Economists from the University of Oklahoma studied the potential impact that State Question 779 would have on city governments, and found that small cities may have reason to worry, but larger cities shouldn’t.
State Question 779 proposes raising the state sales tax one cent in order to fund $5,000 raises for teachers, and other aspects of education. But many city governments oppose the measure because they rely on sales tax increases too, to build streets, fire stations, and other things.
Two OU Professors of Economics, Cynthia Rogers and Gregory Burge, looked to past state sales tax increases to see how municipalities were impacted. They analyzed the impact of four previous Oklahoma state sales tax increases (in 1984, 1984, 1987 and 1990) on the timing of municipal sales tax rate changes.
“So smaller cities were less likely to increase their sales taxes in the two years following these state tax increases,” Rogers said. “The implications suggest that passing SQ 779 may extend the time between sales tax increases in small communities from 9 to 16 years.”
But, she said larger, urban districts that serve as retail centers—like Tulsa, Oklahoma City, Norman—did not have that problem and were able to raise local sales taxes after the state rate went up. So she doesn’t think things like Oklahoma City MAPS project will be impacted, and that people will continue to support it.
Rogers admits she does not know where the threshold lies.
If State Question 779 passes Oklahoma’s sales tax will be among the highest in the nation, and will top 10 percent in some communities. Voters will decide on this issue in November.
