The first assistant district attorney has recommended that a misallocation of more than a $550,000 in county sales tax be remedied through use of the county's general fund - a method he said is practical and aligned with the intent of the taxpayers.
“Due to the miscalculation of the allocation of the four different excise taxes, some of the moneys have been devoted to a purpose other than for which the tax was enacted,” Ben Loring wrote in a memo to the commission after citing the Oklahoma State Constitution which says “no tax levied and collected for one purpose shall ever be devoted to another purpose.”
Loring's legal opinion was presented to Ottawa County Commission members Monday in response to their request to find a legal resolution to a tax allocation error that left the Ottawa County Sheriff's Office and the county road tax account with revenue shortages that date back to 2003.
Additionally, the error led to overpayment of tax revenues to the county's Governmental Building Authority and the rural fire departments.
With regard to the Governmental Building Authority - the entity responsible for overseeing the construction of the new county courthouse - Loring said that using the general fund to compensate for any allocation shortfall is “certainly the most logical solution.”
“If the overpayment (to the authority) had not been made, there probably would be a shortfall for the completion of the construction, which would have to be paid from the county general account anyway,” Loring wrote.
Loring also indicated that putting the burden of repayment on the rural firefighters would be detrimental to the departments and would contradict what tax payers intended to accomplish when they approved the tenth of a penny tax four years ago.
Loring has also suggested that the tax shortfall for the road tax could be reimbursed from the highway fuel tax money collected and divided among all three road districts.
“This would be sort of a ‘robbing Peter to pay Paul scenario,'” Loring said. “But it would still be a legal way to resolve the issue.”
Loring said the Oklahoma Tax Commission and the state auditor's office are in agreement with his opinion that the entities that received the shortfall must be reimbursed.
The entities that were overpaid may be best served by just being allowed to move forward and “leaving well enough alone.”
District 1 Commissioner John Clarke was the first to suggest that the county find a way to compensate the two entities that were shorted and then just “move forward with the correct allocation.”
Commissioners discussed that option last week but asked Loring to research all legal avenues for resolution.
“Whichever fund or funds the money comes out of, there are most likely insufficient funds to pay all of the shortfall at one time,” Loring wrote. “I would recommend that the money be paid back in one-third increments. I believe this would be considered reasonable as that is the same method that judgments against the county are paid.”
The panel made no decision Monday as commission chairman Russell Earls and Loring were absent from the meeting.
The plan, according to state officials, must be approved by all entities who have been impacted by the allocation error before it will be implemented.
A meeting of the taxing entities is planned, but a date has not been set.
Loring's memo outlining his legal opinion was presented to commissioners John Clarke and Kenneth Palmer through assistant district attorney Jennifer Ellis.