Why Oklahoma Hates State Property Taxes

• Joe Wertz
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  Joe Wertz was a reporter and managing editor for StateImpact Oklahoma from 2011-2019. He reported on energy and environment issues for national NPR audiences and other national outlets. He previously worked as a managing editor, assistant editor and staff reporter at several major Oklahoma newspapers and studied journalism at the University of Central Oklahoma.

There’s been a lot of talk lately about rejiggering Oklahoma’s tax code.

Task forces at the state Capitol are hoping to trim some fat by way of an array of state-subsidized credits, rebates, breaks and economic incentives that reduce the tax base.

Meanwhile, Gov. Mary Fallin and other lawmakers are pushing to reduce or eliminate the personal income tax, which comprises roughly a third of all state tax collections.

There’s a healthy debate on both sides of the income tax issue, as well as a lively discussion over what raising sales, excise and gross production taxes will do to Oklahoma families and businesses.

But you’ll never hear any pleas for a state property tax here in Oklahoma.

Why?

Just thank Bill Murray — the Governor, not the actor.

Oklahoma Historical Society

Oklahoma's ninth governor, William H. Murray, led efforts to eliminate the state property tax.

In the 1930s, Oklahoma’s legislature only met every other year, said Alexander Holmes, Regents Chair of the Department of Economics at the University of Oklahoma.

The legislature would pass a budget, which would be funded by a collection of tax revenues. In the ’30s, Oklahoma’s budget was largely funded by three sources, Holmes said, including a gross production and insurance premium tax.

“But the state ran on the property tax,” said professor Holmes, who also served as Secretary of Finance under Gov. Henry Bellmon’s second term in the late ’80s and early ’90s.

The State Board of Equalization — which estimates and certifies revenue available for appropriation and “equalizes” property value — would adjust the millage levy, raising or lowering property taxes in response to revenues from other tax collections.

This was before Oklahoma had a balanced budget amendment, Holmes said. Everything worked fine — until the price of oil tanked.

With less gross production taxes coming in, the Board of Equalization was forced to act, said Holmes, who was “flabbergasted” after studying the board’s historic records.

“Dramatic doesn’t begin to describe the numbers” he said. “Your property tax might triple from one year to the next. Then it might drop in half. Then it might double again.”

The wild swings made it nearly impossible for landholders to make a plan to meet their property tax obligations. Adding to land-related problems for property owners: the Dust Bowl.

“The poor earth isn’t growing, and your property tax is doubling,” Holmes said.

It’s easy to understand why getting rid of a state property tax was a popular idea in Oklahoma, and that’s William H. “Alfalfa” Bill Murray did. Murray led efforts to abolish the state property tax, and worked to impose millage caps on property equalization.

A 1933 amendment to Oklahoma’s constitution abolished the state-run property tax and made it the exclusive prerogative of local governments. In all the debates about adjusting Oklahoma’s “tax mix” at the state level, a property tax is never suggested.

Holmes said it never will.

“It’s unpopular even at the local level,” he said. “Oklahoma has a dark, dark history with the property tax. It will never even be an option — politically — worth discussing when discussing tax reform.”