One way to keep property taxes from rising is to reduce its value. That’s the answer Republican lawmakers came up with to the complaints about increasing property taxes.
State Question 847 wouldn’t reduce property taxes — it would only lower the caps on what properties can be assessed in value. Those values are used in determining the amount of taxes paid.
Right now, all Oklahoma property owners have a cap on assessed values depending on the type of property. Even if the market value is higher, taxes won’t be based on that. So, in a private home in a neighborhood where market rates are 15% more than last year, the assessed value cannot exceed 3%.
Property taxes are used to pay for county and local needs including schools, libraries, CareerTech, some city services and county agencies such as the sheriff’s office. No property tax funds go to the state.
What will State Question 847 do?
If passed, the constitution would be amended to:
- Reduce homestead and agricultural property caps from a high of 3% to no more than 1.75%;
- Reduce other real property, such as rental and commercial, from 5% to 4%; and
- Create a separate tiered cap on homestead owners 65 or older who also have income above the threshold for the existing senior property tax freeze program.
How does this affect people 65 and older?
The Senior Freeze Program, also known as the Oklahoma Senior Valuation Limitation Program, was implemented in 1997 after voters approved State Question 677. It was intended to give tax relief to older Oklahoma homeowners on fixed incomes.
The program freezes the assessed value of a property for Oklahomans 65 and older who do not exceed the county’s median income as determined by the U.S. Department of Housing and Urban Development. In Tulsa County, that income cap is currently $90,300 a year.
For older Oklahomans who have too much income to qualify, SQ 847 sets up a system of caps on their assessed property value. Those amounts will change based on HUD’s county median income reporting.
Those tiers are:
- 100-120% of qualifying income amount: capped assessed increase at .35%
- 120-140% of qualifying income amount: capped at .70%
- 140-160% of qualifying income amount: capped at 1.05%
- 160-180% of qualifying income amount: capped at 1.4%
- 180% or more: capped at 1.75%
What are the arguments for and against State Question 847?
Supporters say it provides relief by slowing growth of taxes and creates equity in property taxes for older Oklahomans. They say taxes remain local but revenue increases for county and local governments will be slower.
Proponents point out it will give Oklahoma the lowest assessed property tax cap in the country.
Opponents argue it could force higher taxes because local and county entities would need to pass more bonds to keep up with needs. Bonds are used to pay for infrastructure such as school buildings — things like lights, roofs, playground equipment, technology, books and buses — as well as libraries, streets, bridges, lights, drainage systems, parks and city buildings.
Critics say it would create inequities when two identical homes in a neighborhood are taxed at different levels, placing unfair burdens on new homebuyers forced to pay higher valuation rates.
How much will this affect county and local budgets?
The exact fiscal impact is not known.
Think tank Oklahoma Policy Institute in April reported that University of Central Oklahoma professor Ryan Kiggins found a $42 million income reduction at the county level in the first year, ramping up to a $575 million loss by year 10 — not including the existing Senior Freeze estimates.
A legislative interim study in September featured Oklahoma City Assistant City Manager Brent Bryant and Deer Creek Assistant Superintendent Cordell Ehrich. Both expressed concern about harm to local services if the measure passes.
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