OCPA: Use TSET to Protect Vital Services

By OCPA President Jonathan Small

In the final hours of the 2017 Legislative session, lawmakers desperate to find revenue passed Senate Bill 845 to impose a $1.50 per pack tax on cigarettes. Except that, to get around constitutional limits on legislative power, they labeled the measure a “fee.”

The Oklahoma Supreme Court unanimously struck down the revenue provisions of Senate Bill 845 earlier this month. This has left some elected officials claiming they must pass new and larger tax increases during a special legislative session. To strengthen their case, they have the same doom-and-gloom predictions they trot out for every tax debate: nursing homes will close, rural hospitals will fail, health and human services will be depleted. All this supposedly because lawmakers couldn’t constitutionally pass a tax on tobacco.

But if lawmakers want to use tobacco money to protect vital services, there’s a better place to look.

It’s called the Tobacco Settlement Endowment Trust, or TSET. This is a public trust that manages money received by the state as a result of the tobacco lawsuit and settlement from years ago. This fund alone recently topped $1 billion, and it gets $50 million a year deposited to the endowment plus spends about $50 million in earnings every year.

TSET does a few important things, but it also has plenty of questionable spending. Right now, TSET is spending around $770,000 to lecture Oklahomans to drink more water. Last year, public outrage forced TSET to change course when it attempted to create a new administrative position with a salary of $250,000 a year.

So, when you take a billion dollar bank account, growing every year and generating annual earnings around $50 million, then factor in some questionable spending, it’s obvious TSET offers state leaders an alternative to increasing the tax burden on working Oklahoma families. The money is already there to prevent all of the doom-and-gloom scenarios.

This is why OCPA has called on lawmakers to allow Oklahomans to vote on reforming TSET and accessing those funds to stabilize reimbursement rates for nursing homes and rural hospitals. This could also fund the Physician Manpower Training Commission. It could all be done without taking away from TSET tobacco cessation programs or the current endowment.

Believe it or not, some have ridiculed this suggestion simply because it’s not a tax increase.

The state Constitution does say that reforming TSET requires a vote of the people. But so does passing any tax hike that has less than three-fourths support in both legislative chambers. Why not let Oklahomans vote to break down this funding silo, just a little, in order to shore up some basic services?

It’s time to use TSET funds to protect rural hospitals, nursing homes, and other vital services instead of increasing the tax burden on working Oklahoma families.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs (www.ocpathink.org).