“To tell you how it’s going to affect the Nation, well I can’t because I don’t know what’s going to happen.” — Muscogee (Creek) Nation Tax Commissioner Jerry McPeak
Legislation adding new fee faces lawsuit
OKMULGEE, Okla. — Muscogee (Creek) Nation Tax Commissioner Jerry McPeak discussed Oklahoma state legislation adding a tobacco fee and what it would mean for the Nation.
The bill passed with a vote of 51-43 and would add a $1.50 cigarette fee per pack in order to raise state revenues.
Shortly after the bill passed, several large tobacco companies along with individuals filed a lawsuit.
Standard Distributing Company, Hutchinson Oil Company, Philip Morris USA Inc., R.J. Reynolds Tobacco Co., Rogers Oil Co., Stephenson Wholesale Co., Corey L. Cooper, Brian Hutchinson and James P. Naifeh filed a lawsuit June 7.
According to the lawsuit, SB 845 violated fundamental requirements of Oklahoma’s Constitution Article V sub-section 33: (1) the bill originated in the Senate, not the House of Representatives; (2) the bill passed during the five last days of the session; and (3) the bill did not obtain a three-fourths majority in each chamber.
The fee will go into effect Aug. 25.
According to KFOR Channel 4 in Oklahoma City, the tobacco fee is expected to bring approximately $215 million to help fill the state’s $900 million budget shortfall.
“People seem to be led to believe that this shortfall just happened this year. It’s like going broke. You’re probably not going broke from one decision. You probably went broke because you made bad decisions for a long time,” McPeak said.
McPeak is a former Oklahoma state representative.
He said years ago the state stopped utilizing a balanced budget.
“We would borrow money from the rainy day fund, which if you’re borrowing money out of your savings account I would say your budget’s not balanced,” McPeak said.
He estimated that there has not been a balanced budget for approximately 10 years.
McPeak said no one knows how the lawsuit will turn out.
“But we work very hard and we predicted a year ago that they were going to attempt to do it and it wasn’t going to happen, they were going to make it a fee,” he said.
McPeak said they started visiting with people in the Oklahoma House of Representatives and the Senate.
“If you’re going to do a fee, you write it up correctly. And they did,” he said.
McPeak said the legislative branch wrote it in a way that would not negatively impact the Nation’s tobacco compact.
“Well obviously, we don’t know how it’s going to affect the Nation because we don’t know what’s going to happen and anyone that states they know what’s going to happen is very misinformed,” he said.
McPeak said until the lawsuit is settled, no one knows if the bill will go into effect or not.
“To tell you how it’s going to affect the Nation, well I can’t because I don’t know what’s going to happen,” he said.
McPeak said the state tax commissioner has to make preparations as if the bill will take effect Aug. 25.
“Which is going to cost him lots of dollars and man power, and if it doesn’t take affect then they’ve wasted all of that money,” he said. “So it’s going to affect them and going to make them spend money that we don’t need to be spending. The fact that we are having to defend another lawsuit for unconstitutionality, which happens multiple times,” he said.
McPeak said the only group that received a budget increase was the Oklahoma Attorney General’s office.
“You think it might be because they’re anticipating lawsuits by unconstitutionality of this law and several others, maybe,” he said.
McPeak said if the bill goes into effect Aug. 25, then it might change the way some tobacco retailers do business with the Nation in regards to buying what they have to offer.