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Your property taxes are based on three variables: The fair cash value of the property after adjustments for things like homestead exemptions, the local millage and the assessment ratio. Most property owners understand the valuation process and the millage rates for school operational costs are essentially the same for every school district in the state, a little over 36 mills with another 4, more or less, coming through the county.. TOM GILBERT/Tulsa World

I’ve written several times about a fundamental problem faced by Tulsa Public Schools and other supposedly “rich” school districts: If they could somehow increase their property tax earnings, they end up losing state aid because of the state’s equalization penalty.

The state thinks it fairer to equalize all children’s education funding at an inadequate level rather than let any child’s education be adequately funded, and it uses state school aid to enforce that.

Dennis Neill, a friend who was part of a city task force that studied the issue a few years ago, points out that there is a way to wire around the equalization penalty.

Unfortunately, there’s some math involved in understanding how. Sorry. I’ll try to keep it brief.

Your property taxes are based on three variables: The value of the property, the local millage and the assessment ratio. Most property owners understand the valuation process and the millage rates for school operational costs are essentially the same for every school district in the state.

But the assessment ratio is a wild card. Each county determines what percentage of taxable value is actually taxable — that’s the ratio. It can be anywhere between 11% and 13.5%. In Tulsa, it’s been at the legal minimum, 11%, for a long time. In most Oklahoma counties, the assessment ratio is higher than 11%, but for purposes of figuring out how hard their schools are hit by the equalization penalty, the state acts as if everyone is at 11%.

That’s right. School districts in most Oklahoma counties are getting extra property tax revenue because their assessment ratio is higher than 11%, but the state figures the equalization penalty as if it were 11%.

But not Tulsa County schools, because our ratio is only 11%.

Neill’s solution, instead of arguing with the Legislature to let us raise our millage without it counting against our state aid, is to raise the assessment ratio. We don’t need the state’s permission to do that.

How much money are we talking about? According to task force documents that Neill shared with me, if the county had a 12% ratio in 2015-16 it would have meant about $9.2 million more money for TPS, none of which would count in figuring the equalization penalty.

I’m not a fan of the idea, but Neill makes some good points, which I’m glad to share.

The benefits go well beyond TPS. If the assessment ratio goes up, all property tax funded entities — including the library system, the county health department, Tulsa Tech, Tulsa Community College, Tulsa County — get more money.

Local voters can do this without the state’s permission. It’s already in law. All it takes is a majority vote in a county election and the assent of the county assesor.

Obviously, the premise of the whole idea is that everyone in Tulsa County pays more taxes.

My knock against the ratio idea isn’t that taxes go up, it’s that they do so inefficiently.

We’d raise property taxes across the board in the county to help the local schools. You can make a case for better funding for Tulsa Tech or TCC or even Tulsa County government, but there’s no reason to think that all of them need an increase at the same time in the same proportion.

Some would probably be overfunded at a higher assessment ratio. Others might not get enough. It just seems inevitable that taxes go up more than they have to just to help the school district.

My preferred method, legal permission for local districts to fund their schools with higher millages outside the equalization process, would also mean everyone pays more property taxes, but not quite as much.

That’s how Arkansas solved the problem of underfunded urban schools.

The problem with my plan: You’d have to fight for it in the Legislature — which is controlled by property tax-hating rural lawmakers — and then, depending on how you do it, possibly have to convince a majority in a statewide vote. County voters would have to look at any millage hike too.

Then, there’d inevitably be a court fight: The defenders of equalization would want to argue that you can’t value the education of a Tulsa child more than his rural cousin.

It’s worth noting that the assessment ratio method accomplishes exactly that, but that somehow doesn’t count.


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