A measure that will cut Oklahoma's top personal income tax rate in 2015 and provide $120 million over two years to pay for repairs to the crumbling state Capitol is constitutional and should be allowed to remain in effect, a state assistant attorney general argued Tuesday during a hearing before a state Supreme Court referee.
House Bill 2032 does not violate the state constitution's single-subject rule as alleged in a legal challenge filed in an attempt to have the measure tossed out, Assistant Attorney General Dan Weitman said.
“It all deals with income tax collection and divvying up the income tax,” he said. “It's all related to one purpose and that's managing taxes.”
Jerry Fent, an Oklahoma City attorney who is challenging the measure's constitutionality, said the law contained in House Bill 2032 violates the state constitution's single-subject rule. The practice is commonly called logrolling because it logrolls several subjects into one bill.
HB 2032, which took effect July 1, calls for $60 million to be used for Capitol repairs in the 2014 fiscal year, which began July 1, and an additional $60 million to be set aside for repairs to the nearly 100-year-old building in the 2015 fiscal year.
Fent said the constitution requires bills to contain one subject, and HB 2032 illegally sets up a special appropriation while also cutting taxes.
“My arguments are a slam dunk,” he said. “There were two subject matters in that bill.”
Fent is asking the high court to throw out the measure by declaring it unconstitutional.
Fent and Weitman made their arguments before Supreme Court referee Greg Albert, who will file a report with the court.
HB 2032 would reduce the top income tax rate from 5.25 percent to 5 percent on Jan. 1, 2015. Taxpayers would first see the effect of the tax cut in 2016.
The measure sets up a mechanism to cut the rate to 4.85 percent in 2016 if total revenue growth in the 2016 fiscal year, which begins July 1, 2015, is equal to or greater than the fiscal impact of the 0.15 percentage point tax cut.
HB 2032 also provides funds to repair the Capitol. The first work is expected to repair the crumbling exterior. Pieces of limestone have been falling the past two years from the building's exterior.
Fent said the law also is unconstitutional because the money is set aside over two fiscal years. He said the constitution restricts legislators to appropriate money only for the upcoming fiscal year.
Weitman said HB 2032 doesn't create a debt, and it doesn't indebt a future Legislature.
“They're just funding a fund that they created,” he said. “That's not a debt.”
Fent called HB 2032 a revenue bill and said it should have received 75 percent support in both chambers because it dictates how revenue should be spent. It passed 65-25 in the House and 32-14 in the Senate; 76 votes are needed in the House and 36 are needed in the Senate to get 75 percent support.
Weitman said the three-fourths approval requirement comes from State Question 640, which voters passed in 1992 with the intent to make it more difficult for lawmakers to pass tax increases, not more difficult for their taxes to be lowered.
“This bill … lowers taxes,” he said. “It does not increase revenue to the state and therefore is not a revenue bill.”
The Supreme Court in recent years has been critical of logrolling. Justices have tossed out sections of law or entire laws they found to be violating the single-subject rule. In a 2010 logrolling case, the high court said it was “growing weary of admonishing the Legislature for so flagrantly violating” the single-subject rule of the constitution.
“We hope that they see in this case this is a single subject,” Weitman said.
Fent said he's not arguing the bill's intent.
“That's probably a very worthwhile cause, to get some money to fix the Capitol building,” he said. “But, however, they need to do it constitutionally.”