As city governments prepare for substantial budget cuts due to loses in tax revenue, some officials say Oklahoma’s tax code puts them in a bind.
Shopping, retail and overall spending are down due to closures caused by the COVID-19 pandemic. As a result, sales tax revenues are plummeting.
Projections show Oklahoma City could collect $35 million less in sales tax revenue in the next fiscal year, according to the city’s budget director, Doug Dowler.
“We expect our sales tax to be down for the next year so we have to make adjustments to our budget,” he said.
The city police and fire departments are preparing for 3% budget cuts for FY2021, which starts in June. Every other city department is facing a cut for more than 11%.
“We have to do some level of reductions, otherwise we just can’t make the budget fit. But we are trying to make the cuts to police and fire lower than we are to other departments,” Dowler said.
Other cities face similar problems. The Chickasha Fire Department in the past two weeks has not been able to consistently staff its rescue truck, one of three in the department, according to the local firefighter association. The truck assists the two other ambulances with crashes, extrications and other rescue operations.
“If you should have a large scale incident, it puts more of a burden on the people that are left. So, it creates a public safety issue as well as a firefighter safety issue,” said Ricky Burns, the Vice President of Chickasha Local 2041.
Chickasha City Manager John Noblitt said he and other city leaders have tough decisions to make because of the city’s reliance on sales tax, which is due to state law.
“By forcing cities and towns to rely on sales and use (tax) as the primary source of funding for operations,” Noblitt said in a written statement, “we as managers and Mayors are forced to make these types of difficult decisions when there is any downturn in spending.”
A legislative priority for Oklahoma City this legislative session was a push for a change in the tax code. Dowler used property tax revenue as an example of an alternative source of funds that’s less volatile than sales tax.
“The truth is, when our citizens our hurting, we hurt too. They’re not able to spend like they could before because they’re out of work, and we feel that in our sales tax.”
Gov. Kevin Stitt was asked at a press conference on Thursday if he is supportive of allowing cities to collect revenue through means outside of sales tax.
“It’s not the time to uh raise taxes. We’re going to have to be smart, we’re going to have to be innovative. That’s why I’m rolling up my sleeve and digging into the details,” he said.
The Oklahoma City police and fire departments are preparing budget presentations, which are expected to reflect a 3% cut. Budget presentations will take place at the May 26 city council meeting.