ENID, Okla. —
The $50 million Quality of Life plan before Enid voters this week is split into two funding sources — $30 million from a 7 mill ad valorem tax over 20 years, and $20 million from a half-cent sales tax for five years.
The ad valorem tax is a continuation of an existing tax, originally approved by city voters to fund bridge improvements. If voters pass that portion of the overall plan, it will yield no net increase in local tax rates.
The sales tax portion, however, does raise local sales tax — by one-half of one cent for every taxable dollar spent in the city over the next five years.
Being a “new” tax, the sales tax portion of the proposal has sparked more public comment, and raised concerns among some over increasing taxes.
In an effort to place the proposed sales tax hike in context, the Enid News & Eagle has analyzed data from the U.S. Census Bureau, Oklahoma Tax Commission, city of Enid, Tax Foundation and Sperling’s Best Places, a commercial analysis firm that analyzes cities and states to create rankings based on a wide variety of factors, including sales and income tax and cost of living.
Enid’s current combined sales tax rate is 8.35 percent, or 8.35 cents on the dollar. That includes: 4.5 percent state sales tax; 3.5 percent city sales tax; 0.35 percent county sales tax.
The city’s portion of the combined sales tax increased from 3.25 percent to 3.5 percent in 2003, and has remained the same since.
The city’s sales tax revenues have increased by 57 percent since 2003, increasing from $18.6 million in 2003 to $29.6 million in 2012.
The proposed parks plan would increase the city portion of the total sales tax rate by one-half cent, making the new tax rate 8.85 percent, or 50 cents more in sales tax for every $100 spent in Enid.
In order to assess where Enid stands in relation to other cities in Oklahoma, census data was analyzed for 233 tax-collecting cities and towns in Oklahoma.
The lowest combined sales tax rate in the data set was the town of Eldorado, population 446, with a combined sales tax rate of 7 percent. The high end of the range was the town of Hallett, population 125, with a combined sales tax rate of 11 percent. The total range for combined sales tax rates in the state for towns and cities that collect city sales tax was 4 percent — 4 cents for every taxable dollar spent.
With its current combined sales tax rate of 8.35 percent, Enid sits even with the cities of Broken Arrow, Jenks, Midwest City and Owasso.
At Enid’s current 8.35 percent combined sales tax rate, 33 towns and cities have lower tax rates, while 194 towns and cities have higher combined sales tax rates, placing Enid in the bottom 15 percent of sales tax rates in the state.
If Enid voters increase the city’s combined sales tax to 8.85 percent, the city still would be in the bottom half of sales tax rates in the state, with 102 towns and cities having lower sales tax rates and 122 having higher sales tax rates.
Seven cities currently have a combined sales tax rate of 8.85 percent, including Bixby, El Reno, Mustang, Sand Springs and Yukon.
Looking beyond Oklahoma, some sources point to Oklahoma’s relatively high sales tax rates compared to national averages.
According to the Tax Foundation, Oklahoma has the fifth-highest combined sales tax rate in the nation. The report used a population-weighted average of local tax rates and the state rates to compare state totals — 8.66 percent for Oklahoma, slightly greater than Enid’s current rate and slightly less than the proposed rate.
Tennessee had the highest rate at 9.43 percent, followed by Arizona, Louisiana and Washington.
The report compares Oklahoma and other sales-tax collecting states to states that do not collect sales tax, such as Alaska, Delaware, Montana, New Hampshire and Oregon.
Among states that do collect state sales tax, the five lowest combined sales tax rates were in: Hawaii, 4.35 percent; Maine, 5 percent; Virginia, 5 percent; Wyoming, 5.34 percent; and Wisconsin, 5.43 percent.
While the Tax Foundation report makes a state-to-state comparison of sales tax rates, it does not take into account other factors, such as income tax rates, property tax rates and overall cost of living.
Many states that have lower sales tax rates have significantly higher income tax and property tax rates, and an overall higher cost of living.
Sperling’s Best Places provided the Enid News & Eagle with a cost-of-living index for all 50 states, Enid and more than 100 other cities in the U.S.
The cost-of-living index accounts for sales tax rates, plus income tax, and costs for groceries, housing, utilities, transportation and health care. All of those factors are compiled into an aggregate cost of living — a benchmark set around the national average.
The U.S. benchmark is a cost-of-living index of 100. Cities and states with a COLI greater than 100 have an above-average cost of living, while cities and states with a COLI less than 100 have a cost of living cheaper than the national average.
According to the data provided by Sperling’s, Oklahoma has a cost of living index of 84.7 —more than 15 percent below the national average. Compared to all 50 states, Oklahoma has the lowest cost of living in the nation, according to the Sperling’s report.
Thus, while Oklahoma has the fifth-highest combined sales tax rate, the state also has the lowest cost of living.
Enid has a COLI of 86.4, slightly higher than the state COLI, but still more than 13 percent below the national average.
The COLIs for Oklahoma’s surrounding states are: Arkansas, 84.8; Kansas, 87.8; Colorado, 110.4; Missouri, 92; Texas, 95.3.
The 10 states with the lowest combined sales tax rates in the U.S. have considerably higher costs of living than Oklahoma, ranging from a COLI of 97.7 in Wisconsin to 176.3 in Hawaii — the highest state COLI in the nation.
Enid voters will decide this week whether or not to raise $20 million for quality-of-life improvements by a half-cent sales tax hike, with the overall effect of taking the city from the bottom 15 percent to the bottom half of sales tax rates in the state, with the lowest aggregate cost of living in the nation.
Note on methodology for analysis of sales tax data: Three separate entries were made for Oklahoma City in the sales tax data set, due to the city having different tax rates in three different counties. Unincorporated places that collect state and county sales tax, but not city sales tax, were removed from the list in order to compare only towns and cities that assess a city sales tax.
State, Region Sales Tax Rates
Current combined sales tax rates, in percentages, for some notable regional cities in Oklahoma include:
• Alva — 9.25
• Ardmore — 8.5
• Bartlesville — 8.5
• Broken Arrow — 8.35
• Chickasha — 8.844
• Edmond — 8.25
• Eufala — 10
• Fairview — 8.75
• Guymon — 9.5
• Hennessey — 8.75
• Kingfisher — 8.25
• Lawton — 8.875
• Moore — 8.25
• Muskogee — 9.15
• Norman — 8.25
• Okeene — 9.25
• Oklahoma City — 8.375 to 8.725
• Perry — 9.25
• Ponca City — 8.667
• Pond Creek — 9.75
• Seiling — 10.25
• Stillwater — 8.75
• Tulsa — 8.517
• Watonga — 10
• Weatherford — 9.5
• Woodward — 8.825