Tulsa Election 2013: Proposition 3: The "Improve Our Tulsa" G. O. bond issue

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Our condolences and prayers go out to the Inhofe family. A small private plane registered to Dr. Perry Inhofe, son of Sen. Jim Inhofe, crashed on Sunday, killing the pilot.

The "Improve Our Tulsa" package of capital improvement funding comes to voters as two propositions. We've talked about the 7-year, 1.1% sales tax (Proposition 2). Here's Proposition 3, the general obligation bond issue. Before Mayor Jim Inhofe introduced the "third-penny" sales tax, G. O. bond issues were the way Tulsa paid for capital improvements.

Oklahoma law allows counties and school districts and community colleges and library systems to use property tax ("millage levies") for operating expenses, but cities can use property tax for two purposes only: repaying "general obligation bond issues" for capital improvements and paying off judicial settlements and judgments against the city. The money comes out of a "sinking fund" which is replenished by an increase in property taxes. (For example, the $7.1 million Great Plains Airlines settlement that Kathy Taylor arranged and Dewey Bartlett Jr approved would have been paid in this way, had the Oklahoma Supreme Court not ruled that the repayment was illegal.) So the only way a city in Oklahoma can make use of property tax as a revenue source is to get sued or go into debt. (I leave the perverse incentives thereby created as an exercise for the reader.)

Each year, the city submits its sinking fund needs to the county excise board, which calculates the millage required to cover the need, based on the assessed value of property in the city. Tulsa has the highest property tax rate of any city in Tulsa County: 20.24, which amounts to $202.40 of the property tax bill on a $100,000 house, about $30 more than the tax on the same value house in Broken Arrow. It amounts to about 15% of your total property tax bill.

For as long as I can remember, the City of Tulsa has balanced its capital improvements funding between sales tax and G. O. bonds. New bond issues are usually staggered to keep the property tax rate level; the idea is to issue new bonds as the old bonds are paid off. We would get more for our money if the millage could be "pay as you go," if we didn't have to incur fees for issuing the bonds and debt service, but for now, state law doesn't allow it.

So there's nothing scandalous or novel about issuing G. O. bonds to finance streets and bridges.

70% of the $335 million is designated for rebuilding and maintaining existing streets. By law that 70% must be spent for stated projects. Arguably, only 52% is going to specifically listed projects; another 18% ($63,406,000) is made up of "citywide" funds for unspecified rehabilitation and replacement projects and matching funds. An attorney wanting to derail the bond issue could have some fun with that. The relevant section of state law is 62 O. S. 574.

That leaves 30%, $106.5 million, which could be spent on other street and bridge construction, reconstruction, and repair projects yet to be determined. The bond issue language is limited to those purposes. Debt service would be over and above the $335 million, which constitutes the amount of principal being borrowed.

Despite the lack of specificity on which street projects will be funded with 48% of the money, at least we know the money has to be spent on street projects. My inclination is to vote FOR Proposition 3.

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About this Entry

This page contains a single entry by Michael Bates published on November 11, 2013 10:44 PM.

Veterans Day 2013: Where Do We Find Such Men? was the previous entry in this blog.

Tulsa Election 2013: Proposition 1: Yes for a reasonable City Council pay raise is the next entry in this blog.

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