Municipal Finance Policy
OML Future of Municipal Finance III
Adopted January 7, 2009
Some top priorities to provide stable long-term revenue structures for municipal governments-
State-Municipal Partnerships: Encourage state and municipal cooperation to grow and strengthen Oklahoma. Aid towns and cities when the burden cannot be shouldered alone locally. For example:
; Increase REAP funding and similar programs to aid the small communities.
; Provide at least partial funding for state and federal environmental mandates
on municipalities such as costly infrastructure improvements especially in the
area of water and wastewater projects mandated by additional federal and
; Provide start-up funds to develop shared expertise for small communities such
as city managers and planners.
; Buffer local communities from the increasing burden of state fees, such as
water testing and lab costs.
Sales Tax – Since Oklahoma municipalities are overly dependent on local sales tax for municipal operations, every effort should be made to assure that this revenue source supports local services including:
; Seek a legislative reallocation of state sales tax to municipalities for local
; Broaden the sales tax base to include services in line with the economic shift
from goods to services in the economy
; Assure that the Oklahoma Tax Commission devotes resources to verify that
all revenues due to cities are properly collected and equitably dispersed to
o Encourage the state to adequately fund the OTC and provide auditors to
determine that revenues are properly collected and dispersed.
o Assure equitable assessment and distribution of revenue pass-through
programs such as the alcohol tax, sales tax holiday reimbursement,
tobacco tax, and motor fuels taxes.
o Continue third party revenue recovery programs.
; Eliminate some current exemptions and only impose additional new sales tax
exemptions when equivalent new funding sources for municipal governments
are provided. Require that proposals for tax reduction or exemptions be
accompanied by sunset provisions and studies of cost/benefit and fiscal impact
to both the state and local governments.
; Do not support reduction or elimination of sales tax on groceries unless it is
part of a comprehensive restructuring of the Oklahoma sales tax to provide a
balanced and adequate revenue system .
Ad Valorem Tax: – Seek to re-establish municipal access to local property tax revenues to provide a more stable and balanced revenue base.
; Amend the Oklahoma Constitution to allow optional local ad valorem levies
for municipal government or restructure local levies.
Transportation: – Seek additional state funding for municipal roads, bridges, and transportation needs. Several options exist including:
; Increase the portion of the motor fuels (currently 1.875%) and motor vehicle
collections (currently 3.1%) revenues distributed to municipalities for
; Increase motor fuels taxes either as cents per gallon or as a percentage of
price per gallon dedicated to municipal transportation needs
General Municipal Operations: Broaden current statutes to allow local government to determine charges based on local costs and standards rather than through state or federal mandated rates. For example:
; Modernize business licensing statutes in Title 11.
; Allow local adjustment of court operations and costs
; Increase municipal percentage of utility gross receipts (Currently 2% in Title
68, Art 26, Sec. 2601).