Fund set up to help entities projected to fall short this year

OKLAHOMA CITY (AP) -- Public schools, libraries and other entities expecting proceeds from a state tax fund will be disappointed this year.<br><br>For the first time since its inception, the Ad Valorem

Sunday, January 12th 2003, 12:00 am

By: News On 6

OKLAHOMA CITY (AP) -- Public schools, libraries and other entities expecting proceeds from a state tax fund will be disappointed this year.

For the first time since its inception, the Ad Valorem Reimbursement Fund is projected to fall short, according to information provided by the Tax Commission.

The fund was created in 1986 as part of an earlier bill by the state Legislature to help attract business. It is made up of 1 % of corporate and personal income tax collected by the state. The shortfall will affect 120 school districts, 48 of the state's 77 counties that depend heavily on property taxes and libraries.

Other entities affected are emergency services, CareerTech schools and health care departments.

"It's the difference from ending the year solvent or insolvent," Bixby Schools Superintendent Mary Jane Bias said of the money owed to her district by the state. Privately owned power and other manufacturing plants don't have to pay property taxes for five years under the legislation.

The reimbursement fund was created to cover those losses to local tax jurisdictions and has been able to pay 100 percent of the costs for the past 16 years.

Projected claims for this year are estimated to be $50 million, but the Tax Commission believes deposits to the fund will only reach $23.5 million.

Among the biggest losers are the Mid-Del, Bixby, Broken Arrow, Newcastle and Ponca City school districts.

The state's funding formula is set, in part, on a sliding scale that takes into account a district's local property tax revenue. The more local revenue generated, the less money that district gets from the state.

Districts with large manufacturing centers or energy plants get more property tax money than others and, therefore, receive less in state aid. "We like the theory, and we like the way they took care of it -- if they would fund it," state schools Superintendent Sandy Garrett told The Daily Oklahoman. "If they're not going to fund it then we need to change it."

Bias' $17 million annual budget was cut by almost $2 million because of state aid reductions. Her district is due about $3.3 million in property tax reimbursement, but will only get about $1.6 million.

Her school board would "definitely consider" legal action if the entire amount owed is not paid by the state, Bias said. A new gas-to-liquid plant and a new clean fuels plant at Conoco will mean a loss of $800,000 in property tax money this year, said Ponca City school Superintendent Bill White.

"From a disaster standpoint, we're still 18 months to two years away," White said. "But I know it's out there. It's a cliff we're going to fall off if they don't figure it out."

According to the Tax Commission, 190 businesses in Oklahoma are claiming the exemption. Businesses may have more than one claim.

The 1985 law has been amended 20 times to allow different types of businesses to claim the exemption. The fund paid out $143,000 the first year it existed. By 1991, claims had risen to $9.5 million, and by 1999, $15 million in claims were filed.

The Tax Commission projects that next year the fund will only be able to pay out claims at about 40 cents on the dollar, and the fund will decline each year through 2005.

"It's a wonderful opportunity for businesses to come to Oklahoma," Bias said. "But I'm sure the people of Oklahoma didn't intend it to come on the backs of school children."