Tahlequah Daily Press

Local News

October 19, 2012

Water, tax, DHS questions on ballot

The final in a two-part series on state ballot questions examines SQ 764, 765 and 766.

TAHLEQUAH — Voters will head to the polls in just over two weeks to deliver their opinions on six state questions to help provide financial and programmatic direction for citizens across Oklahoma.

The Tuesday, Nov. 6 general election will reveal the majority-vote response to State Questions 764, 765 and 766.

If approved, State Question 764 will amend the Oklahoma Constitution and would lend a helping hand to the Oklahoma Water Resources Board in authorizing additional funding, which could be a pledge up to $300 million, for local water and sewage treatment. The pledge of credit would assist the OWRB in providing bond financing for an approximated $82 billion in needed water and sewage treatment improvement over the next five decades.

Use of the government-aided leverage will fund bonding for communities to access low-interest loans to finance water and wastewater infrastructure, said Oklahoma Scenic Rivers Commission Administrator and OWRB Board member Ed Fite.

“The governor’s foresight, to date, has resulted in more than $1 billion of much-needed infrastructure throughout small, medium and large communities,” said Fite. “Earlier this year, the Legislature adopted the 2012 Oklahoma Comprehensive Water Plan that identified an $82 billion need exists to address Oklahoma’s water and wastewater infrastructure over the next 50 years. Without this infrastructure, our state cannot guarantee a balance between a vibrant economy and healthy environment.”

If approved, it would be employed after other local and state reserve funds and insurance policy funds were exhausted, and if local municipalities failed to make required loan payments to the OWRB. State tax revenues would be used to pay back any authorized bonds.

“While the Oklahoma Water Resources Board provides a very successful grant and loan program that continues to be rated as AAA program, it’s estimated that the agency will not be able to satisfy the projected demand in the OCWP to fund our state’s communities future needs for infrastructure without additional funding being made available to it,” said Fite.

Save The Illinois River Inc. member Ed Brocksmith said Tahlequah now has a modern sewage treatment plant “thanks to some of the last federal funding made available to cities.”

“Tahlequah, and other cities in the Illinois River watershed, are facing costly improvement in sewage treatment in order to meet higher water quality standards,” said Brocksmith. “Funding from outside the community could be critical to financing the technology needed to protect the Illinois River and Tenkiller Lake.”

Sen. Jim Wilson, D-Tahlequah, said the projects funded by SQ 764 will be financed much like they are now, with rate payers paying the debt, and observed that if all goes well, the state won’t have to use any of the $300 million pledged to guarantee bad debt.

“On the negative side, many think OWRB is political. This conclusion comes in part from their effort to sell Oklahoma water to Texas in 2000 - 2001, and their political involvement in selling Sardis Lake water to Oklahoma City. They have not made citizens comfortable with their technical ability or their relationship with contractors, which some think is too cozy,” he said. “Explaining water issues requires comprehensive analysis of water issues. Over irrigation is one cause of shortages. The big cause now is oil and gas well fracking. It takes a tremendous amount of ‘fresh’ water to frack – up to four million gallons per gas well. This seems to be a huge, but silent, motivation for water needs in Oklahoma and Texas. My concern is we need to continue developing water resources for Oklahoma communities, and we in Cherokee County benefit quite a bit from OWRB loans, but this state question makes me suspicious. Since the real purposes for water usage haven’t been itemized, there seems to be a lack of transparency. I can see this debt guarantee being used to build a pipe line from southeastern Oklahoma to Oklahoma City and westward, not really a community driven enterprise. I’d just be more comfortable if the public knew the backroom plan.”

The OWRB currently provides low-interest financing for nearly 70 percent of water and sewer infrastructure in the state, said Rep. Mike Brown, D-Tahlequah.

“The Legislature would provide the monies to pay for the bonds, would provide for methods for issuing the bonds and would provide for how the fund is administered. According to the Water Resources Board, if State Question 764 fails, the Financial Assistance Program would be reduced to funding only 5 to 10 percent of infrastructure needs over the next 50 years, which would result in increased rates for drinking water and sewer customers across Oklahoma,” he said.

Pending the people’s choice, State Question 765 would amend the Oklahoma Constitution and abolish the Oklahoma Department of Human Services, the Oklahoma Commission of Human Services and the position of director of the Oklahoma Department of Human Services, and would reshuffle the ODHS by eliminating its constitutional mandate and assisting the Legislature to re-create the agency through codification.

The measure is expected to improve oversight of the agency that provides services to citizens identified as elderly, poor and disabled. A law has already been enacted by the Legislature that gives the governor the power to appoint the DHS director and the members of four advisory committees. The existing management structure, however, was determined to be one of the issues that lead to a class-action lawsuit filed on behalf of children subject to DHS-supervised foster care.

DHS employees have had many questions and concerns about the wording of SQ 765, and how its passage would effect the agency from a business application standpoint, said OKDHS Cherokee County Director Steven Edwards.

“Without expressing an opinion on the state question, I can tell you that the public can expect to see many changes in the upcoming months in the structure of DHS and changes to our foster care system. We have already begun implementing the Oklahoma Pinnacle Plan, which is a five-year improvement plant for the foster care system,” he said. “We have already given rate increases to foster parents and pay increases to front-line child welfare workers. By the end of this year, our goal is that no child under the age of 2 will have to sleep in a shelter when removed from [his/]her home, but rather will go to a loving foster home. These changes have already begun and many more improvements are on the way.”

Edwards said the agency is excited about the November arrival of its new director, Ed Lake, and the experience he presents from time spent with the Tennessee DHS.

“Any state agency that has a child welfare division as part of its services will experience problems with foster care, lawsuits, and occasional tragedies. It is the sad nature of our business,” he said. “Mr. Lake has experienced many of these same issues and brings with him a wealth of knowledge and experience in managing an agency like this. Overall, we want to regain the public’s faith and trust in this agency and with the workers who are part of this community. Please remember: I am DHS. The workers in this office, many of whom may be your friends, family or fellow church members – they are DHS. We cannot do this work alone and must have community support to help serve Oklahomans in need.”

Edwards added that regardless of the vote outcome “this community can expect that DHS will continue its mission of helping Oklahomans in need to lead safer, healthier and more independent and productive lives.”

Brown said passage of SQ 765 would eliminate the Human Services Commission and make the agency’s top leadership directly answerable to the governor.

“Due to the fact that Oklahoma’s founding fathers didn’t trust a strong chief executive, they long ago fractured the governor’s authority among boards so that the top officers of the state’s colleges, prisons, welfare programs and most other key areas don’t report to the governor. They report to boards and commissions,” he said.

“The Human Services Commission currently consists of nine members each serving nine-year terms, which hinders the ability of the governor or the Legislature to have much oversight or influence over the direction of the agency.  State Question 765 would change this structure and hold the governor and the Legislature directly accountable for the performance of the Department of Human Services.”

The resolution to the class action suit was to spend more money for pay, hire more supervisors and reduce case loads by increasing child welfare workers, said Wilson.

“DHS tracks 9,000 kids in their child welfare division. Unlike Florida, at least Oklahoma knows where their foster kids are. With that many kids, there will be some cases of abuse, even though none is acceptable. The management structure didn’t really need to change The Legislature really needed to fund DHS better all along,” he said. “The new structure will work fine, as would the old, if adequate funding was in place. It reminds me of the decades [when] the  courts supervised our management of prisons because of inadequate funding. As soon as they gave control back to us, we quit adequately funding the prisons. The same thing will happen here.”

State Question 766, if authorized by voters, would amend Section 6A of Article 10 of the Oklahoma Constitution and would discontinue taxation of indefinite business property, including patents, trademarks, brand names, franchises, contracts, mineral interests and proprietary computer software.

The Legislature approved the measure for the ballot in response to the Oklahoma Supreme Court ruling that decreed all forms of intangible property, except those already exempted by the Constitution, subject to imposed taxes.

 The Oklahoma Tax Commission estimated a per-year reduction of $50 million in collected property taxes if the measure passes, with the most significant impact being felt by counties that receive large shares of property tax revenues from public utility companies, railroads and airlines. Proponents of SQ 766, like the State Chamber of Commerce, believe its denial by the people could lead to tax increases on smaller businesses due to county assessors imposing blanket taxes on intangible property.

Tahlequah Area Chamber of Commerce Executive Director David Moore said the agency has no opinion on SQ 766.

“I don’t have a comment for that. Our chamber has not taken a position on it, therefore I cannot speak on the issue,” he said.

Wilson said removing property taxation from intangible property became an issue “three or four years ago when a Supreme Court ruling required the state to charge property tax on intangibles.”

“I remember AT&T being heavily involved in the beginning, which makes sense because public utilities, railroads and airlines would have to pay the most,” said Wilson. “We passed a law a couple of years ago allowing companies to pay an in-lieu of franchise tax of $25 to avoid paying intangible property taxes. So this state question is the permanent fix,” he said. “On the down side, it will take the potential of $50 to $60 million out of county revenues. To be fair, because of the timing of the court ruling and the in-lieu of tax, the counties never received this much money. Probably 60 percent of that money would go to schools. Again, only counties with a big presence of utilities, railroads and airlines, etc.,  would benefit. Not Cherokee County. The pro-business administration and State Chamber of Commerce support this measure. Some organization is spending money on commercials misrepresenting the impact. It’s important to recognize that in Oklahoma the pro-business community abhors paying taxes and have never been able to give up special tax treatment for the long-term benefits of education, transportation infrastructure and health care. It’s really difficult to identify if the additional profit going to shareholders in New York is of more benefit than hiring additional teachers in Oklahoma.”

Under SQ 766, large railroad and utility companies like Southwestern Bell, AT&T and AEP-PSO will be exempted from taxes on intangible properties, and essentially amounts to handing corporations a large tax cut, said Brown.

“And on the losing end are schools, fire and police protection and other vital services, which would lose about $65 million annually in revenue. Like most states, Oklahoma determines ad valorem taxation of certain entities, including public service companies, railroads, and airlines, at the state level instead of the local level,” he said

 “A 2009 Oklahoma Supreme Court ruling opened the door to locally assessed entities being subject to this tax. However, rather than develop a Constitutional Amendment that would have restored the status quo, the Legislature put forward in SQ 766 a proposal to end all taxation of intangibles. If passed, SQ 766 could cost local governments at least $65 million in property tax revenue, 60 percent of which goes to schools alone.”

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