A Solution to the Property Tax Increase Problem

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A month ago I wrote about this area’s rapid growth and described local tax collections continue to grow as formerly empty fields fill up with new homes and taxpayers. 

State Reprenstative Jason Murphey
State Reprenstative Jason Murphey

In that article (hd31.org/508) I encouraged local officials to set aside new growth revenues to meet the road infrastructure needs resulting from the increase in traffic and population.

Early calculations indicate that just the Logan County county government could have approximately $300k in new revenues for the upcoming fiscal year. What if most of this growth revenue was set aside for road infrastructure, and year after year the county continued to invest in infrastructure instead of spending it on growing the county government bureaucracy?

It is important to note that just a small fraction of ad valorem revenue goes to the county. Much of the remainder goes to local school systems. This year it appears that the Deer Creek, Guthrie and Edmond school districts are set to receive combined new growth revenues of over a million dollars from Logan County growth alone. This does not count the new growth revenues to the Edmond and Deer Creek districts resulting from the rapid development in north Oklahoma County.

Currently, state law does not encourage school districts to separate part of this new growth revenue and save the funds for meeting the increased school infrastructure needs such as the building of new school buildings. School districts frequently attempt to meet these infrastructure needs by asking for property tax increases. Districts then issue debt that takes years to pay off.

This results in two primary problems. Firstly, when the debt is issued, the district is suddenly empowered with a rapid cash flow of other peoples’ money. In the past, this has led to extremely questionable spending practices. More on that later. Secondly, because the district has issued debt, taxpayers are forced to foot the bill, not only for the principal, but millions more in debt, interest and related fees.

I suggest an alternative approach. We must change state law to enable school districts to set aside part of the regular ad valorem proceeds to build infrastructure without debt issuance. This would result in massive savings through debt avoidance and encourage more responsible spending, plus the district would have a real sense of ownership over their savings, as opposed to a sudden cash infusion.

Successful legislation has already been authored to allow rural road districts to use this pay-as-you-go approach and I believe we can pass this same reform on behalf of school districts. Hopefully this new legislation will help local school officials stop the endless cycle of tax increase elections and allow them to set aside part of the new growth revenues to meet the corresponding infrastructure needs.

Thank you for reading this article. Your interest and input are much appreciated. Please do not hesitate to email Jason.Murphey@hd31.org with your thoughts and suggestions.

***Guthrie News Page has added the link to Guthrie Superintendent Dr. Mike Simpson’s column.

3 Responses to "A Solution to the Property Tax Increase Problem"

  1. Jarod Cassada   July 22, 2013 at 2:01 pm

    How about spending it on parks, sidewalks, and trails instead? Most of the sidewalks built over the last 100 years are in a poor state. Other options are: The Elbow (noble park) should be developed as an Urban Wilderness and would result in increased quality of life in Guthrie and an additional attraction for people to visit. Also, Guthrie has too many roads in the residential areas. In the older areas, a road every 300-400′ is common. Remove 2 of every 3 of these “cross-roads” and develop those reclaimed areas as residential lots and/or as a “green-belt” connecting highland hills park to Mineral Wells Park and possibly to Cottonwood. Well managed, this project could pay for itself and result in considerable community image improvement.

    It is time to take an interest in maintaining the existing part of Guthrie and promoting the health of the community rather than simply expanding it.

    Reply
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