theadanews.com - Ada, Oklahoma

Local News

January 8, 2014

City backs bill to reduce tax-collection fees

Ada — City officials across Oklahoma are backing a bill that would reduce the Oklahoma Tax Commission’s administrative fee for some of its services.

The Ada City Council jumped on the bandwagon Monday, voting 4-0 to support House Bill 1875. The bill would cut but not eliminate the tax commission’s fees for collecting local sales and use taxes.

Other cities and counties support the bill, which would allow them to keep more of their sales tax dollars, said Councilman Darrell Nemecek, who serves on the Oklahoma Municipal League’s board of directors. He said the bill was originally introduced during the 2013 legislative session and will resurface when the 2014 session begins.

“This bill was carried over to this legislative session, and the authors have got this up and it will be one of the first bills to be heard,” he said. “They believe that they have — the information that we have — that we have the votes to get this passed this year.”

Mayor Greg McCortney said the city could save about $75,000 a year if the bill becomes law.

“I don’t know why in the world we wouldn’t support this,”  he said.

Local sales tax collections are critical for Oklahoma cities, which do not receive property tax dollars for their daily operations. As a result, cities rely heavily on sales tax money for their day-to-day operations.

Under Oklahoma law, cities and counties must enter into a contract with the tax commission to collect local sales and use taxes. The tax commission charges an administrative fee for the service, which ranges from 1 to 1.75 percent of collections.

Ada lost about $76,412 in revenue from July 2012 through June 2013 due to the OTC’s administrative fee, according to information from the Oklahoma Municipal League.

HB 1875 would slash the fee to 0.5 percent of collections, allowing cities and counties to keep more of their sales tax dollars, according to the league. To offset the reduced funding, the bill allows the tax commission to keep 0.4 percent of 1 percent of sales and use tax collections starting in fiscal year 2014-15.

Supporters of HB 1875 would like to see lawmakers consider the bill shortly after the 2014 session begins, said Carolyn Stager, executive director of the league.

“Our hope is that it comes up early in the session,” she said. “Number one, because it’s an effort we’ve been working on for the past three years. The momentum is there.”

Stager said the league has heard from several other cities and counties that support the bill, but she did not have the exact number.

The tax commission does not comment on pending legislation, said communications director Paula Ross.

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