On Nov. 12, Tulsa voters will have a chance to even out the city’s roller coaster finances.
State law essentially limits the city to using sales tax revenue for its operational costs. That’s an undiversified tax base that can whipsaw up and down from year to year. In the good years, revenue spikes and the public service unions rightly line up for pay hikes. But the bad years inevitably follow and the result is that the city has few options to massive cuts, layoffs and dispiriting choices about important public services.
In 2010, Tulsa voters overwhelmingly approved a city charter “rainy day” fund proposed by then-City Councilor G.T. Bynum. In years when city general revenue is up by 4% or more, half of the growth goes to the Economic Stabilization Fund. The city can spend money from the fund only if the city finance director projects general fund revenue for the coming budget year will be lower than the previous year.
It was a good plan, but so far, the Rainy Day Fund has only built up a reserve of $1 million, which isn’t much cushion for a city with a an operating budget of more than $800 million.
The Improve Our Tulsa renewal program headed to a city ballot this fall includes a plan to dedicate 0.05% of the city’s current sales taxes to the Rainy Day Fund starting July 1, 2021.
Approval of the rainy day funding won’t increase the tax rate in Tulsa. It simply redirects a small sliver of current sales taxes and makes it permanent.
The city projects that the tax will raise $19 million in its first 4½ years.
In truth, a $19 million cushion — assuming unrealistically that there aren’t any downturns between now and 2025 — isn’t enough either, but it’s 19 times better than what we have now.
With some luck and good management, the city should be able to build the fund up over the long arc of time to a level that it will ease the worst years.
A better solution to the city’s endemic financial problems would include the state allowing the city to diversify its tax base with operating revenue from property taxes, but with the Legislature unlikely to take that step anytime soon, a dedicated rainy day tax is a prudent move with available resources.
New Cherokee Nation principal chief says tribe won't bail the state out for a decade of fiscal irresponsibility.