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Pro-Tax Group Raises Concerns in Oklahoma

A pro-tax group in Oklahoma is raising concerns among that state’s aggregates producers. The Oklahoma Citizens for Aggregate Benefits will encourage county commissioners, county officials, rural fire departments and others to support HB 1876, which would allow counties to set a tax of up to 7 percent on the production of aggregates.

HB1876 authorizes any county to levy up to 7 percent severance tax on the gross value of the production of rock, gravel, sand and gypsum through a special election approved by a majority of the registered voter in the respective county. The special election may be called by the board of county commissioners or by an initiative petition signed by 5 percent of the registered voters in the county. Finally, the measure requires the proceeds from the severance tax to be deposited into the county highway fund.

State Rep. Charles McCall (R-Atoka), authored the bill. A senate version of the bill, authored by Frank Simpson (R-Springer), died in committee in 2013.

Johnston County commissioners recently endorsed The Oklahoma Citizens for Aggregate Benefits. Oklahoma County Commissioner Ray Vaughn said he expects most county commissioners to support the tax proposal.

Jim Rodriguez, executive director for the Oklahoma Aggregates Association, told StateImpact Oklahoma, “This would be a nightmare for the companies operating in those counties to keep track correctly of this tax. It would also create an imbalance within our industry, having materials counted one way in one county and another way in a neighboring country. It's a very bad idea.”

Rodriguez pointed out that the only state in the region with a severance tax is Arkansas, which charges 4 cents a ton. The proposed Oklahoma tax, he said, would translate to up to 42 cents a ton.

“This is a high-volume, low-cost product,” Rodriguez said. “What happens when you significantly increase the cost of a low-cost item that is produced in high quantities?”

Even if the proposed rock and gravel tax makes it through the state legislature, it faces another significant hurdle: A 75 percent legislative majority is required to enact new taxes, a provision that’s been on the books since 1992, when voters approved State Question 640, StateImpact Oklahoma said.