The Oklahoma Municipal League held a rally at the state capitol last week to urge lawmakers to reject a repeal of the sales tax on groceries. The group represents 464 towns and cities.

SB 1328, which has passed the Senate and is being considered by the House, would eliminate the sales tax on groceries when state revenues are at least 10% higher than collections in fiscal 2008.

Carolyn Stager, executive director of league, said the repeal would endanger funding for local projects approved by voters. In some communities, she said, the sales tax on groceries accounts for 70% of annual revenue.

“Cities and towns are overly dependent on sales tax,” Stager said. “We are the only state where cities and towns do not receive ad valorem dollars for general operating purposes.”

Ponca City Mayor Homer Nicholson said he does not believe the state would be able to reimburse local governments for lost revenue, as promised in the bill.

“Dig past the mantra and understand the mechanics,” Nicholson said. “Every city in the state of Oklahoma will suffer catastrophically.”

Sen. Jay Paul Gumm, D-Durant, who proposed the legislation, said the current tax would stay in place until state revenue rises by $700 million, or 10% of 2008 revenues. The state would lose a little more than $400 million a year if the tax repeal is triggered by the rising revenues, he said, which includes almost $200 million of reimbursements to local governments.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.