Much ado about fees
The Oklahoma Supreme Court issued an opinion yesterday in a related case I wrote about Sunday as part of my story on fees and taxes.
In a 6-2 ruling, the court said several fees on civil court filings that went to programs in the state Department of Human Services and the state Attorney General’s office were unconstitutional. Justices framed the issue in stark language:
The courts may not be a tax collector for the executive branch of government.
At issue were transfers of court fee income to programs for adoption registries, child abuse investigations and victim services. Justices in the majority called the programs “general welfare” and unrelated to traditional court-related functions:
These three programs, while laudable, are not related to services provided by the courts for which reimbursement to the State is permitted by imposing fees on those making use of the courts. These three programs are not for the maintenance or support of the court system, nor do they defray expenses of the court system. Though such programs may indisputably be worthwhile, and the provision of such services necessary, they do not serve a judicial or even a quasi-judicial function. The possibility that some persons who seek these services may eventually seek redress through the court system and that these programs may enable some of the persons to gain access to the judicial process is too remote and speculative.
The state has 20 days to appeal the ruling and ask the Supreme Court to reconsider the case. But if the ruling stands, that means lawmakers are going to have to find another way to fund the programs, which combined brought in about $4 million a year from court fees.
A larger issue here is the movement away from taxes and toward fees to fund state and local government services. There’s plenty of debate about how to effectively do that, but generally, if the state imposes a fee, it’s in return for a specific service performed for a taxpayer. A tax, meanwhile, is supposed to benefit general services for all taxpayers.
Joe Henchman, director of state projects for the Tax Foundation, said in an interview that fee income and dedicated funding can allow politicians to fund popular programs but still say they won’t raise taxes:
The general fund of a state budget of a state budget is all these different things, and some are more popular than others. I can understand the political motivation of taking out some of the most popular necessities or the things that people really like and then proposing dedicated funding sources for them. … It’s a way of walking away from the abstraction of government, even though ultimately money is fungible. By doing that, all they’re really doing is freeing up money to be spent on something else other than those programs.
Henchman said Oklahoma’s new fee on cash wire transfers is unrelated to the service it funds, which is drug interdiction:
Entirely separate from the tax or fee issue is that they’re only targeting some types of wire transfers. It just goes to show that whatever rationale they have is hogwash. It’s not about regulating wire transfers or stopping drug cartels, it’s about squishing these guys that for whatever reason don’t have the ears of politicians right now.
Here’s how much the state brought in from licenses, permits and fees during the last few years, according to the Office of State Finance. The figures do not include fees for higher education, which is a separate category.
Source: Oklahoma Office of State Finance
For a more detailed look at the almost 200 types of fees, licenses and permits, you can download a spreadsheet here, or view it online here.
–Paul
Written by Paul Monies
Follow @pmonies
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[...] A quick glance at the budget summary shows several ideas to increase revenue, including agency consolidations, elimination of some tax credits and increases in permits, fees and licenses. [...]