Cities concerned about governor’s proposal to end sales tax on groceries

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OKLAHOMA - Like anyone else, Walter Cox would love to save money on his grocery bill.

“It would be nice to go down a little bit,” Cox said.

Governor Mary Fallin’s proposal to end state sales tax on groceries may save folks, like Walter, hundreds.

According to Fallin, Oklahomans could expect to save $350 to $676 on groceries a year for a family of four.

“That’s pretty good. I like that. That’s a car payment,” Cox said.

But, some are worried the savings will come with a cost to local governments, who depend heavily on sales tax.

Some said, on average, "30-40 percent of their budget comes from sales tax on groceries."

According to Oklahoma law, if the state decides to get rid of a tax, a city can't collect tax on the item either.

“A lot of times, our biggest source of revenue comes from grocery sales tax. When you talk about a Walmart or a Crest, it is a huge amount of money. So, when you talk about doing away with that, that will impact city services,” said Oklahoma City Councilman John Pettis - services like utilities, police and trash pickup.

According to the Oklahoma Municipal League, smaller communities would be especially vulnerable.

“Some of them are small towns, so it will be like a $6,000 to $8,000 a month per hit. To a very tiny town, that is a huge amount, and there's no other way to make up the difference,” said Missy Dean with the Oklahoma Municipal League.

But, according to the governor’s office and tax commission, municipalities have nothing to worry about, citing an exemption in a Streamline Tax Agreement.

The governor’s office sent us this statement about the agreement:

“While the contracts with the cities and towns calls for the tax bases to be exactly the same, exceptions can be provided by statute. As a member of the Streamlined Sales Tax Agreement, Oklahoma has agreed to keep the state and local tax bases identical. However, there are two exceptions provided in the Agreement. States can treat groceries and drugs different at the state level than the local level.”

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