Oklahoma SQ 814: Using tobacco money to pay for Medicaid expansion

Only two state questions are on the ballot in November, which seems like a record low. Of the 12 attempts this year at putting a question on a ballot via initiative petitions, two made it two the ballot (802 and 805), two (involving marijuana) are in process, and the remainder failed for lack of signatures or were stricken by the State Supreme Court. (One more petition, SQ 803, seeking a referendum on HB 2597, also failed for insufficient signatures.)

State Question 814 is a legislative referendum. It began as Senate Joint Resolution 27 and was passed by large majorities (81-17 in the House, 34-11 in the Senate). Because it modifies the State Constitution, final approval requires a vote of the people. Sen. Nathan Dahm appears to have been the only Republican vote against it, but I haven't been able to find his rationale.

(UPDATE: On October 30, 2020, I spoke with Jeremie Poplin, filling in for Pat Campbell on Talk Radio 1170 KFAQ, about both State Questions. Click the link to listen.)

Here is the video of debate on SJR 27 in the State Senate on March 12, 2020, and here is the State House debate on SJR 27 from May 14, 2020.

The proposal would modify Article X, Section 40, repurposing money that currently goes into the Tobacco Settlement Endowment Trust Fund to pay the state's share of the Medicaid expansion that voters foolishly approved with SQ 802 in June.

Article X, Section 40 is a provision that was added to the Oklahoma Constitution by SQ 692 at the November 2000 election, initiated by the legislature, creating a Tobacco Settlement Endowment Trust (TSET) Fund to contain a portion of the settlement payments from the tobacco companies. The percentage of payments dedicated to the fund began at 50% and increased by 5% a year to 75%, where it has remained since 2007. A special trust with separate board of directors and board of investors handles the funds; the remainder is available for appropriation by the legislature as part of the normal budget process. SQ 814 would reduce that percentage to 25%

TSET's spending has been controversial. TSET is supposed to be using the fund (worth $1.4 billion at the end of FY2019, the most recent year that has been audited) to help people quit smoking and to deal with the medical consequences. The Oklahoma Council of Public Affairs (OCPA) documented many examples of poor judgment and management, such as the "Free the Night" program that seems to promote drinking in bars.

Oklahoma has a problem with funding silos. Too many of the dollars received by state and local government are earmarked for one purpose or another, and many of those earmarks are constitutional. No matter how desperate the need may be in one department (say, schools), and no matter how overfunded the agencies receiving earmarked funds may be, there's no legal way to move money to where it's needed most. Legislators would rather raise taxes on all of us regular Oklahomans than risk unleashing the wrath of the lobbyists protecting their earmarks.

SQ 814 would not reallocate any of the money currently in the Tobacco Settlement Endowment Trust Fund; it would only change how new money is allocated as it is received from the tobacco companies. (UPDATE: The TSET 2019 annual report states that the total receipts from the tobacco companies for the four fiscal years from 2016 through 2019 were, respectively, $76,009,297, $77,953,045, $71,663,337, and $69,766,823. Passage of SQ814 would mean that about $35 million that currently gets added each year to the $1.4 billion TSET endowment would instead be set aside for state Medicaid matching funds. TSET would still receive roughly $17.5 to $19.5 million each year, based on the last four years' income.)

SQ 814 doesn't come anywhere near fixing the problem of funding earmarks, but at least it redirects earmarked money where to fill part of what could be a massive fiscal hole. I'm voting yes.