Two cities struggle to pay bills after sales tax errors

OKLAHOMA CITY (AP) _ Two small towns must repay sales tax money that businesses paid to them by accident instead of sending the money to Oklahoma City. <br><br>Mustang is repaying $255,000 and Yukon is

Saturday, September 28th 2002, 12:00 am

By: News On 6

OKLAHOMA CITY (AP) _ Two small towns must repay sales tax money that businesses paid to them by accident instead of sending the money to Oklahoma City.

Mustang is repaying $255,000 and Yukon is working on a $211,000 debt.

Businesses that made administrative errors in their sales tax reports caused the problem, the Oklahoma Tax Commission said.

The metro communities now have to cut spending so they can make monthly installments to repay the money. Officials in Mustang and Yukon did not know the money was paid to their cities in error and had earmarked it for projects.

Some say the tax commission should improve its system, although the commission said it is doing all it can to prevent the problem. It now leaves reporting correct sales tax figures up to businesses.

``It's something that happens,'' said commission spokeswoman Paula Ross. ``If you think of how many businesses there are in the state filling out sales tax reports, there's room for error.''

In Mustang, city leaders saw the increasing income as a sign business was booming. That meant a chance to pass a 28-year, one-cent sales tax that would pay for new baseball fields, a swimming pool and a 16,000-square-foot police station.

Mustang officials thought they could afford day-to-day services and retire the bonds _ worth $15 million.

But an account glitch discovered a year ago showed that one company was incorrectly paying sales tax money to Mustang. The total added up to $255,000 for an 18-month period.

Now Mustang is repaying about $10,000 a month for two years.

``It was bad news,'' said David Cockrell, Mustang's acting city manager. ``It's one of those pieces of news where you shake your head and ask what's next.''

Cockrell said the city council recently raised water and trash bills by as much as 30 percent to help cover a $50,000 per month budget shortfall.

The tax commission told Yukon officials during the 2001-2002 fiscal year that the city was overpaid about $211,000.

``Things are really tight right now,'' Yukon City Manager Jim Crosby said. ``It was very devastating.''

The errors showed up about a year after Oklahoma City officials published an audit of sales tax income showing several vendors paying money to other communities that should have been going to Oklahoma City.

``Some of it is business owners that don't really make sure they are paying to the right jurisdiction,'' City Auditor Susan McNitt said. ``They might have an Edmond post office address, but they're actually in another city.''

Zach Taylor, executive director of the Association of Central Oklahoma Governments, said the tax commission should be more vigilant.

``Businesses need to be very mindful of how they report their taxes,'' he said. ``And the tax commission needs to give stronger oversight to whom they assign money.''