House passes revenue bill, but fate uncertain in Senate

Posted on: 3/28/18

HB 1010XX passed the House 79-19 Monday night, with three votes more than the three-fourths needed to meet the supermajority requirement. The House considers the bill a package that was agreed upon to get all 28 members of the House Democrat Caucus to support the measure. If the bill is changed or divided into separate revenue bills by the Senate, it may not pass in the House if it is returned for further House action.

The cigarette tax increase was passed at $1 per pack increase and the funds will go to the General Revenue fund the first year and the Health Care Enhancement Fund thereafter. Over the weekend, the OHA lobby team and others in health care contacted House and Senate legislative leaders in both parties urging them not to reduce the cigarette tax from $1.50 to $1 and divert the funds from health care. This act leaves $80 million in cigarette tax funds on the table in a revenue package projected to bring in $474.7 million in fiscal year 2019. Much of that money would be used to fund the teacher pay raise in HB1023XX, the state employee pay raise in HB1024XX, and the education support personnel pay raise in HB1026XX.

OHA has been fighting attempts by the tobacco industry and convenience store lobby to lower the cigarette tax to 75 cents increase per pack. According to experts, a 75 cent increase makes no difference in reducing smoking rates because the tobacco industry absorbs the increase in price with discount coupons.

According to comments on Tuesday by Senate Majority Floor Leader Greg Treat, the Senate is still in discussion with the Republican Senate Caucus and the Democrat Caucus and are working to verify the revenue projections. The earliest time the Senate could take action would be today, Wednesday.

HB 1010XX, increases the cigarette tax $1 per pack. The bill changes the method of taxing little cigars to the same as cigarettes. The bill apportions revenue from the tax on little cigars to the General Revenue Fund in fiscal year 2019 and to the Health Care Enhancement Fund in subsequent fiscal years. The bill increases the tax on diesel $0.06 and the tax on gasoline $0.03. The bill apportions revenue from the motor fuel taxes to the General Revenue Fund in fiscal year 2019 and to the Rebuilding Oklahoma Access and Driver Safety Fund in subsequent fiscal years. The bill increases the gross production tax discount rate from 2 percent to 5 percent. The bill also provides the gross production tax discount rate will be reduced to 2 percent if State Question 795 is approved by voters. It modifies apportionment of the gross production tax and creates the Oklahoma Occupancy Tax Act. It imposes a $5 per room per night tax on hotel rooms and provides for exceptions. The bill repeals language related to the taxation of little cigars.

Chambers of commerce from across the state are opposed to this bill primarily because of the increase in the hotel/motel tax of $5 (which would make Oklahoma City and Tulsa have the highest lodging tax rates in the country), increase in the gross production tax to 5 percent; and because the bill diverts the cigarette tax and motor fuel to the general revenue fund for the first year. (Lynne White)