A PENNY FOR YOUR THOUGHTS: Moore Voters Asked to Consider One-Cent Sales Tax Increase

by Rob Morris for Moore Monthly

The things that make a city or community a great place to live aren’t really all that complicated.  It begins with some very basic things, like good streets, good schools, good shopping, water and waste disposal, and, of course, safety.

“If you don’t have a safe city, you don’t have a city,” said Mayor Mark Hamm. “People have to feel safe. When you go to the grocery store or for a walk around a park or your neighborhood in the evening, you don’t want to have to worry about anything bad happening.”

When you look at any of the “Best Places to Live in Oklahoma”, Moore is consistently ranked in the top five. And the reason it finishes there is that people recognize the city offers those simple, but very important things to those who choose to make Moore their home.

Moore’s population has grown from about 35,000 in 1980 to about 64,000 today. While no one would claim that Moore is perfect, City leaders continue to work hard to ensure residents have everything that makes the city a great place to live.

“It’s just going to continue to grow, and we have to find a way to keep up with the growth,” said Hamm.

For those reasons, the City is asking voters on April 7th to consider approving a dedicated one-cent increase in the sales tax – an approval which would generate approximately $12 million in additional revenue per year.

Up until now, City leaders have addressed Moore’s expanding needs through a combination of general obligation bonds (GO bonds) and sales tax revenue. It has helped the city provide a variety of amenities, including improved roads and parks that are the envy of other cities in the region. City Manager Brooks Mitchell says the challenge is keeping up with the growing population, especially when it comes to funding the growing operating expenses of the police, fire, and maintenance departments.

“Like all cities, we have capital projects we need to continue to do to upgrade our infrastructure and continue our support for public safety,” said Mitchell. “So, how do we want to fund those capital projects in the future? Do we want to continue to do it through GO bonds and have Moore residents fund 100% of it themselves, or go to a sales tax proposal where roughly 30% of all the sales tax collected in Moore is paid by people who don’t live in Moore?”

Supporters of the one-cent sales tax increase point out that “shared burden” is one of the biggest selling points for the shift away from reliance on GO bonds.

Midwest City is very similar to Moore in size and community needs. Their City Manager, Tim Lyon, offered his thoughts on the challenges shared by Midwest City, Moore, and all Oklahoma cities.

“Sales taxes are the lifeblood of the general and administrative operations of every city in the state of Oklahoma,” said Lyon. “Oklahoma is the only state in the Union that does not allow a levy on ad valorem.”

What that means, according to the Oklahoma Municipal League (OML), is that, under Oklahoma law, municipalities are prohibited from using property taxes for day-to-day operations such as police, fire, and street maintenance. This forces cities to rely on municipal sales tax for general services.

Mitchell recognizes that while Moore city leaders have been strategic in using GO bonds, there is a growing sense of property tax fatigue among Moore residents. As has been pointed out, when a city uses GO bonds to fund things like capital projects, it is the citizens of Moore who bear 100% of the burden.

“The question before voters is ‘How do you want to fund capital projects in the future?’,” said Mitchell. “This proposal offers our residents a trade. If they will support this one-cent increase, the city portion of their property taxes will begin to decline.”

That decline will be felt over the next four-to-five years as the city pays off the current GO bonds still on the books. The current projected millage rate in the City of Moore is 16.5%  If voters approve the one-cent sales tax increase, the millage rate is projected to be 8.4% by 2030. (see graphic for projected decline).

If you’re wondering what that increase means for individuals, it’s pretty easy to crunch the numbers. The current sales tax for Moore is 8.5%. Here’s the breakdown of that sales tax, showing how much belongs to the city:

State of Oklahoma = 4.5%

City of Moore = 3.875%

Cleveland County = 0.125%

TOTAL = 8.5%

If voters approve the one-cent increase, the breakdown looks like this:

State of Oklahoma = 4.5%

City of Moore = 4.875%

Cleveland County = 0.125%

TOTAL = 9.5%

In practical terms, that means someone shopping in Moore would pay 0.095. cents per dollar spent in the city, or $9.50 per $100 spent. Deidre Ebrey, Moore’s Assistant City Manager, was asked about concerns regarding a negative impact on shopping. Ebrey states, “Our own data from past sales tax increases show no negative impact on sales.  The National Bureau of Economic Research suggests leakage due to tax avoidance is small and short-lived”.  

Mitchell says that, in addition to sharing the tax burden with shoppers in Moore who do not live in the city, the one-cent sales tax increase will allow leadership to build a cushion as they plan for the future.

“Our planning can be done in ten-year cycles,” said Mitchell. “If this proposal passes, I will ask the city council to put a cap on how much can be committed to projects over the next ten years, which will equal 80% of the projected collections. That way, we build in a 20% cushion to take care of any economic downturns that might happen.”

The shift away from GO bonds to sales tax also allows the city to address rising public safety expenses. As Moore has grown in size, the needs of the local police and fire departments have also grown dramatically.

“A police car that cost $60,000 just a short five years ago is now close to $100,000,” said Moore Police Chief Todd Gibson, “Being transparent with the operations in the equipment they need, that’s expensive, and that cost goes up almost on a yearly basis.”

Not surprisingly, Moore Fire Chief Ryan Marlar is facing the same challenges with his department regarding equipment.

“In 2015, we could order a new fire truck in ten months and receive that truck at the cost of about $400,000,” said Marlar. “Fast forward to today, and that same fire truck is going to take us three years to receive, and is going to cost about $850,000.”

The constant need for equipment replacement is not the only challenge facing the Moore police and fire departments. The explosive growth of Moore’s population has led to a higher call volume, requiring more police officers and firefighters. Additionally, those officers need adequate training and new technology to be effective in performing jobs where lives are often on the line.

Marlar said, “Back in 2005, we made about 3,600 calls. We made just under 8,000 calls last year, and it’s not just the increase in call volume. A lot of those calls are occurring at the same time. So, as the population continues to grow, we’ll have to consider more growth and resources to maintain the level of service that’s acceptable.”

Chief Gibson says the police department also faces a rising number of calls, along with a growing need for new technology.

“The increase in call volume requires more funding to support the high level of public safety our citizens expect and deserve,” said Gibson. “The technology is advancing across the world and impacts everything we do. From the police officer in the car to the 911 call that comes in, it all filters through technology.”

Another glaring problem facing both the Moore police and fire departments is the need for a dedicated training facility to prepare officers and firefighters for the wide variety of situations they face each day.

“We have to drive fast, and we have to shoot guns, and different things like that,” said Gibson, “And we don’t have a place of our own to train for that. So, we look to Oklahoma City, Norman, and other surrounding partners for access to that. These are perishable skills that have to be maintained, and without immediate availability to a training location, it really hinders us from continuing that constant training tempo, which allows us to go out and provide that high level of service.”

Firefighters also deal with perishable skills that come into play across the many life-or-death situations they face on an ever-growing variety of emergency calls.

“We have to send our firefighters out of town to train,” said Marlar. “And gone are the days when we just fight fire. We have hazardous material responses. We provide swift water rescues. We have a rope rescue team ready to respond if someone experiences a medical emergency on a cell tower. The challenge is that we don’t have the facilities where our people are able to train shoulder to shoulder on those calls.”

While it may seem a stretch to suggest that a one-cent sales tax can cover such great and growing needs, Mitchell says that’s exactly what it’s intended to do, while sharing the tax burden beyond Moore residents.

“The city operating budget retains the same funding source that it does today,” said Mitchell. “The extra one-cent replaces the GO bonds, the property tax for the capital projects. It also allows additional equipment purchases for public safety and provides additional funding for public safety operations.”

While it’s impossible to address every question about the proposed one-cent sales tax increase, it’s also important to address the broader community’s sense of tax fatigue. Some Moore residents have expressed frustration about ANY tax increase.

While big box stores are better equipped to handle the ups-and-downs of shopping trends, some are concerned about the impact of a one-cent sales tax increase on local and small businesses in Moore. Concern over consumer anger has led many local business owners to decline to discuss the tax, which they support.

One local business owner, a lifetime Moore resident who owns a popular business, agreed to share their thoughts anonymously.

“I personally think that, if we need the sales tax dollars to be raised to improve things like public safety, streets, and drainage, then it’s the best way to do it efficiently,” they said. “I’m also a property owner, with investment properties across Moore, so having a lower property tax is always a plus for me.”

This local business owner also agrees that it will be extremely helpful to see the tax burden shifted from being 100% on the shoulders of Moore residents under the current system to the expected 70%-30% under the proposed sales tax increase.

“We definitely have plenty of regular shoppers from outside Moore,” said the business owner. “You know, I recognize that the economy is not the best right now for a lot of people, but the livelihoods of small businesses run on local support. When you hear the words “tax increase,” it sounds negative. But the way I see it is that this additional one cent is actually a positive. It’s a way to invest back in the place where you live: your streets, your parks, your police officers, and firefighters.”

Q: How much money is expected to be generated and how will it be allocated?  
A: The proposed increase would generate approximately $12 million per year. The allocation will be 90% to capital improvements (such as road replacement, drainage mitigation, sewer upgrades, public facilities, etc.) and 10% to public safety (operations and equipment).

Q: Are the City of Moore's expenses outpacing our revenue?   
A: Cities in Oklahoma operate primarily on sales tax revenue. Moore’s 65,000+ population requires all and then some of our annual sales tax revenue just to offer basic services.  Any capital improvements such as road replacement, flooding mitigation, sewer upgrades, public facilities, etc. have traditionally been funded through general obligation bonds. Our proposal is to shift from general obligation bonds to sales tax funding. This allows for:  
-Moore’s improvements to be funded from those outside of our city who shop here (conservatively 30% of the revenue) and  
-The City of Moore’s portion of the property taxes to decrease  

Q: Will my property taxes go down if we shift to using sales tax for capital projects?  
A: If the proposition passes, the City’s portion of your property taxes will begin to decrease once the current bonds are paid off. Below are the conservative estimates of the City's millage rate declining through 2030:

Q: Why doesn't the proposition say that the City's portion of the property taxes will decrease if this passes?
A: The electioneering statute doesn't allow for that to be a part of the proposition. Should the proposition pass, city council is committed to using sales tax revenue for funding which, in turn, will lower the City's portion of the property tax.  Any G.O. Bonds that might be contemplated in the future can only be placed on the property tax rolls if approved by voters.
 
Q: How will this impact sales in Moore?  
A: Our own data from past sales tax increases show no negative impact on sales.  The National Bureau of Economic Research suggests leakage due to tax avoidance is small and short-lived.  Other cities and counties in the metro-OKC area are also considering an increase, ultimately leveling the playing field.

Q: Will residents have input into what capital improvement projects are considered?  
A: Yes.  Residents will continue to have input regarding the projects City Council considers funding.

Q: Why do police and fire need their own Public Safety Training Center?
A: Nearby facilities are often fully booked and expensive to use. Having a dedicated, centrally-located training center would allow both police and fire personnel to train more consistently, efficiently, and cost-effectively, whether on or off duty. On-duty training must happen within a certain response time to all parts of the city.