Another interesting controversy this week, complete with machinations by the city legal department, disagreement between the majority of the Councilors and the Mayor, and ties to Vision 2025. I'd like to try to sort it all out for you, but that's more than I've got time for at the moment. This sort of thing is right up my alley, but the day job and family life have been eating into blogging time -- that's why I haven't had anything to say about this so far.

I'm told that six councilors were ready to reconsider last week's vote to fund engineering work on the water line to Owasso -- Henderson, Medlock, Turner, Roop, Mautino, and Christiansen. I will save the technicalities of why that vote never happened for another time, in order to keep this entry focused.

One of the concerns expressed is that Tulsa's taxpayers would be subsidizing the growth of Owasso in a way that will ultimately hurt Tulsa's tax base. Not only would new retail development in Owasso allow residents to keep more of their spending local, it would capture dollars from shoppers who live north and east of the city. Instead of coming on into Tulsa to shop, they would be able to find everything they need in Owasso.

This is, in fact, Owasso's economic development strategy:

Owasso has a unique alignment of several area highway transportation systems. As a result, it is a collection point for over 312,000 consumers in a 4,309 square mile area. The area has an average household income that exceeds $52,000 per year. ...

The Owasso funnel area is comprised of Skiatook, Sperry, Nowata, Hominy and Pawhuska to the west; Coffeyville, Caney, Bartlesville, Oologah and Collinsville to the north; and Claremore, Catoosa, Pryor, Vinita and Chelsea to the east. ...

Consumers traveling from these geographies to reach Tulsa area attractions, such as shopping and the airport, funnel through Owasso.

Now, while some of this doesn't stand up to close scrutiny (Nowata is not to the west), the basic funnel theory is valid, and it will have an impact on Tulsa's city finances and economy. For years, Tulsa, as the metropolis, has collected a relatively high percentage of sales taxes from non-residents. In the '60s and '70s, the near suburbs had little in the way of retail. Owasso had a little grocery store, a Tastee Freeze (featured in the film The Outsiders), some filling stations, and maybe a few other cafes. It was a bedroom community for aerospace workers.

These small towns turned into suburbs as more and more Tulsans chose to live there and commute to jobs in Tulsa. They were joined by newcomers who had lived in suburban towns elsewhere. Eventually, retail sprang up to serve the residents, and over time some of these towns developed a critical mass sufficient to turn them into employment centers in their own right.

To some extent, the City of Tulsa has facilitated this process since the '70s by building infrastructure -- streets, water lines, sewer lines and treatment plants -- to make it easier to live in the suburbs. In the '30s and '40s, Tulsa used its access to plentiful water from Spavinaw to coerce surrounding areas into annexation -- out of city customers paid higher rates than customers in the city limits. That's why Dawson, Highland Park, Red Fork, and Carbondale are no longer separate cities, and why we don't have enclaves like The Village.

As this process has developed, Tulsa lost customers to the suburbs -- suburban residents could find more and more of what they needed close to home. But you still had to come to Tulsa for big stores and malls.

Regional retail centers -- power centers, malls, department stores -- are the next phase. Now these growing suburbs are strategically positioned along major routes into the city -- Sand Springs to the west, Jenks and Glenpool to the southwest, Bixby to the south, Broken Arrow to the southeast, and Owasso to the north. They are already capturing customers from the rest of northeastern Oklahoma with their new big box stores -- you don't have to come all the way into Tulsa to shop at a Wal-Mart Supercenter or a Lowe's anymore. Verily, verily, I say unto you, when you see a Best Buy in Owasso, or a Barnes and Noble in Broken Arrow, the end is near for the City of Tulsa's metropolitan sales tax advantage. (And there will be wailing and gnashing of teeth at City Hall.)

What does this mean for city finances? Already the third penny sales tax has ceased to be strictly for long-term capital improvements. About half of it now goes to fund operational expenses -- things like equipment purchases, which can be loosely classified as capital expenditure, but don't fit the intent for the tax when it was first enacted. That trend will continue and likely accelerate. When all three pennies go to short-term and operating expenses, where will the City get the funds for real long-term capital improvements? The passage of Vision 2025 closed off the possibility of raising sales taxes again in the short term.

One answer is for Tulsa to turn the funnel effect to its own benefit, making use of prime locations along the major approaches to the city which are in Tulsa city limits. Some officials developers believe the answer is to turn Midtown into a suburb, which would (for reasons to be spelled out another time) hurt Tulsa's economy and public finances by destroying one of the City's only competitive advantages.