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Municipal Advocate Warns Sales Tax Exemptions Hurting Local Budgets During Pandemic

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Facing a difficult economic recovery from the coronavirus pandemic, the group representing Oklahoma’s city governments told state lawmakers during an interim study at the state capitol last week that they’re struggling with dozens of sales tax exemptions.

Mike Fina, executive director of the Oklahoma Municipal League, said those exemptions cost a total of $8.3 billion in sales tax funding. Fina said that not only constrains city budgets, but it also holds up policies many would like to see, like making groceries exempt from sales tax. 

"I can’t stand up here and advocate for that because sales tax on groceries is the largest driver of revenue for municipal government," Fina said. "If you take sales tax off of groceries, you will bankrupt every city in this state."

Fina said sales tax certificates issued to businesses last three years, and are sometimes misused.

"Sales tax certificates actually do survive, even if your business closes down," he said. "So, what we’re finding is a lot of people won’t have the business anymore, they’ll still have the sales tax certificate and they’re still going and getting goods and using that sales tax certificate."

Oklahoma is the lone state where cities can only use sales tax revenue for operations. 

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