Excise board rubber-stamps property tax hikes

While Oklahoma voters have closed off most avenues for tax hikes without a vote, there remains one loophole: the sinking fund. As Tulsa County Assessor Ken Yazel explains in the news release below, each taxing entity (a city, for example) presents the county excise board an estimate of the property tax money it will need added to the sinking fund in the coming fiscal year to repay general obligation bonds and judgments against the taxing entity.

The excise board is supposed to analyze the request and determine its validity before approving it, but according to Yazel, the Tulsa County Excise Board has been rubber-stamping requests, resulting in a property tax increase for all Tulsa County property owners once again this year, without any vote of the people.

The property tax increase requested by the City of Tulsa includes money for the final payment of the Great Plains Airlines settlement, a settlement that was thrown out by the Oklahoma Supreme Court well before the Excise Board voted to approve Tulsa's request. Yazel called this to the Excise Board's attention at the meeting on October 19, 2011, but they rubber-stamped the request without any amendments. A motion by one board member, Ted Kachel (appointed by the district judges), to delay the decision until they could learn more about their prerogatives to review and amend requests from the taxing entities died for lack of a second.

Don Wyatt's Boondoggle Blog has a summary and audio of the Tulsa County Excise Board meeting. The apathy on the part of the board's majority (Oklahoma Tax Commission appointee Ruth B. Gaines and Tulsa County Commission appointee Warren G. Morris) is appalling. They don't want to exercise independent scrutiny and judgment to protect the taxpayer.

Wyatt makes an important point: Just because your property value declined doesn't mean that your tax will go down. If the decline in value reflects a general county-wide decline, the excise board will raise the millage rate to keep the same amount of revenue flowing in. It's as if an unelected body had the power to raise sales tax rates to compensate for economic slowdown and a decline in spending.

Here's Yazel's news release:

County Excise Board Raises Tax Rates in Spite of Concerns Expressed by Tulsa County Assessor

TULSA, OK.-- The Tulsa County Excise Board approved an increase in property taxes over concerns raised by Tulsa County Assessor Ken Yazel during its meeting held on October 19, 2011.

The county assessor's job is to appraise the fair market value of property in the county. It is the function of the county excise board to approve the amounts requested for property taxes that will be used in the calculation of the appropriate tax levies.

All of the entities receiving property taxes submit an estimate of needs for property taxes to the excise board each year. It is the board's responsibility to analyze those needs, approve the property tax requests, then apply the approved amounts to the certified property values furnished by the county assessor. It is from this process that the amount of taxes each property owner will pay is derived.

Yazel attempted to make the following points to the Excise Board on behalf of the taxpayers:

1. At its core, the county excise board has property tax oversight responsibility. The board has in fact historically voted on property tax rates with virtually no independent analysis of the various estimates of needs.

2. Instead of analyzing the requests as the statutes dictate, the board merely relies on a county employee to provide them with the millage rates. To properly exercise its oversight responsibility, the excise board needs its own independent analyst to help it fulfill this responsibility.

3. Statutes require the excise board to take into account (for all entities requesting property taxes) cash balances and revenues from all sources. The requirement is there so the excise board can determine whether the requesting entity actually "needs" what has been requested.

During the meeting, one excise board member characterized the board's activity over his eight year tenure as "rubber stamping" the millage rates presented to them. He expressed some regret for this and asked the assistant district attorney for a better understanding of the board's responsibilities. Another member stated bluntly that he is incapable of analyzing the requests.

Yazel's position is not that the excise board or the county employee are doing anything other than what has been the practice for years. Rather, he is trying to help the board understand that in an era where cumulative property values are going down and the demand for money and tax rates are increasing, they have broader obligations and authority to review and potentially modify these requests than they have been exercising.

"As an example, I attempted to point out the situation related to the City of Tulsa sinking fund and the Great Plains $7.1 million judgment," said Yazel. "The Oklahoma Supreme Court recently ruled that payment to be invalid. However, the City of Tulsa put the final portion of that payment into their current request for property taxes, having done so before the Supreme Court made its ruling. I was trying to get the board members to see that they were about to raise taxes on the citizens of the City of Tulsa for a payment that the Supreme Court had invalidated. In the end, they approved the request with no changes. This proves the point, that before raising taxes they need to be more deliberative and analytical and not merely accept what is put in front of them as accurate or complete."

Total property tax revenues collected in Tulsa County have risen over the past 10 years from $397 million to an estimated $621 million for the current year, even though in many communities the population and/or the cumulative property valuations are going down. An increasing number of residences are being converted to rentals, and there is some evidence that businesses are locating in neighboring counties because of the marked difference in tax rates.

"This is a trend that is unsustainable in the long run, and that is my concern on behalf of the taxpayers," Yazel said. "It is much easier for public officials to address it now. It will be exponentially more difficult to deal with in the future if this pattern continues."

Ken Yazel was elected Tulsa County Assessor in 2002 and was re-elected in 2006 and 2010. A retired Major, U.S. Marine Corps, Yazel was also a CPA for many years. During his time in county government he has continually fought to lower taxes and ensure that property values in Tulsa County are fair and equalized.