Vision2's closing fund could triple, City Council analysis shows
BY WAYNE GREENE World Senior Writer
Saturday, September 22, 2012
9/22/12 at 7:23 AM
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The deal-closing fund in the Nov. 6 Vision2 proposal could end up with more than three times as much money as official estimates show, a City Council analysis indicates.
As put forward by the Vision2 campaign, the fund is projected to amount to $54.942 million over the 13-year course of the sales tax. The fund is designed to pay for incentives for potential employers and has been the target of much of the public criticism of the Vision2 package.
The estimate is based on no growth in sales-tax collections - no inflation and no increase in economic activity - over the run of the tax, but the council analysis shows that Tulsa County sales-tax collections have grown an average of 2.44 percent a year during the past 12 years.
Based on that rate of growth, the City Council analysis projects that the closing fund would raise $172.867 million over the course of the tax.
City Councilor Blake Ewing said that with the way Proposition 1 on the Vision2 ballot is worded, no more than $122 million could be spent on building and infrastructure projects at the Tulsa airport industrial complex and no more than $132 million could be spent on equipment there.
With the county's projected bond service cost, the total airport costs are about $333.9 million, but there is no cap on the closing fund.
"It's appropriate to be suspicious that the deal-closing fund easily could be much larger than the airport projects," Ewing said.
In general, Ewing said, the deal-closing fund is bad policy. It plans to build the city on the basis of companies that are "bribed" to come here rather than those that are grown locally or attracted to the city by the opportunities here.
"I just don't want to play the game that way," Ewing said. "Think about what that amount of money could do in this city."
Vision2 Co-chairman Don Walker said that if the potentially higher figure for the fund turned out to be true, it would be good news because it would mean the local economy would be growing.
"Obviously, if the economy grows there'll be more in the closing fund," Walker said.
He pointed out that if sales-tax collections grow, the amount of money going into the quality-of-life funding in Vision2's Proposition 2 also could grow. That money is proportionately divided among Tulsa County and its communities.
"I think that's great news," Walker said. "It's the best of all possible worlds."
On the other hand, if the economy contracts, the amount of money going to the closing fund and the quality-of-life projects also could be smaller than projected, he said.
The numbers used by the Vision2 campaign are based on conservative estimates, designed to make sure bond costs associated with planned projects are covered and taxpayers are protected, Walker said.
The closing fund would be administered by a seven-person public authority made up of the three Tulsa County commissioners, the mayor of Tulsa and the mayors of three other cities in Tulsa County.
Walker said proposed language for the authority would restrict spending to projects that offer at least 10 jobs paying at least $50,000 a year and that county officials anticipate using the money only for much larger opportunities.
Any economic development agency could bring qualifying proposed uses for the money to the board, which would meet publicly.
While projects would not be restricted to Tulsa County, they would have to brings jobs to Tulsa County. Officials have said that by not strictly limiting the money to Tulsa County, the authority could consider opportunities in parts of Tulsa outside the county limits, such as the Port of Catoosa.
How much money would the Vision2 tax extension raise?
According to official estimates, the two-part, 13-year extension of a 0.6 percent Tulsa County sales tax would raise an estimated $748.8 million.
But that figure is based on no growth in Tulsa County's sales-tax collections - no inflation and no increase in the amount of economic activity in the area.
A City Council analysis of the tax proposal assumes a different scenario - 2.44 percent annual growth over the course of the tax. That is based on Tulsa County sales-tax growth in the past 12 years.
Using that assumption, the total collected by the tax would be more than $980.9 million - almost 31 percent more than the officially projected amount.
Original Print Headline: Closing fund under Vision2 could triple
Wayne Greene 918-581-8308
Blake Ewing: "The deal-closing fund easily could be much larger than the airport projects," the city councilor says