Wagoner County sales tax election, February 11, 2025

Wagoner County residents face a Hobson's Choice at next month's school primary election. In November, the county settled a Federal wrongful-death lawsuit for $13.5 million. Wagoner County taxpayers are stuck with the bill, but they get to decide on February 11, 2025, whether to pay for it with a higher property tax or a higher sales tax.

On May 17, 2021, Angela Liggans, 41, was arrested for assault and battery against a police officer and was booked into Wagoner County jail. According to the complaint in federal court, Liggans was a Type 1 diabetic and was deprived of insulin by jail personnel for days. The complaint alleges that staff did not move her to emergency care despite skyrocketing blood sugar levels and hallucinations. She died at the jail 16 days after her arrest. Here is the complaint in the federal lawsuit, Liggans v. Elliott, via thetruthaboutwagonercounty.com. The lawsuit was filed by Liggans's mother, Sharon Dalton, who was appointed as Special Administrator of Liggans's estate in 2022.

The parties reached a settlement on August 16, 2024, which was entered on November 19, 2024. The county's insurance through the Association of County Commissioners of Oklahoma Self-Insured Group (ACCO-SIG) already paid the plaintiff $483,156.70, out of the county's $1 million maximum benefit; according to the County Commission resolution accepting the settlement, the remainder went to pay "attorney's fees and costs pursuant to the reducing liability coverage provided to Wagoner County in its liability protection plan." (Since the settlement, other parties have intervened in the probate of Liggans's estate, including someone claiming to be her common-law husband.)

To pay the settlement, Wagoner County will vote on a single sales tax proposition on Tuesday, February 11, 2025. The proposed sales tax increase is for a quarter of a cent on the dollar (0.25%) for up to 15 years, in order to satisfy the judgment levied against the county in a Federal lawsuit. If debt issued to pay the judgment is satisfied sooner, the sales tax increase ends sooner. Wagoner County currently has a 1.3% sales tax, which would increase to 1.55%, and several municipalities, including Coweta, Okay, Tullahassee, Porter, and Wagoner, would see their total sales tax rate, including state and municipal sales tax, go to 10.05%.

Here is the ballot language for the proposition:

A Proposition providing for funds for Wagoner County, Oklahoma; levying a one fourth of one percent (one-fourth cent) sales tax increase on gross receipts or proceeds on certain taxable sales; the sales tax increase to terminate on July 1, 2040 or until any debt issued in connection with said sales tax increase has been satisfied in full, whichever occurs sooner; such tax to be used to provide funds to pay and satisfy the balance due and owing on the judgment entered against Wagoner County in Case #23-CV-139-RAW-GLI in the United States District Court for the Eastern District of Oklahoma on November 19, 2024 by depositing said balance owed on the described judgment into the County's sinking fund to be used for that purpose and that purpose only; authorizing the payment of debt service and costs of issuance; fixing an effective date; making provisions severable.

(An election-systems gripe: The above is from a ballot image that was texted to me by someone who had received an absentee ballot for the election; the sample ballot was not available in the Oklahoma Voter Portal on Tuesday, possibly because there was an election for Wagoner County voters in the Inola Public Schools district that day. In order to look at sample ballots for jurisdictions other than my own, I have to find a voter in that jurisdiction from the voter database and enter his name and date of birth. The state election board needs to make all sample ballots directly and publicly accessible, with a permanent link for sharing, and they ought to be accessible as soon as the ballots have been ordered.)

Here is the ballot resolution, approved by the County Commissioners on December 2, 2024, which defines more precisely what Wagoner voters would be approving on February 11, 2025. Sections 5 indicates that the Commissioners intend to issue revenue bonds against the sales-tax proceeds, so there would be additional costs -- debt service and costs of issuance -- beyond the settlement itself. Section 6 means that a bank or banks in Wagoner County will get to make some money off of these revenue bonds, which would not be the case if the settlement were paid from the sinking fund.

SECTION 5. The sales tax shall be limited to a period of Fifteen Years (15) from the effective date or until any debt issued to satisfy the purpose set forth herein has been satisfied whichever occurs sooner. Any debt issued pursuant to this resolution shall allow prepayment in whole or in part at any time with excess bond proceeds or excess sales tax collection.

SECTION 6. That any debt issued to be paid with this sales tax shall be offered through the underwriter with banks located in Wagoner County to be given an opportunity to participate in the financing either through bonds purchased by the local bank or banks.

(Section 6 is missing an "or" for its "either.")

A year ago, Wagoner County residents defeated 8 tax propositions that would have made existing temporary taxes permanent, added new taxes of a half-cent on the dollar, and added a 5% lodging tax. The three sales-tax increase propositions failed by 18% to 82%.

So what happens if Wagoner County voters say no to a sales tax this time?

By state law, court judgments are paid out of the county's sinking fund which is replenished by property tax. Each year, the county excise board calculates for the county, each municipality, and each school district how much money has to come out of the entity's sinking fund to make bond repayments and pay for court judgments. They take that number and divide it by the assessed value of property in the jurisdiction to calculate the necessary increase in the property tax millage rate for each entity. Here's an example of the Estimate of Needs completed by each taxing subdivision of the state: In the 2024-2025 Fiscal Year, Wagoner County has no sinking fund at all and no levy for a sinking fund because it had no obligations to pay from that fund. Exhibit Y, on page 106 of the PDF, shows that the total valuation excluding homesteads of Wagoner County is $892,586,381, which forms the denominator for all millage levy calculations.

The settlement in the case calls for the repayment of the balance of the settlement of $13,016,843.30 "in ten equal annual installments plus post-judgment interest compounded annually on the first day of January of each year," beginning May 1, 2026, with interest accruing from January 1, 2025, 4.96% for first three payments, then 6% thereafter. If I've understood the nuances correctly, each year's payment will decrease because the interest accrued each year will decrease as the principal is paid down.

My calculations put the first payment at $2,159,583.46 and the last at $1,379,785.39. That would be the numerator for the annual millage levy calculations. Assuming no growth at all, the sinking fund levy would be 2.42 in the 2025-2026 tax year and would decline to 1.55 in the 2034-2035 tax year, a property tax impact on a $200,000 home of $51.78 in the first year and $33.08 in the last. A FAQ on the County's website estimates a slightly lower amount, $41.77 in higher taxes the first year on a $200,000 home, then decreasing over time. If Wagoner County valuation grows by 5% a year (last year's growth was 8.7%), the sinking fund levy would be 2.30 in the 2025-2026 tax year and would decline to 0.95 in the 2034-2035 tax year.

Here are the property tax rates for Wagoner County for 2024-2025. They range from 74.58 mills in the Okay School District to 129.42 in the part of the Haskell School District in the city limits of Bixby. The portion of that millage that goes into county government's general fund is 10.31 mills. Currently the county has no sinking fund nor do any of the municipalities based in the county. (Tulsa, Catoosa, Broken Arrow, and Bixby, which all have some territory in Wagoner County, have sinking-fund obligations.)

The Wagoner County website has a Frequently-Asked Questions page on the proposed tax increase, which acknowledges that each method for paying the settlement has its advantages.

Taxpayers might ask why this burden should fall on them. Well, you elected the official responsible. When it comes to the jail, the buck stops with the sheriff, who was just re-elected by Wagoner County voters to another four-year term. Sheriff Chris Elliott had two Republican primary challengers last June and was forced into a runoff with Tyler Cooper. Elliott won the runoff and re-election by just 35 votes, 4,327 to 4,292. Only Republican candidates filed for the office.

Note that the mandatory two-month gaps between filing in April, June primary, August runoff, and November general elections mean that a lot can come to light between filing and the election, too late for candidates to jump in to the race. When I was a kid, filing was in July, three months later. Perhaps we need a None-of-the-Above option on the general election ballot, to give voters a final option to say no in response to late-breaking scandal and force a special election.

There is a perverse incentive for Oklahoma government entities to settle a lawsuit: Paying for insurance comes out of the budget. Paying lawyers to defend a lawsuit comes out of the budget. Operational improvements to avoid lawsuits come out of the budget. But a lawsuit judgment or settlement comes out of the sinking fund, which does not eat into the elected officials' budget. In 2008, Tulsa Mayor Kathy Taylor agreed to a settlement with the Bank of Oklahoma, regarding Great Plains Airlines, that cost Tulsa taxpayers $7.1 million dollars. It was no skin off her nose when she agreed to the settlement, and it undoubtedly made her corporate cronies happy. Happily for taxpayers, the Oklahoma Supreme Court threw the settlement out, and BOK was forced to repay the City of Tulsa.

The Wagoner County FAQ addresses a couple of the obvious questions.

Why can't the county sell property or pay for it some other way?

State statute governs the way judgements are to be paid through a sinking fund. The tax levy,either sales tax or property tax, must be sufficient in itself to repay the debt. If collections exceed projections, the tax must be stopped at that time even if it is prior to the end of the stated term of the tax. The county cannot lawfully collect more than is due. The county can commit other funds (such as use tax) to the sinking fund in an effort to retire the debt early if the commissioners decide to do so.

Why can't they just take it out of the Sheriff's budget?

The Sheriff's office is a Constitutional Office, meaning it is first in the priority of funding for the county along with other Constitutional offices. The governing boards are bound by statute and the State Constitution to provide for law enforcement for the county. The Sheriff's office does have other funds by which to operate his office, however they are restricted for that purpose and cannot be used to pay for a judgement. The statutes provide for judgements to be paid for with a sinking fund instead.

Note the acknowledgment that the county could choose to draw on other, unrestricted funds (such as use-tax revenue) to pay toward the settlement and retire it early.

Ken Yazel, the late Tulsa County Assessor, was a strong advocate for the idea that elected county officials had discretion to use more of their earmarked funds to cover operation of their offices related to the earmarked purposes, thus reducing the amount of money the officials would need from the general fund, freeing general fund money for capital improvements, rather than always asking the taxpayers for more. He wanted the law to require annual county budgets to account for all funds accessible to county officials, including carryover earmarked funds. State Rep. David Brumbaugh proposed such a bill in 2013, but it died in the Appropriations and Budget Committee. I seem to recall that State Rep. Pam Peterson had a similar bill some years earlier, but pulled it at the request of county officials who promised to adopt similar reforms voluntarily.

If I were a Wagoner County voter, I would vote against the sales tax and then tell my elected officials (especially the two County Commissioners up for election next year) that I'll be watching to see if they can free up money from their budgets so that not all of the cost of this settlement falls on property owners.