Oklahoma voters to decide on two property tax measures
BY WAYNE GREENE World Senior Writer
Sunday, September 30, 2012
9/30/12 at 8:14 AM
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Backers of two complex state questions going before voters Nov. 6 say the efforts will bring more equity to the state's property tax system, but opponents say they will shift the tax burden and short schools and local governments of needed money.
State Question 758 would cap property tax assessment increases for owner-occupied homes and farm land at 3 percent per year. The current cap on assessment increases on all property is 5 percent.
Rep. David Dank, R-Oklahoma City, said the proposal is designed to help restrain the constant growth in property tax bills, which are especially difficult for senior citizens and people on fixed incomes.
"They're the ones it really stings every time their property taxes increase," Dank said. "Every time they get their tax bills, it shows a 5 percent increase."
But Tulsa County Assessor Ken Yazel says restricting increases in property values will result in an inequitable shift of the burden of fixed expenses that are funded with property taxes, including local school bond payments.
If property values don't rise enough to fund those fixed costs, millages have to be raised to cover them, he said. That means everyone pays a higher tax rate on properties whose tax values are restricted.
Commercial property owners and homeowners whose tax values are closer to their actual value - people who recently purchased their homes, for example - end up absorbing the tax burden of those whose properties are undervalued.
The winners are people whose home values are rising quickly, and the losers are people whose home values are not, he said.
Some people will vote for the measure thinking it will cut their property tax bill and then will see bigger tax bills as a result.
Also, education leaders have said the proposal jeopardizes growth revenue for public schools and vocational-technical centers.
A legislative study of the proposal shows that it would prevent tax collections on residential properties from rising more than $6.5 million in fiscal year 2014. Most of that money would have gone to public schools, but Dank said there's a difference between preventing growth in funding and cutting funding.
"It's not going to cost anybody one thin dime," he said. "It doesn't cost schools, doesn't cost counties. It just restrains the growth of taxes."
State Question 766 would eliminate property taxes on intangible property, which includes such things as patents, licenses and trade names.
In 2009, the state Supreme Court ruled that all businesses, including those assessed at the county level, should have to pay the tax. The issue was delayed for Oklahoma businesses that are assessed at the county level when the Legislature created a business activity tax to be paid in lieu of the intangible property tax.
That left only those businesses assessed at the state level - public utilities and transportation entities for the most part - subject to the intangible property tax.
The proposal would resolve the issue by eliminating the taxability of intangible property for all businesses.
Eliminating the tax would cost about $50 million in revenue to local governments, 60 percent of which goes to schools, according to state estimates.
Chris Benge, vice president of government affairs for the Tulsa Metro Chamber, said making intangible property taxable would be a sudden divergence from the state's history and could amount to an enormous new tax burden on businesses.
"It's just potentially a huge, huge tax increase," Benge said. "It seems to be wide open."
That sort of potential hit to businesses would chill the state's potential for job growth, Benge said.
Yazel said that if the value of centrally assessed intangible property is taken out of the local property tax revenue stream, fixed costs will drive up the tax milllage on all property taxpayers.
Michelle Cantrell, an attorney who has studied the issue, downplayed the suggestion that failure of the proposal would result in a big tax hike for most businesses. Extending the business activities tax - which is at most $25, and which is often refundable - would resolve the issue for all locally assessed companies, meaning only the centrally assessed companies would be subject to the tax, she said.
STATE QUESTION NO. 758
This measure amends the State Constitution. It amends Section 8B of Article 10.
The measure deals with real property taxes also called ad valorem taxes. These taxes are based on several factors. One factor is the fair cash value of the property.
The measure changes the limits on increases in fair cash value. Now, increases are limited to 5 percent of fair cash value in any taxable year.
The measure changes the cap on increases to 3 percent for some property. The 3 percent cap would apply to homestead exempted property. The cap would also apply to agricultural land.
The measure also removes obsolete language.
SHALL THE PROPOSAL BE APPROVED?
STATE QUESTION NO. 766
This measure amends Section 6A of Article 10 of the Oklahoma Constitution. At present that section exempts some intangible personal property from ad valorem property taxation. This measure would exempt all intangible personal property from ad valorem property taxation.
An ad valorem property tax is a tax imposed upon the value of property.
Intangible Personal Property is property whose value is not derived from its physical attributes, but rather from what it represents or evidences.
Intangible Personal Property which is still currently taxed but would not be taxed if the measure is adopted, includes items such as: patents, inventions, formulas, designs, and trade secrets; licenses, franchise, and contracts; land leases, mineral interests, and insurance policies; custom computer software; and trademarks, trade names and brand names.
If adopted, the measure would apply to property taxation starting with the tax year that begins on Jan. 1, 2013.
SHALL THE PROPOSAL BE APPROVED?
Original Print Headline: Two property tax issues on ballot
Wayne Greene 918-581-8308