DALLAS — Oklahoma’s plan to issue $25 million of lease revenue bonds to repair a Tulsa dam was unanimously rejected as unconstitutional Tuesday by the Oklahoma Supreme Court.
The proceeds were earmarked for a repair project at the city-owned Zink Lake dam on the Arkansas River by the Tulsa River Parks Authority that would raise the water level by three feet to provide land for a county park.
The court called the proposed bonds “nothing more than a gift to the city of Tulsa and surrounding communities from the state,” which is a violation of the constitutional prohibition.
“This type of gift is precisely what is prohibited by the Oklahoma Constitution,” Justice Yvonne Kauger said in the court’s opinion.
The bonds were to be issued by the Oklahoma Capitol Improvement Authority and supported by annual appropriations from the Legislature.
A lease on the park by the Oklahoma Department of Central Services was not sufficient to make the dam project a legitimate state interest, Kauger said in the opinion.
Kauger called the lease a “fictional” arrangement.
“The state’s involvement in this project exists only to lend its credit to and make a donation for the benefit of the municipality,” she said in the ruling.
The bond issue was authorized by the Legislature in 2009 and limited to the Tulsa project after a similar plan adopted in 2008 was voided by the top state court. In the earlier case, the court said the original enabling legislation was unconstitutional because it provided for three separate bond issues for unrelated projects.
Sen. Patrick Anderson, who fought the bond measure in the Legislature and argued against it at the Supreme Court earlier this month, said he felt vindicated by the ruling.
“I certainly agree with the court’s conclusion that the issuance of these bonds would violate the constitution of the state of Oklahoma,” Anderson said Tuesday. “In the future, I would hope that policy makers will pay closer attention to the state constitution.”
The bond proceeds were originally expected to repair three dams in the Tulsa region, but the project was revised to focus on the single dam when an expected $50 million federal grant did not materialize.
“The Oklahoma Constitution forbids using funds for a purpose other than that intended by the Legislature, it prohibits the state from making gifts, and it forbids the creation of debt without a vote of the people,” Anderson said at the Nov. 8 court hearing.
The Council of Bond Oversight delayed a decision on the dam bonds Jan. 26 after several members questioned whether Gov. Mary Fallin and lawmakers were aware of the changes. The panel approved the bonds at a special session on Feb. 9.
Tulsa Mayor Dewey Bartlett said the Tulsa dam project would provide an economic benefit to the entire state.
Bartlett said the economic benefits of the dam project are comparable to an American Indian museum project in Oklahoma City that has received $58 million of proceeds from state lease revenue bonds.