Claremore town hall: one-cent sales tax would raise about $5 million a year for infrastructure, city manager says

At a Claremore town hall meeting, the City Manager said a proposed one-cent local sales tax dedicated to infrastructure would generate about $5,000,000 a year and that state law and the city’s existing utility structure constrain how revenues can be used.

The sales-tax proposal would be restricted to capital infrastructure, the City Manager said, and “about $5,000,000” is the annual estimate of revenue if the penny passes. The manager said Oklahoma’s municipal finance system is “antiquated. It’s archaic. The tax system in Oklahoma was put in in 1933,” and that cities in the state have limited taxing options compared with other states.

Why it matters: Claremore officials say the city faces large, ongoing infrastructure needs — including replacement of aging water service lines that federal regulators require the city to inventory — and limited revenue tools. The penny would be dedicated to infrastructure projects and could not be diverted to general operating expenses, officials said.

The City Manager framed the penny as one of the few local options to fund capital work. He said Claremore’s current city sales tax rate is 3% and that “every dollar that is spent here, collected here, stays right here.” He told attendees the city currently pays roughly $6,000,000 per year in debt service across several notes and has taken on major projects such as a recent water-plant upgrade.

Residents pressed the City Manager on whether a failed sales-tax measure would lead the city to raise utility rates. One resident told the meeting, “That’s a threat. That’s not right,” after the manager said the city would “take a hard look at utility rate increases” if the sales-tax increase does not pass. The City Manager responded that any utility-rate changes would follow a council decision and a formal cost-of-service study: “You all make that decision. We have to do a cost of service study on every single utility that we provide to make sure that’s justified.”

The manager addressed how Claremore balances utilities and municipal services. He said the city subsidizes some services through its utility operations and that public-power communities must consider total bills (electric, water, sewer, refuse, stormwater) rather than only a single rate. He presented comparisons of local sales-tax and utility-rate mixes across nearby communities and argued Claremore is “not the highest” when total utility bills are considered.

Officials described specific funding uses and local agreements. The manager said when a developer (identified during the meeting as Atwoods) built a store, the city paid for associated infrastructure and recovered costs through a development agreement tied to sales-tax receipts; he said the developer’s upfront cost was about $2.8 million and that two of the three pennies generated at that site would repay the project over up to a 10-year period.

On solid-waste service, the manager said the city expects to contract commercial trash collection and estimated Claremore would receive roughly 10% of the contractor’s gross revenues back to the city if the council approves the contract and the city reaches agreement with the RFP winner. “We will get 10% of their gross revenues back to us,” he said.

Officials repeatedly warned that the state’s system limits municipal options: the manager said Oklahoma cities often rely on sales tax and utility sales to fund projects because property-tax systems and intergovernmental sharing are structured differently than in other states.

Officials also described a federal requirement to inventory possible lead service lines. The City Manager said the city must identify roughly 6,000 homes that federal authorities flagged as “unknown” and that replacing or fully addressing those lines would be costly: “Our water guys cannot go out and replace 6,000 service lines. It’s just not in the [budget].”

Next steps and decision process: The City Manager said the council must approve any tax measure and that staff will present details, including any required studies and budget incorporations, before voters decide. He emphasized the city uses merit-based pay increases for employees and cautioned that staff compensation and mandated pension contributions also affect the budget.

Residents at the town hall raised questions about relative tax burdens, the city manager’s compensation and service levels on specific streets; officials reiterated they intend to present voters with accurate information and that council action would determine final policy.