An Oklahoma County judge has sided with eight school districts that sued the Oklahoma Tax Commission over the new way it has been distributing motor vehicle tax collections.
A June lawsuit by Sand Springs, Muskogee and six other school districts claimed that the Tax Commission had misinterpreted a new law and beginning July 1, 2015, incorrectly distributed more than $14 million of motor vehicle collections from across the state among Oklahoma’s 419 independent school districts.
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The other plaintiff school districts are Altus, Canton, Lone Wolf, Mid-Del, Ponca City and Quapaw.
On Monday, Oklahoma County District Judge Patricia Parrish entered official minutes into the public record from a Friday hearing in which she sided with the plaintiffs’ argument for summary judgment about how motor vehicle tax collections should be distributed.
Plaintiffs’ representative Gary Watts, who retired in the spring as general counsel and chief financial officer at Sand Springs Public Schools but has continued working on the case, said the lawsuit was necessary to force the Tax Commission to change.
“As early as November, the OTC will apply the law as we have requested,” Watts said.
At issue was the Tax Commission’s interpretation of 2015’s House Bill 2244, which sought to cap the amount of motor vehicle tax money that education receives at 36.2 percent.
The legislation eliminated a clause in state law that had allowed the Tax Commission to dip into the state’s portion of the collections if there was not enough to give the districts at least the same amount they received in the previous year.
In months when there were not enough collections to give all school districts the amount of money they received the previous year, OTC made distributions based on each district’s student population, but the plaintiff school districts contended the Tax Commission should have decreased each district’s portion equally.
Watts said Judge Parrish’s ruling only provides relief to the eight plaintiff school districts, but it also forces OTC to change the way it apportions future funds from motor vehicle taxes.
“What this means is the plaintiffs are the only ones whose base (the amount the districts received the previous year) will be corrected. Those whose base was too high will still have a higher base than arguably they should. Those whose base was too low will still have a lower base than arguably they should. This ruling means the Tax Commission’s process will be correct moving forward, but it doesn’t mean everyone gets relief.”
Paula Ross, a spokeswoman for the Tax Commission, said the agency “intends to diligently work with plaintiffs’ counsel in the very near future to finalize the court’s ruling.”
