KGOU Election Series; 707 Tax Change

Throughout this week, the KGOU News Department is presenting a series of reports on several of the initiatives on the November 2nd ballot. Today, we're examining State Question 707, which would give local governments more flexibility in using taxes to pay for public sector infrastructure improvements. To begin to understand what exactly that means and how it would work, I met with Jovan Bullard, the Executive Director of the Oklahoma City Urban Renewal Authority. We're here inside the Presbyterian Research Park. Just to the east of Interstate 235, four blocks from the center of the Central Business District of Oklahoma City. Bullard is standing at the edge of a dirt lot where construction workers are in the initial stages of constructing a biotechnology manufacturing facility. They're building a metal frame to poor concrete for the foundation of what will be a tiny plant owned by the site events corporation. This was within the research park that was owned by the

Oklahoma City Urban Renewal Authority. The financing for the facility was entirely dependent upon tax increment financing. That allowed the $15 million project to go forth. Don Wood of the Norman Economic Development Coalition says that similar arrangements have been made to assist businesses throughout the state. Currently we have a law that allows us to put together a tax increment financing district and that basically can be a blighted area or maybe a new industry coming to the community that needs an infusion of private investment and it allows us to set the taxes at the current existing rate and then take any new taxes that are created from sales tax and from property tax and to use that new money to do public improvements of the area. Streetscapes, streets, sewer lines, water lines, lighting, anything that would be a public type improvement and the idea is that you take the new money created by the growth of the area

and you invest it back in that area. You make that area better, more people come in and make an investment in that area and so it kind of just grows on its own revenues. In addition to funding infrastructure improvements, tax increment financing can also fund future developments such as the site events plan. But Don Wood says that as much as the system has helped Oklahoma's economic development, it has a major flaw. The challenge that we have is because of a constitutional provision, we cannot long-term finance the money from a district. So if you have a new tax increment financing district formed, you can only spend the money as you get the money. You can't go out and say well we're going to do a street and it's going to cost us a million dollars with the money to do the street and it's going to take us two or three years to pay for the street out of this tax increment money. This state question doesn't change anything other than allowing you to take the tiff money and service a long-term debt instrument like a loan or a bond.

Proponents say state question 707 enjoys broad bipartisan support and that they're not aware of any vocal opposition. Yet some supporters like Dean Sherf of the Oklahoma City Chamber of Commerce worry that the initiative's wording may be too ambiguous to be fully understood by voters. If you look at the verbites on 707, it really doesn't clearly define that it is a great economic development tool. People will look at this question and say what's the tax increase, it is not a tax increase. It is something that can help us develop the central core of Oklahoma City. Advocates predict that if 707 passed, Oklahoma would be better able to compete with other states that already allow multi-year financing to recruit new businesses. I'm KGOU News Director Scott Gurrien.