Holland leads chorus of praise for court’s ruling against health care tax
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Published: 24-Aug-2010

By Patrick B. McGuigan

Published: 24-Aug-2010

The historic state Supreme Court ruling striking down a health insurance claims fee on constitutional grounds has garnered enthusiastic response from state leaders and activists. The court’s finding clarified that a new tax in House Bill 2437 violated a popularly-enacted mandate that requires either legislative super-majorities or statewide voter approval before new taxes can go into effect.

Oklahoma Commissioner of Insurance Kim Holland filed a lawsuit challenging the measure’s constitutionality, and her legal staff led the charge to strike down the law. Today (Tuesday, August 24), she led a chorus of praise for the decision.

In a statement sent to CapitolBeatOK this afternoon, Holland said:

“Today’s decision is a victory for all Oklahomans who believe that our Constitution is worth upholding. 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.”

State Rep. Mike Reynolds of Oklahoma City said the decision was vindication for him and other vigorous opponents of the levy, a 1 percent fee (actually a tax, the court agreed) on health insurance claim payments. Reynolds said:

“Thankfully, the Oklahoma Supreme Court agrees with the dozens of state lawmakers who opposed this health care tax. Today’s decision likely means the Medicaid program will face a shortfall, but fortunately other programs will not be affected.”

Legal rejection of the tax hike means a loss of some $78 million per year in government tax revenue. Reynolds credited city attorney Jerry Fent for his role in challenging the measure. In addition to the tax hike question, H.B. 2437 passed in the last five days of the legislative session, violating  strictures against late-session consideration of such bills. 

In his press release, Rep. Reynolds stressed the health care tax is the second major “revenue enhancement” to collapse since the end of the session in May. The other, a drive to install cameras on state roads capable of reading car tags (and allowing state officials to identify uninsured drivers and issue them tickets) fell apart in recent weeks, leaving another $50 million hole in anticipated budget revenue. 

Reynolds said, “Unfortunately, next year’s Legislature will face a financial crisis created by a hasty budget process this year.”

State Rep. Mike Ritze of Broken Arrow also hailed the court’s decision, saying, “As a doctor, I know how difficult it is for many Oklahomans to afford health care coverage, which is why I opposed this new tax. It’s just common sense. Higher prices lead to lower consumption, which is why we should try to keep insurance rates as low as possible. House Bill 2437 would have done the opposite.”

Dr. Ritze said, “House Bill 2437 would have added to the already heavy tax burden facing Oklahoma citizens. We need to reduce taxes on Oklahomans, not increase them, and calling a tax a ‘fee’ does not make it easier for the taxpayers.”

Another prominent commentary on the ruling came from state Rep. Ken Miller of Edmond, chairman of the House Appropriations and Budget Committee. His statement to CapitolBeatOK and other news organizations said: 

“I applaud the Supreme Court’s decision affirming that the provider fee is in fact a tax. As details of this proposal became clear during the final days of session, I advised against and voted against its passage, strongly believing the bill to be a tax increase.

“In addition to H.B. 2437 not meeting the constitutional requirements of SQ 640, it was also poor policy to increase the tax burden on Oklahoma families and businesses, especially during a global recession.

“As state leaders continue to address our budget challenges, we must do so in a fiscally responsible manner without placing additional burdens on taxpayers.”

As president and CEO of The State Chamber of Oklahoma, former state Rep. Fred Morgan had vigorously opposed H.B. 2437. Today, he praised the Supreme Court’s speedy consideration of the issue, and underscored his organization’s support for Commissioner Holland’s aggressive legal stance in forcing the issue into the legal arena. Morgan said:

“The State Chamber is extremely pleased at the decision … that the Legislature’s action in passing a tax on health care claims was unconstitutional.

“This is a big relief to the business community as it would have added millions of dollars to our bottom-line costs and may have threatened the ability of employers to provide health care to their workers.

“The citizens of Oklahoma voted more than a decade ago to require either a three-fourths vote of both houses of the Legislature, or a vote of the people, on any revenue measure passed by the Legislature.

“The Supreme Court today upheld the people’s voice. We appreciate the leadership of Insurance Commissioner Kim Holland in recognizing the unconstitutionality of this legislation and stepping out to challenge it.”

Oklahomans for Responsible Government (OFRG), a citizens’ “watch dog” group, said citizens should “rejoice” over the judicial finding. OFRG

Executive Director Brian Downs commented:

“Taxpayers of Oklahoma can rejoice with the rejection of the 1 percent 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.”

OFRG’s analysis had contended lawmakers cold have avoided the health claims tax by increasing average budget cuts from 3.4% to 5% for all state government agencies. Downs said, “ This ruling now sets the precedent that will protect taxpayers in the future from similar taxes disguised as fees.”

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