to Oklahoma, over $242 million in earnings to date and payouts totaling $1.17 billion, it’s an understatement that tobacco use, particularly traditional combustible tobacco use is big money for the state of Oklahoma.

On November 19, 2012, in an Oklahoma House of Representatives interim study, “State Agency Loss of Federal Funding Contingency Plans,” Mike Fogarty, then CEO of the Oklahoma Health Care Authority, testified to the heavy dependence of the state on revenue from taxes on traditional tobacco products. In response to a question from a participant in the study about whether or not a significant decline in tax revenue had transpired with the heavy push to reduce tobacco use, Mike Fogarty responded:

No … We’d hope that fewer people would buy and smoke cigarettes, and we are actually often quoted as saying, we need people to go buy cigarettes, we just don’t want them to smoke, because we are dependent on the revenue [on tobacco products]. But the fact of the matter is that tax [taxes on tobacco products] has not gone down. We along with our partner agencies the Health Department and others would like to see cigarette purchasing go to zero, but if it did, we would be here talking about the loss of state revenue…[emphasis added].

Understanding how much money the state makes off of traditional combustible tobacco use, whether through heavy excise taxes or settlement payouts, it’s discouraging that some state agencies still refuse to be transparent with Oklahomans about the varied risks between combustible tobacco use and non-combustible use of tobacco or alternative products.

OCPA has highlighted the problem of the lack of transparency related to the varied risks of the various uses of tobacco previously. Sadly, in an age where information is more accessible than ever and the state of Oklahoma has more money than ever, websites and information from the Oklahoma State Department of Health, the Oklahoma Health Care Authority and the Oklahoma Department of Mental Health and Substance Abuse Services still portray all types of tobacco products are as equally dangerous.

Thankfully lawmakers stopped a power-grab attempt this legislative session by state bureaucrats with a religious dedication to non-transparent regulation of tobacco and alternative products. These bureaucrats wanted to use the cover of prevention of youth access to alternative tobacco and non-tobacco products as a means to regulate all tobacco and alternative products the same which would lead to taxing them the same.

We are still waiting for transparency from health related state agencies and hopefully these state agencies will follow the lead of the Oklahoma Tobacco Settlement Endowment Trust Board of Investors as it relates to transparency. Oklahomans’ health depends upon it.

Jonathan Small President

Jonathan Small


Jonathan Small, C.P.A., serves as President and joined the staff in December of 2010. Previously, Jonathan served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. Small’s work includes co-authoring “Economics 101” with Dr. Arthur Laffer and Dr. Wayne Winegarden, and his policy expertise has been referenced by The Oklahoman, the Tulsa World, National Review, the L.A. Times, The Hill, the Wall Street Journal and the Huffington Post. His weekly column “Free Market Friday” is published by the Journal Record and syndicated in 27 markets. A recipient of the American Legislative Exchange Council’s prestigious Private Sector Member of the Year award, Small is nationally recognized for his work to promote free markets, limited government and innovative public policy reforms. Jonathan holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.

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