Five Things to Remember About the Penny Tax Proposal

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State Question 779 is perhaps the most hotly debated issue appearing on ballot this year, proposing a 1-cent sales tax hike mainly to fund a $5,000 salary increase for teachers.

Current projections show a penny hike in the state sales tax will generate $550 million its first year. Early estimates were around $615 million, but sales tax revenue has been declining due to the economy.

According to the petition filed by SQ 779 supporters, the revenue will be distributed monthly, with 69.5 percent to K-12 school districts; 19.25 to colleges and universities; 3.25 percent to career and technology centers; and 8 percent to the Education Department for preschool programs for low income and at-risk children.

School districts must use 86.33 percent of the funds to raise teachers’ salaries by at least $5,000. The remainder is to be used to expand or create new programs to improve educational outcomes.

Here are five things to remember.

  1. More than half the funds generated would be used for teacher raises. Oklahoma teachers’ salaries are third lowest in the nation (and the two states with lower salaries have since approved increases.) State Question 779 specifically prohibits school districts from using the money to add superintendents or increase superintendent salaries.
  1. If passed, the sales tax increase will elevate Oklahoma to the highest combined state and local sales tax in the U.S. at 9.78 percent. Many cities and towns already levy 10 cents or more per dollar, and a handful are over 11 cents on the dollar.
  1. The tax would fall hardest on the poor, who spend a larger portion of their income on retail purchases. It would cost the bottom 20 percent of households an average of $90 a year. Middle-income households would pay about $262 a year. And the top 1 percent would pay $1,691, according to a data analysis by the Institute on Taxation and Economic Policy.
  1. Proponents have million dollar donors and have been gathering support for over a year. University of Oklahoma President David Boren has been the public face of the campaign, and Stand for Children, a Portland-based nonprofit, has been a major funder and organizer. A political action committee to support the measure had raised $4.2 million as of Sept. 30, records show.
  1. Opponents launched a last-minute push to derail the proposal. OCPA Impact, a political nonprofit group, was one of the early critics, challenging the petition unsuccessfully in court. The anti-tax group has spoken against the measure at public forums. Recently, a political action committee called Oklahoma Deserves Better took shape, with the backing of several mayors, including Oklahoma City’s Mick Cornett and Tulsa’s Dewey Bartlett.