The Oklahoma City Council will take up a measure that could add more funds related to the new professional basketball team.
The council is considering whether to implement a use tax as a companion to the sales tax voters approved in March. The sales tax was earmarked for improvements to the Ford Center and the construction of a basketball practice facility to help lure the National Basketball Association into bringing a team to Oklahoma City.
While the sales tax will be directly paid by citizens, the use tax is mainly for businesses. Oklahoma City Manager Jim Couch said a use tax is like a sales tax, but applies differently.
“It’s for things purchased out of state and used in the state,” Couch said. “You can’t go out of state to avoid paying sales taxes.”
An example would be a business buying windows for its store. If the windows were purchased out of state, the business would still have to pay a tax for the use of the windows in its Oklahoma City store. However, the cost a business pays for the use tax could be passed down to consumers.
The city estimates the use tax would generate around $11 million during the length of the Ford Center sales tax, which is 15 months beginning next January.
Couch said the use tax is nothing new.
“We’ve always had a policy of assessing use taxes equal the amount of our sales tax,” he said. “This is a companion item to the sales tax. Historically, after sales taxes have passed, we’ve adopted use taxes for that amount.”
Couch said a use tax was applied for the original MAPS project, as well as MAPS for Kids.
The difference this time is that the use tax would be adopted months after the sales tax was approved.
“We usually pass that right after the sales tax passes, which probably draws less attention than doing it months later.”
The money raised would go into a special account labeled the Oklahoma City Sports Facilities and Capital Improvement Projects Use Tax Fund. The money could only be used for improvements to city sports facilities, like the Ford Center. The funds may also be used for any cost overruns related to the basketball training facility or any capital improvement projects.
The city council would have the discretion to decide how the funds should be applied.
Couch said the special fund is the best way to handle term-limited revenue.
“The reason it isn’t just put into the general fund is because these are limited taxes so the tax goes away. You don’t want to build that into your revenue base on a temporary tax. That’s the reason we do it that way.”
The city council will vote on the item at Tuesday’s regular meeting. “Scott Cooper