HEALTHY CITIES

HEALTHY OKLAHOMA

We’re all in this together

77% of all Oklahomans live in municipalities

91% of STATE sales tax is generated from sales within

municipalities

80% of Oklahoma citizens & businesses receive water from

municipal sources

Virtually all commerce, government, education & healthcare occurs inside a city

Cities are the Economic Engine for the State

Number of Municipalities by Size

Oklahoma has 585 municipalities

319 have population under 1,000

200 have population between 1,000 & 5,000

58 have population between 5,000 & 50,000

5 have population between 50,000 & 100,000

3 have population over 100,000

Major Sources of Operating Revenue

STATE - 5

Income Tax

Sales Taxes

Gross Production Taxes

Motor Vehicle Taxes

Misc. Taxes

COUNTY - 3

Ad Valorem

State Apportionment

Sales Tax

SCHOOL DISTRICT - 3

Ad Valorem

State Appropriation

Federal Appropriation

MUNICIPALITY - 1

Sales Tax

6 states provide 3 sources of revenue from appropriations, ad valorem, income tax and sales tax

27 states provide 2 sources of revenue

17 states provide only 1 source of revenue

How Do Other States Fund Municipalities?

Only in Oklahoma is that 1 source sales tax

Sources of Oklahoma Municipal Revenue

Sales and use tax, 53%

Property tax, 8%

Other taxes, 7%

Federal and state

earmarked 12%

Charges for services,

15%

Other revenue, 6%

Compare US vs. Oklahoma

Other Taxes, 11%

Fees/Charges

7%

Sales Tax, 11%Income Tax, 14%

State Funds, 15%

Federal Funds, 6%

Property Tax, 28%

All Other Revenues, 8%

US Municipal Revenue Sources

Sales and use tax, 53%

Property tax, 8%

Federal and state

earmarked, 12%

Other taxes, 7%

Charges for services,

15%

Other revenue, 6%

Okla. Municipal Revenue Sources

In Search of the Big Box

For fiscal survival, municipalities are forced to pursue retail sales over jobs or rooftops

New jobs generate income tax

New rooftops, after construction, generate only ad valorem tax

The “Wal-Mart” Effect

Sales Tax Revenue Per Person Per PennyMakes comparisons possible regardless of

size of city or rate of tax

The average PPPP in a Wal-Mart City is $139

The average in a non Wal-Mart is $72

Do retail sales generate NEW revenue?

When Glenpool adds a Wal-Mart, where do the shoppers come from? Drains revenue from one locality to

benefit another, or Shifts revenue from one retailer to

another within the same locality

Pursuit of retail sales has limited benefit for the state

.

Problems with relying solely on Sales Tax

Sales tax is a volatile source of revenue

Consumer switch to Internet sales Loss to Oklahoma municipalities

projected to be $106 mil. annually by 2010

State and counties crowd out the ability for cities to increase sales tax

Not Every Transaction Generates Sales Tax

Number of City & State Exemptions

6

69 70

100108

139 142 143

0

20

40

60

80

100

120

140

160

1980 1981 1990 2000 2002 2007 2008 2009

Inside City Hall Voter-approved sales tax is often

dedicated to a specific purpose

City Portion Dedicated General Fund

Broken Arrow 1.5% 1.5%

Claremore 3.0% 0%

Collinsville 1.0% 2.0%

Jenks 1.0% 2.0%

Mannford 1.5% 2.0%

Owasso 1.0% 2.0%

Sand Springs 1.5% 2.0%

Sapulpa 2.2% 1.8%

Skiatook 1.0% 2.0%

Tulsa 1.0% 2.0%

Streets & Transit

Administration

Recreation & Culture

Economic Development

Neighborhood Planning

Public Safety

Operating Revenue (2¢)

Streets & Transit

Administration

Recreation & Culture

Economic Development

Neighborhood Planning

Public Safety

Operating Revenue (2¢)

Public Safety Consumes Most Available Sales Tax Revenue

POLICE/FIRE % OF OPERATING FUND

90.7%

118.7%111.0%

187.5%

160.5%

88.4%

158.8%174.0%

101.0%

0%20%40%60%80%

100%120%140%160%180%200%

Municipal Street Funding

Municipal Roads Vital to Economic Development 54% of miles driven in Oklahoma are

driven on municipal streets Motor Vehicle Apportionments

Municipalities $24 mil. statewide Counties $235 mil. statewide

Transfers

in (normally utilities),

16%

Proceeds from long-

term borrowing,

1%

General revenues,

84%

How to balance the city budget?

Consequences Robbing utility revenues means:

Systems go without maintenance

54% of Oklahoma’s Water Treatment Facilities are under DEQ consent order.Compare 4% in Kansas

EPA estimates $5.4 billion to bring municipal water and sewer up to standard statewide

Higher Utility rates for customers

First Do No Harm Learn the cost of new state mandates

placed on cities prior to passage CTAG will request a bill requiring

Municipal Fiscal Impact Statements No more sales tax exemptions that

don’t pay for themselves Fully fund Disaster Relief obligation

each year

Healthy Cities Healthy OklahomaRemedies

HEALTHY CITIES HEALTHY OKLAHOMA

Remedies

Consider the solutions Diversify the tax base, giving access to ad

valorem for operations Municipal Fire Districts

Increase motor vehicle apportionment Repeal sales tax exemptions that don’t

provide a benefit Return to cities a portion of the state sales

tax generated in its area Half-cent for roads

Proposals for Next Session

No unfunded mandates

Require municipal fiscal impact statements on legislation

Proposals for Next Session

Office of Emergency Management reporting

Require semi-annual report to legislature on outstanding payments to municipalities

Proposals for Next Session

Allow counties to help once again Remove population

limitations on county’s ability to assist with street building and repair

Proposals for Next Session

Expand retail opportunities

Allow municipal public trusts to participate in retail operations

Proposals for Next Session

Interim Study on municipal funding structure

QUESTIONS &COMMENTS