Monday, February 26, 2007

FAQ’s Regarding Fairgrounds Annexation

There seems to be a lot of confusion regarding the facts surrounding Tulsa’s proposed annexation of the unincorporated area on which the Tulsa Fairgrounds lies. This is my attempt to add some clarity to what has amounted to being a one-sided argument. I recognized as I got into this, that this could turn into one very large posting, so I'm going to post these four questions first and then produce more later.

{One other brief note, feel free to post comments, but understand that I'm not going to turn my blog into a "public forum" for debate. There are a lot of such sites available if you want to debate. The purpose of this blog is to provide a place for me to share my thoughts and opinions. As such, I'll be selective in what I approve. If you want to trash me or my opinion, do it on a site you pay for.]

Q: Is the City taking over the Fairgrounds from the County?

A: No. The County’s facilities happen to lie on a parcel of land that is surrounded on four sides by the Tulsa City limits. Several County parks (LaFortune for one) are owned and operated by the County but lie within the city limits of Tulsa. Annexation of the land on which the Fairgrounds lies will not change either ownership of the buildings, or which governmental entity would be responsible for operations.

Q: Is the Fairgrounds a “tax free” zone?

A: No. Sales taxes are collected (or should be) on every transaction for goods (but not services) that occur on the Fairgrounds. The State of Oklahoma gets its 4.5 cents of sales tax. Tulsa County gets its 1.017 cents of tax. Only the City of Tulsa receives no tax on sales of products deep within its city limits. If a 3-cent sales tax reduction is good for the tax payers, wouldn’t a 4.017 cent holiday be better? Why isn’t the County waving County sales tax at the Fairgrounds?
Q: Is the 3-cent tax break the major draw for retail activity at the Fairgrounds?

A: No, it only has a minor appeal at best. If it was a such primary consumer attraction, then basic economics would dictate the construction of retail properties outside of the city limits. However, such establishments don’t occur because several other factors have exponentially greater impact on consumer behavior.

I will endeavor to explore these in more detail later, but for the most part these relate to economies of scale (boat shows have a lot of boat vendors in one place), proximity to desired demographic groups (this can be as simple as closeness to major highways), synergistic marketing (sharing of advertising and promotions to a specific event at a specific time), and limited offers with a distinct ending time (which pushes the consumer to make a decision).

This last item has several factors, one of which DOES deal with the sales tax savings (“The show is over in two hours, after which you won’t save on the tax" strategy). However, other inducements can be given by the vendor to achieve the same end, just as they do with limited-time sales in their respective stores.

Q: Is annexation akin to raising taxes?

A: No more than closing a tax loophole is raising taxes. If someone is given an exception by the government to not pay taxes that others must pay, that is a loop hole. The County currently has a “loophole” smack in the middle of Tulsa’s city limits. Closing a loophole only raises taxes on those who have consciously chosen to use that loophole. It is a major stretch to claim such an action is akin to raising sales tax rates across the board (even if it is to pursue river development).

I know of no better conservative in the Oklahoma legislature than Sen. Randy Brogdon of Owasso. As a former mayor of Owasso, Sen. Brogdon supported the annexation of unincorporated land inside Owasso’s “fence line,” that included retail properties which had previously enjoyed a tax break by being outside Owasso’s taxable area.

Given the facile definition of “tax hike” that some of the more boisterous opponents of annexation have made, then Sen. Brogdon was “showing his true liberal colors” by supporting a “tax increase” when he annexed that land. I guess Brogdon was just being a hypocrite when he authored the “Tax Payers Bill of Rights.”

Such an argument is laughable and should be treated as such.

[I'll endeavor to post more a little later in the week.]

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