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Wed July 17, 2013
Tulsa Plans To Ask Voters To Approve Never-Ending Sales Tax Hike
Public meetings on the recently approved draft of what would be Tulsa’s biggest ever capital improvement initiative continue through August. The list of potential projects range from widening streets and repairing bridges to replacing city pools with aquatic centers and building new zoo exhibits.
But paying the nearly $1 billion price tag is forcing Tulsa to get creative, as the Tulsa World‘s Zack Stoycoff reports:
Councilors have agreed in nonbinding consensus votes to ask voters this November to extend the city’s third-penny and 0.167-cent sales taxes until the anticipated cost of the package’s projects are covered, marking a departure from the traditional practice of setting expiration dates for sales-tax extensions.
So the sales-tax extension wouldn’t have a set end date. That’s unusual, but Tulsa has had success with the idea before.
The 2001 third-penny sales tax package, which had a five-year deadline, fell about $70 million short of its $390 million projection due largely to the national recession that followed the September 11, 2001, terrorist attacks.
Voters were asked to extend the tax again in 2006 to cover projects they had previously approved in 2001.
In the same election, voters were asked to extend the third-penny tax for the next capital funding package – this time, a third-penny extension that would expire only after the revenue was collected. The 2006 package expired in fiscal year 2013, when the third-penny tax was transferred to Fix Our Streets projects that voters approved in 2008.
One advantage of having an open-ended sales-tax extension is that it protects taxpayers from project cost overruns. The projected cost of the improvements is determined before voters go to the polls, and the tax expires as soon as that amount has been collected, regardless of whether the project cost more than expected.
The projects also benefit because they aren’t as vulnerable to drops in revenue collections, which would only extend the life of the sales-tax extension.
But City Councilor G.T. Bynum told the Tulsa World the new funding method isn’t without risk:
“There are trade-offs,” said Councilor G.T.Bynum, who is chairman of a task force that has helped craft the latest proposal. “It’s not a perfect approach, but I think we all agreed that it was better than trying to guess five to six years out how much (money) would come in by a specific date, hour and minute.”