The practice of Tax Increment Financing in Oklahoma is remarkably controversial, given the fact that it doesn’t involve actual tax increases; what happens in a TIF district is that revenue over and above a specified baseline figure is then spent on improvements in the actual district. (Michael Bates explained the process in Urban Tulsa Weekly some years ago.) Poster child for these things is the downtown Oklahoma City district set up around Devon Tower, expected to bring in about $225 million once the tower is in place; objections stem from the fact that this money is designated for upgrading that specific area, rather than spread around to all the usual open hands.
We also have something called Business Improvement Districts, which are financed by an additional assessment on property owners within their district. Since this does require a tax increase, approval by the majority of property owners is required. The Downtown OKC BID was approved in 2001.
While the BID is ongoing, TIFs tend to have an expiration date: Oklahoma TIFs are limited by law to 25 years, though most of the TIFs in Tulsa expire in 15 years. And Oklahoma City’s MAPS sales taxes have all had expiration dates, though you’d likely not have noticed it unless you read the small print on the ballot; each new collection began the day after the previous one expired. In general, people seem to like the idea that a tax can run out, which explains the actions of this guy in St. Louis County, Missouri:
The campaign for a sales tax for an emergency communications system in St. Louis County is not over although 67.74 percent of county voters approved a 0.1-cent sales tax for the system on Nov. 4.
State Sen. Jim Lembke, R-south St. Louis County, has introduced a bill (SB 638) in the state Senate that would limit the tax to five years, exempt food from the tax and prohibit the county from ever proposing the measure again.
The bill would protect taxpayers, he said. The tax needs a sunset, he said. “I don’t want to thwart the will of the taxpayers,” the senator said. The tax “should not go on in perpetuity,” he said.
I am surprised that the ballot measure didn’t specify an expiration date, since this was a one-time project. Or maybe I’m not so surprised:
Former County Councilman Skip Mange, chairman of the campaign committee for the tax, said Lembke’s bill would kill the system. “There is no other available tax revenue,” he said.
Does this constitute an admission that the measure as written would not produce the amount of revenue needed — or that the county was looking forward to that tenth-of-a-cent extra once the new system was paid for?
I don’t have a problem with dedicated sales taxes per se; apart from MAPS, OKC collects 0.75 cents on the dollar for public safety, and 0.125 cents to support the zoo. But those are ongoing activities, not one-shot projects, and they don’t have expiration dates, unlike the MAPS taxes. Jim Lembke seems to grasp the concept:
Lembke said he is willing to work with supporters to calculate a sunset for the tax. After that, the county should pay for the system’s operation and maintenance out of its general fund, he said. Or supporters should go back to voters for a special tax to maintain the system, he said.
Doesn’t sound so complicated to me.
(Triggered by a reference in this piece by Brian J. Noggle.)