At a Glance
•StateQuestion779wouldamendtheOklahomaConstitutiontoincreasethestatesalestaxrate
byonepercenttofundavarietyofpubliceducationprograms,includingateacherpayraise.
•Theonepercentsalestaxincreasewouldamounttoa22%increaseinourstatesalestaxburden.
•Thetaxisestimatedtogenerate$615millioninrevenueinitsfirstyear.
•StateQuestion779couldincreasetaxesonOklahomahouseholdsbymorethan$420ayear.
•Ifpassed,OklahomawouldhavethehighestaveragecombinedsalestaxrateinAmerica.
•StateQuestion779wouldincreasethecombinedsalestaxratesofTulsaandOklahomaCity,
Oklahoma’slargestcities,tobethe3rdand5thhighestratesamongAmerica’smajorcities,
respectively.
•Lessthan60percentofthetaxrevenuecouldbespentonteacherpayraisesandretention.
•Highereducationandcareerandtechnologyeducationwouldreceivenearlyonequarterof
thetaxrevenue.
•Theproposalwouldrequireschooldistrictstousesomefundsforteachpayraises,butno
transparencymeasuresaremandatedinStateQuestion779forrevenuesspentonother
programs,suchashighereducation.
A Closer Look
The Tax
StateQuestion779wouldaddArticleXIII-CtotheOklahomaConstitutiontolevyanadditional
onepercent(1.0%)taxonallsales,storage,use,orotherconsumptionofpersonalpropertyor
goodsandservicessubjecttotaxationundertheOklahomaSalesTaxCode(theCode).Thenew
taxleviedbyStateQuestion779wouldbeanadditionaltaxontopofOklahoma’scurrentsales
taxratesandwouldbereportedandcollectedinthesamemannerrequiredbytheCodefor
Oklahoma’sgeneralsalestax.Theproceedsofthetaxwouldbedepositedinanewfundinthe
StateTreasury,createdbytheamendment,tobecalledthe“OklahomaEducationImprovement
Fund”(theFund).Ifpassed,theamendmentwouldbecomeeffectiveonJuly1of2017.1
StateQuestion779’sadditionalonepercentsalestaxwouldeffectivelyincreaseOklahoma’s
currentstatesalestaxrateof4.5%to5.5%-whichwouldamounttoa22%increaseinourstate
salestaxburden.StateQuestion779isestimatedtogenerate$615millioninitsfirstfullyear.2The
OklahomaStateSchoolBoardsAssociation(OSSBA)hasstatedthatthetaxwouldgenerate“$427
millionannually,with$369millionlefttouseforteacherpayraisesandrecruitmentorretention.”3
Basedontheseestimates,thetaxincreasecouldresultinOklahomahouseholdspayingmorethan
$420ayear,accordingtotheOklahomaCouncilofPublicAffairs.4
Currently,Oklahomahasthesixthhighestaveragecombinedsalestaxrateinthecountry.5This
meansthattheaveragepersoninOklahomapaysacombinedlocalandstatesalestaxrateof
8.85%-higherthananyneighboringstatewiththeexceptionofArkansas.UnderStateQuestion
779,OklahomawouldhavethehighestaveragecombinedsalestaxrateintheUnitedStatesat
9.8%.6Additionally,manyresidentsinOklahomacouldseetheircombinedtaxratesclimbtowell
above10%,orevenhigher,ifStateQuestion779ispassed.7
IntermsoftheeffectsonOklahoma’surbancenters,thecombinedratesforOklahoma’slargest
cities,OklahomaCityandTulsa,wouldincreasetobeamongthehighestratesofAmerica’smajor
cities.8OklahomaCity’scombinedsalestaxratewouldincreaseto9.38%,the5thhighestinthe
country,andTulsa’scombinedratewouldincreaseto9.52%,the3rdhighestamongAmerica’s50
largestcities.9
Following the Money
Whiletheamountoffundsgoingtocommoneducationwouldtotalaround69percent,the
amountactuallygoingtowardteacherpayraisescouldbesignificantlyless.Theamendment
wouldrequirethat86.33%ofthefundsgoingtocommoneducationbeused“toincreaseteacher
salaries,”or“tootherwiseaddressandpreventteacherandcertifiedinstructionalstaffshortagesin
themannermostsuitedtolocaldistrictcircumstancesandneeds…”Theamendmentalsostates
that“commonschooldistrictsshallusethirteenandtwo-thirdspercent(13.67%)oftheadditional
fundsprovidedtothemunderthisArticleXIII-Ctoadoptortoexpandprograms,opportunities,or
reformstoimprovereadingintheearlygrades,toimprovehighschoolgraduationrates,andto
increasecollegeandcareerreadiness.”10
Thus,only86.33%ofthecommoneducationfunding–lessthan60percentofthetotalfunding–
couldbeusedforteacherpayraises.However,giventheflexibilityoftheamendmenttoaddress
staffshortages“inthemannermostsuitedtolocaldistrictcircumstancesandneeds,”somedistricts
couldspendamuchsmallerpercentageoftheirappropriatedfundsfromthetaxforteacher
payraises.Theremainderofthefundswouldgotohighereducation(19.25%),earlychildhood
education(8%),andcareerandtechnologyeducation(3.25%).11
EachyeartheStateBoardofEqualizationwouldberequiredtoinvestigateappropriationsfromthe
OklahomaEducationImprovementFundtoensurethatthetaxrevenuesare“usedtoenhance
andnotsupplantfundingforeducation.”TheLegislaturewouldberequiredbytheOklahoma
ConstitutiontoonlyappropriatedollarsfromtheFundtosupplementotherfundingsourcesand
notto“supplantorreplace”otherstatemoniessupportingeducation.IftheBoardofEqualization
determinesthatfundingforeducationhasbeensupplantedbymoneyfromtheFund,the
Legislaturewouldbeprohibitedfrommaking“anyappropriationsfortheensuingfiscalyearuntilan
appropriationinthatamountismadetoreplenishtheOklahomaEducationImprovementFund.”12
Lastly,regardingtherevenueforcommoneducation,thefundswouldbedistributedunder
StateQuestion779“inproportiontotheschoolpopulationoftheseveraldistricts,onthebasisof
thestateaidformulaforcommoneducationthenineffect.”13AccordingtotheOSSBA,afew
largedistrictscouldreceivemillionsofdollars,whilethemajorityofschooldistrictswouldreceive
significantlyless,withsomesmallerschoolsonlyreceivingafewthousanddollars.14
Accountability & Transparency
TheAmendmentwouldrequiretheStateAuditorandInspectorto“approveauditorswhoshall
annuallyaudittheusemadeofthemoniesdistributedtotheschooldistricts…toensurethatit
isusedonlyforthepurposesspecifiedin[theamendment].”Thereisnosimilarprovisionunder
StateQuestion779fortheotherareasreceivingfundingthroughtheOklahomaEducation
ImprovementFund.15Forexample,whiletheproposaldoesdirectthehighereducationdollarsto
bespenton“collegeaffordability,”theproposal’sbroadlanguagecouldprovidemorelatitude
–theamendmentstatesthatmoniesshallbeused“foruseinimprovingcollegeaffordability,or
otherwise in the improvement of higher education.”16
About the Author
RobertAeryistheOklahomaDeputyStateDirectorforAmericansforProsperity.Robertreceivedhis
bachelor’sdegreefromOralRobertsUniversity,earnedhislawdegree(J.D.)fromtheUniversityofTulsa
CollegeofLaw,andisalicensedattorney.
Formoreinformation,[email protected].
1. StateQuestionNo.779.InitiativePetitionNo.403.OfficeoftheOklahomaSecretaryofState,https://www.sos.ok.gov/documents/
questions/779.pdf.
2. OklahomaPolicyInstitute.“StateQuestion779:SalesTaxforEducation,”okpolicy.org.
3. OklahomaStateSchoolBoardsAssociation.StateQuestion779,http://www.ossba.org/advocacy/sales-tax-plan/.
4. OklahomaCouncilofPublicAffairsImpact.“StateQuestionsGuide2016,”http://www.ocpaimpact.com/wp-content/
uploads/2016/09/State-Question-Guide-2016.pdf.
5. TaxFoundation.“StateandLocalSalesTaxRates,Midyear2016,”http://taxfoundation.org/article/state-and-local-sales-tax-ratesmidyear-2016.
6. Felder,Ben.“WhatYouNeedtoKnowaboutSQ779,OnePercentSalesTax.”TheOklahoman,26September2016,http://newsok.
com/what-you-need-to-know-about-sq-779-one-percent-sales-tax/article/5519273;OklahomaCouncilofPublicAffairsImpact.
“StateQuestionsGuide2016,”http://www.ocpaimpact.com/wp-content/uploads/2016/09/State-Question-Guide-2016.pdf.
7. OklahomaTaxCommission.“RatesandCodesforSales,Use,andLodgingTax:3rdQuarter2016,”https://www.ok.gov/tax/
documents/copo3Q16.pdf.
8. TheOklahomanEditorialBoard.“SalesTaxHikeWouldImpactOklahomaCities,Towns.”6June2016,http://newsok.com/
article/5502028.
9. Ibid.
10.Ibid.(emphasisadded).
11.StateQuestionNo.779.InitiativePetitionNo.403.OfficeoftheOklahomaSecretaryofState,https://www.sos.ok.gov/documents/
questions/779.pdf.
12.Ibid.
13.Ibid.
14.Hardzinski,Brian.“OklahomaSchoolBoardsGroupSaysSQ779WouldPayForRaises,LittleElse.”KGOU,20September2016,
http://kgou.org/post/oklahoma-school-boards-group-says-sq-779-would-pay-raises-little-else.
15.StateQuestionNo.779.InitiativePetitionNo.403.OfficeoftheOklahomaSecretaryofState,https://www.sos.ok.gov/documents/
questions/779.pdf.
16.Ibid.(emphasisadded).