Supreme Court Strikes Down New Insurance Fee
The ruling came after Insurance Commissioner Kim Holland filed a lawsuit on July 20, saying the fee on health insurance plans was revenue-generating and needed three-fourths of the Legislature's support to pass.
The bill passed in the final week of the session.
“Today’s decision is a victory for all Oklahomans who believe that our Constitution is worth upholding," Holland said. "State Question 640 was passed overwhelmingly in 1992 granting the people the right to vote on tax increases in the absence of a super majority vote by the legislature. I appreciate the Court’s expediency in looking into this matter. With this decision, my department accomplished all we set out to achieve— to ensure that we adhere to the Constitution and the laws of our state.”
Governor Henry commented through Communications Director Paul Sund: “In the days to come, we will be reviewing the court decision’s short-term and long-term budgetary implications with legislative leaders," Sund said.
“Obviously, from a long-term budgeting perspective, it will be disruptive to lose this revenue source at a time when the state is pulling itself out of a historic budget crisis. Fortunately, the U.S. Congress recently approved new federal funds for state health care needs, and those dollars should help Oklahoma move forward without many disruptions in health care programs in the current fiscal year.
“However, because those federal funds are one-time dollars that must be replaced by the state next fiscal year, Oklahoma will face significant funding challenges in health care and other important programs when the Legislature returns in 2011.”
Oklahomans for Responsible Government Executive Director Brian Downs, who opposed the fee, said, “Taxpayers of Oklahoma can rejoice with the rejection of the 1% health care claims tax by the state’s highest court. The six justices in the majority rightly noted that the measure violated the provisions of State Question 640 approved by voters in 1992 which require a super-majority in the Legislature to raise a tax and prohibit any revenue generating bills from being passed in the last five days of session. It has been OFRG’s position since the budget agreement was announced that this tax wouldn’t have been needed had lawmakers simply increased the average budget cut from 3.4% to 5% in all state agencies. This ruling now sets the precedent that will protect taxpayers in the future from similar taxes disguised as fees.”