Amendment limits tax increases, not cuts

Oklahoma Supreme Court

A lawsuit challenging constitutionality of a tax cut amendment earned a strong rebuke from those instrumental in its passage. The lawsuit challenges Senate Bill 1246, an income tax reduction passed by the Legislature earlier this year.

State Question 640, approved by Oklahoma voters in 1992, required that all proposals increasing state taxes must either be sent to a vote of the people or receive three-fourths approval in both houses of the state Legislature. Such measures also cannot be approved in the final five days of the legislative session.

The filers of the suit claim that since the bill pertained to state tax collections, it needed to meet SQ 640’s requirements, which it didn’t. SQ 640 applies to any bill “intended to raise revenue,” according to the amendment’s wording.

Last month, the Oklahoma Supreme Court heard arguments on the suit. Lines of questioning by justices indicated they could potentially throw out the tax cut. This would also jeopardize other tax-relief provisions enacted since 1992.

Lloyd Noble II and Gary Gardenhire were board members of Oklahomans for State Question 640, a committee organized to promote the amendment ahead of its appearance on the ballot. Gardenhire, of Norman, said today this would apply intent to SQ 640 that simply wasn’t there when the amendment originally passed.

“When we pushed State Question 640 in 1992, we were trying to make it more difficult for the Legislature to increase taxes and revenues in the midnight hour, as they had often done prior to that,” said Gardenhire, an attorney and former state senator.

“Our intent was not to circumscribe the Legislature in reducing taxes. To ‘raise’ revenue meant to increase tax rates. We wanted lawmakers to be more accountable to taxpayers. Our clear intent, when you look back at public comments leading up to the vote, was to make it difficult to increase taxes.

“Some dictionaries say the meaning of the word ‘raise’ is to collect. But it has always been the understanding that, with State Question 640, ‘raise’ meant increase. Court rulings since 1992 have reinforced this.

“When you ‘raise the bar,’ you’re not collecting the bar, you’re making it higher. That’s what we were attempting to do – raise the threshold, make it higher, for increasing taxes on citizens.”

Noble, a Tulsa businessman, expressed concern that a ruling against SB 1246 would affect more than just that piece of legislation.

“Oklahoma lawmakers have passed many different tax reductions since State Question 640 was implemented. They never considered that tax reductions had to meet the provisions of State Question 640 because everyone knew that wasn’t the case.

“A ruling in favor of this lawsuit could end up rolling back every bit of tax relief passed in Oklahoma the last two decades. This would be devastating to families, retirees, veterans and small business owners across this state, all because the Court would have read an intent into the law that was never there.

“It’s been 22 years since this passed a vote of the people. Many Oklahomans living and working today were not of working age and paying taxes back in 1992. They probably aren’t aware of the last-minute hijinks that went on at the Capitol to squeeze in tax increases. It was business as usual. We wanted to change that, and we were largely successful.”

Some of the tax relief measures passed in Oklahoma since 1992 that would be at risk, should the Court overturn SB 1246, include: reductions in the state’s individual income tax rate, repeal of the estate tax, increases in the standard deduction, reduction of the state’s gross production tax rate for oil and natural gas wells, tax exemptions for in-state manufacturers, and specific tax relief for retirees, military veterans and disabled veterans.