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Tulsa financially vulnerable during pandemic due to massive dip in sales tax revenue

Posted at 4:30 PM, May 28, 2020
and last updated 2020-05-29 00:01:45-04

TULSA, Okla. — The city of Tulsa is navigating an expected budget shortfall of $2.7 million after sales tax revenue dipped drastically during the start of the pandemic.

Tulsa is listed as one of the top most financially "vulnerable" cities by the Brooking’s Institute at the start of the outbreak.

“Yeah, I mean, cities are essentially on their own from the perspective of state and even federal government. So, our revenues are really that, primarily that sales tax," said James Wagner, chief financial officer for the city of Tulsa.

Oklahoma is the only state in the country where municipal governments rely mainly on sales tax collections.

That sales tax revenue goes directly into what’s called the “General Fund” for city services.

“So, that general fund though is two thirds of it is supported by sales taxes. So, it is especially vulnerable to the ups and downs in the economy and that is really the only source we have to pay for things like police and fire services. The basic services of the city,” Wagner said.

Tulsa is listed as a financially “vulnerable” city because of a few different reasons.

“One is that our revenues are based on these very elastic sort of vulnerable sources, like sales tax and two, we have industries that have been hugely impacted. So, oil and gas and aerospace are really the two that come to mind there,” Wagner said.

To save money in the “General Fund”, Mayor G.T. Bynum is furloughing one-thousand non-sworn city employees for 17 days from now until December. Mayor Bynum is also included in those cuts.

Employees will work 36 hours a week and leave early on Fridays, shuttering some city offices early for the next eight months.

The city is also under a hiring freeze for certain positions and is under a travel ban for employees.

Despite these measures, city leaders have made it a point to keep crucial services that pull from the “General Fund” untouched.

Those services include Tulsa fire, police and emergency medical services.

“So, that's where we really want to diversify even more, and we're looking at the opportunity of creating like public safety districts as an example where we'd be able to use some property tax revenue to fund basic police and fire services,” Wagner said.

The idea to diversify the revenue is collected for the “General Fund” isn’t new.

In fact, city leaders and state legislators have been talking about stabilizing the funding for years especially after the Great Recession in 2008.

District 66 State Representative Jadine Nollan authored House Bill 1992.

That bill would have given Oklahoma cities the option to vote on “Public Safety Protection Districts,” which would pull funding for emergency services from a more reliable source.

“What this would do is provide additional funding that would be more stable, to provide those services to our communities,” said Rep. Nollan, District 66.

HB 1992 didn’t make it through the state legislature this session due to COVID-19; but Nollan said she’s still optimistic.

Nollan says the conversation about city funding is far from over.

“For us, for me and it's really important to try to work on stabilizing how we provide those services. I do think that it will strengthen and it will also provide better stability for our state. Our whole state,“ Nollan said. “We did have a meeting with the mayor buying them before we started session, but Tulsa legislative team, if you will. And he did say that this was their number one piece of legislation that they wanted to try to move through, because I know that he's very concerned about having better stability and how our cities are funded and specifically the city of Tulsa.”

Nollan hopes something like this is considered in the next legislative session.

As for how the average Tulsan will be impacted by the budget cuts, the city hopes it’s minimal.

CFO Wagner said they’ve tried to limit the impact on services to citizens.

Things like trash, sewer and water are all funded by utility fees, not the “General Fund”, so those services won’t be impacted.

The Tulsa City-County Library will not be impacted by the cuts, because it operates through property tax and the Tulsa Library Trust.

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