Motor Fuel Tax Fee

Today, the Oklahoma Supreme Court struck down a revenue measure passed by the Oklahoma Legislature during the regular May session. The court’s rejection of a proposed fee on electric and hybrid vehicles removes yet another revenue-raising measure from the state’s coffers, following the rejection of a proposed cigarette fee as unconstitutional in August.

The Oklahoma chapter of the Sierra Club filed suit against the measure in August, according to legal documents. The bill, HB 1449, was projected to raise just more than half a million dollars in the remainder of fiscal 2018 and about $1 million in fiscal 2019. As such, Tuesday’s ruling may not dramatically change the scope of revenue needs in special session.

‘Revenue bill’ technically dead on arrival

Much like the cigarette fee, the state’s high court today deemed HB 1449’s additional Motor Fuels Tax Fee unconstitutional based on the grounds that the bill sought to raise revenue but failed to meet the requirements for passing such a bill into law. In section IV of the court’s opinion (embedded in full below), highlighted text states:

Whether a measure is ‘intended to raise revenue,’ must be the overarching consideration in determining whether a measure is a ‘revenue bill.’

After concluding that the intent of the bill was indeed to raise revenue, the historical facts that HB 1449 was passed within the last five days of session and without the constitutionally required supermajority vote proved problematic for justices siding with the majority 6-3 decision.

The importance of language

In addition to the nature of the bill’s passage, the language used in describing it also bolstered the court’s decision. The differences between a “tax” and a “fee” proved central in this secondary consideration.

With regard to a tax, justices concluded these consist primarily of “payments exacted by the state … as a contribution toward the cost of maintaining governmental functions … .” Meanwhile, citing case law, the decision contends a “fee” is “… an amount paid in exchange for a specific government service … .” In the court’s conclusion, justices wrote: “H.B. 1449 … levies a tax in the strict sense of the word, it is not for another purpose which incidentally creates revenue.”

Gov. Mary Fallin responds

Gov. Mary Fallin issued the statement below in an emailed press release Tuesday afternoon following news of the court’s decision:

I’m disappointed with the Oklahoma Supreme Court striking down the registration fee for electric and hybrid vehicles. Fortunately, lawmakers are in special session now working on how to adjust a shortfall of $215 million of state appropriations caused when the state Supreme Court earlier this year struck down a proposed smoking cessation fee.

Oklahoma Supreme Court decision on HB 1449 challenge

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