A fight over how to distribute motor-vehicle tax collections to school districts has now landed in district court.
Eight school districts, including Sand Springs and Muskogee, filed suit this week to try to force the Oklahoma Tax Commission to change the way it has implemented a new law since July 1, 2015.
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The suit in Oklahoma County District Court claims the Tax Commission incorrectly distributed more than $14 million of motor vehicle collections from across the state among Oklahoma’s 419 independent school districts during fiscal year 2016.
The other plaintiff school districts are Altus, Canton, Lone Wolf, Mid-Del, Ponca City and Quapaw.
Plaintiffs’ representative Gary Watts, who retired last week from his position as general counsel and chief financial officer at Sand Springs Public Schools, said the lawsuit is necessary because the Oklahoma Tax Commission has not been following the law.
“The (Tax Commission) has skipped two of the three necessary steps in the law and has shortchanged these districts in how much of this revenue they receive,” Watts said. “We simply want the court to require the (Tax Commission) to follow the law and correct its method of apportioning this revenue in the future. We are not seeking damages from the (Tax Commission), or seeking money already distributed be redistributed from other districts to our clients.”
Paula Ross, a spokeswoman for the Oklahoma Tax Commission, said officials there were not prepared to comment because they hadn’t yet reviewed the new suit.
Sand Springs first tried to petition the Oklahoma Supreme Court to assume original jurisdiction in the matter, but the Supreme Court denied that request in April.
Watts, an attorney, said he has been working pro bono on the matter since his retirement from Sand Springs. The principle of the matter is what drives him and that, in his words, there have been “winners and losers among Oklahoma school districts through no fault or action of any district.”
For example, he said the largest financial loss is Tulsa Public Schools’ at $2.2 million followed by plaintiff district Mid-Del at $1.3 million. Other districts among the top 10 to lose funding over the matter are Putnam City, Oklahoma City, Lawton, Bartlesville and plaintiffs Ponca City, Sand Springs, Muskogee and Altus, according to Watts.
Watts said that the new law was intended to “cap” the total amount of motor vehicle collections going to school districts statewide and if the Tax Commission “had correctly applied the law,” most schools would have seen a consistent funding reduction of 3.6 percent.
Asked whether a favorable ruling in the lawsuit could benefit any of the other 80-plus districts who have seen their state funding reduced, Watts said, “We’re only asking for relief for these eight plaintiff districts.”
John Little, chief financial officer at Muskogee Public Schools, said his district doesn’t question the need to change the way motor vehicle tax revenue is distributed. But he said it shouldn’t have been done overnight.
“We believe that correcting a formula used for 19 years should be corrected, but schools should be given prior notice and time to adjust,” Little said.
