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Owasso Should Prepare for Uncertainty

posted Nov 29, 2008, 12:20 PM by Site Administrator   [ updated Jan 18, 2009, 7:12 PM ]

By James Parsons

Owasso Taxpayer Alliance

www.owassotaxpayer.com

Saturday, November 29, 2008

 

OWASSO, Oklahoma - Over the last month the American People have been on a rollercoaster of ideas concerning the economic situations we face.  On one channel you hear we could be in for a long recession going toward a global depression.  If you turn to another channel you might here a commentator mention the market signals are saying we are going to have a short recession with a quick recovery.  Some seem to believe better times are coming with a new administration while others feel the worse hasn’t happened.  There also seems to be debates on whether we are going to see inflation rise with a falling dollar or deflation with a falling job market.  The only thing these experts are certain about is that we are headed for uncertain times.

This past week, my wife and I took another look at our finances, changed our budget, committed to putting more in savings, paid off debt, and created an emergency plan if things get bad.  I would expect my local government to do the same thing.  Unfortunately, instead of Owasso leadership preparing for uncertainty, they are planning to get us deeper in debt while our city’s sales tax revenues decrease.

Over the next several months, the city plans on increasing our long term debt anywhere from 60% to 104%.  Owasso currently has $45.8 million in obligated long-term debt.  What we know is that Owasso leaders want to spend another $8 million for a city sanitary sewer system, $5.2 million for Stone Canyon’s sanitary sewer system, and $4.6 million to TTC/TCC as a free gift.  At the November 20, 2008 Capital Improvements Committee meeting Owasso City Manager Rodney Ray reported that one possibility for funding the CIP projects was an additional $25-30 million dollar bond issue to be paid for by a new property tax for Owasso property owners.

Adding more debt when we know we are headed into a period of inflation or deflation is dangerous for the taxpayers of Owasso.  If we start on promised projects during a time of high inflation our cost for making the improvements will increase more than our budget making the taxpayers liable for cost overruns.  On the other hand, if we have debt during a deflation period, revenues shrink and our city assets decrease in value making the taxpayers liable for the shortage of money. 

Don’t worry…our city leaders think they have solved that problem.  As I mentioned, one idea is to ask you, the Owasso voter, to approve a new property tax making Owasso one of the highest paying property taxed cities in the highest paying property taxed county in the state of Oklahoma.  Yes!  You read that correctly.  The city of Owasso will be high on the list of property taxes in the State of Oklahoma if this idea is implemented.  Is there no better way to encourage businesses to come, build, and join this community?  The last thing we need during uncertainty is to discourage businesses from coming and staying in Owasso.

But our city leaders don’t seem to be paying attention to what is going on around us in the Tulsa area and that’s a bit scary.  Here are several examples:

1.       In 2003 the voters in Tulsa County approved Vision 2025 to give American Airlines $22.3 million in upgrades at the city’s maintenance plant.  On top of that, Oklahoma Governor Brad Henry provided another $10 million incentive package to expand two aviation projects and “create 600 jobs.”  Governor Henry stated, “By putting state incentives on the table…we are creating hundreds of good jobs and enhancing Tulsa’s already-unparalleled reputation as a national aviation center.” (“Governor Henry Announces $10M for Tulsa Aviation Projects” Daily Oklahoman May 2007)

 

What have we gotten for our “investment?”

 

American is continuing to lay workers off.  In July 2008, American laid off 1,500 people in their maintenance system nationwide due to ridership declining and losing $1.45 billion in the April-to-June quarter. (“American Set to Cut 1,500 jobs in Tulsa” The Oklahoman July 19, 2008).  Tulsa, being the largest maintenance plant in the system with the most employees, laid off more people than the other plants.  The next month, Tulsa television station KJRH reported that American Airlines in Kansas City was going to cut their staff even more and move those jobs to Tulsa. 

 

The station states on their website: “The Chamber says they believe the reasons for the transfer of work (is because) ten million dollars from the Opportunity Fund which was approved by the legislature to support American’s infrastructure, and money from Vision 2025” (“Additional American Airlines Work Could Move to Tulsa”, KJRH August 14, 2008). But American Airlines CFO Tom Horton was less promising when he hinted the last cuts were because the maintenance organization was built for a much bigger airline and not cuts to move jobs (AP, July 2008).

 

2.      Earlier this year, Tulsa County Commissioners along with the Tulsa City-County Health Department, the Tulsa City-County Library, Tulsa Community College, Tulsa Technology Center, and the Owasso School Board voted to lower the property taxes for Electronic Data Systems Corporation (EDS), a Plano, TX based Data Center with facilities in Tulsa.  In early 2007 EDS began work on expanding their database “bunker” located in the Cherokee Industrial Park just west of Owasso, an estimated $105 million dollar improvement. 

 

District 1 County Commissioner John Smaligo stated, This is terrific news since EDS is such an important part of the economy in both Owasso and Tulsa. This announcement highlights our community's focus on creating a better environment for the recruitment and expansion of high-tech industries." (EDS News Release, July 26, 2007)

 

As a result, EDS was able to place that tax break in their portfolio and the company was sold to HP in 2008.  In 2001 EDS had 2,200 employees in Tulsa, has since reduced its work force to around 1,300 employees and continues to ship jobs out of the Tulsa area.  County Commissioner Smaligo and the Owasso School Board were aware of these massive layoffs before they supported this tax break.

 

3.      The Sunoco and Sinclair refineries had been planning huge improvements to their Tulsa facilities.  Sunoco announced in November 2008 that they were scrapping their $375 million dollar facility improvement plan and were pursuing selling the facility (Sunoco Investor Relations, “Sunoco Reports Third Quarter 2008 Results”, November 5, 2008).  As far as we know Sinclair is still planning on their $1 billion dollar Tulsa expansion project (Tulsa World, September 6, 2007).  Time will certainly tell on this one.

 

4.      I am sure everyone remembers the “loan” Owasso city leadership gave Vanguard Car Rental (Tulsa Mayor Kathy Taylor’s company) back in 2003.  This loan was to help relocate the company to Tulsa from Florida.  After moving to Tulsa, Vanguard was bought out by Enterprise Rent-A-Car and since that merger occurred 17.4% of the Tulsa jobs have gone away (Tulsa World, February 22, 2008).

 

5.      Earlier in November, Nordam laid off 3% of its workforce and released this statement from the Board of Directors:  “Like many other corporations in the aerospace industry, Nordam has been negatively impacted by the global economic downturn.  The rapid economic decline coupled with the lack of available financing is adversely affecting our customers and their demand for our products and services…Accordingly, we have made the decision to reduce the size of our workforce in Tulsa…we hope to mitigate the impact of the downturn on the vast majority of our stakeholders.” (Tulsa World, November 11, 2008)

 

6.       Whirlpool announced in late October they were laying off jobs at the Tulsa plant as home sales continue to decline (The Tulsa World and NewsOK.com, October 29, 2008)

These examples exclude the thousands of people that go to work in Tulsa at places like Dollar Thrifty which recently laid off 107 Tulsa workers, ORU which announced an upcoming lay off of 100 Tulsa staff members in January 2009, Trinity Structural Towers will lay off 131 Tulsa workers in January 2009, Nautilus (StairMaster) will close by years end laying off 148 Tulsa workers and SemGroup which laid off 110 Tulsa workers and with the possibility of more after their bankruptcy case is completed. 

I am not a doom and gloom reporter and that is not the point of this article.  I am just stating that the economic indicators for our economy in and around Owasso show that we are in uncertain times.  Our Owasso leaders plan to get us out of these times with more of the same:  raise our taxes, increase our debt, spend more money, and give handouts to rich companies and big developers.  It is reverse welfare.  The poor are giving money to the rich.

Call your Owasso City Council member and let them know that you do not approve increasing our debt under any circumstance unless it is an emergency.  Demand that the city lives within its means, use money for roads, police, fire, and other previously promised projects.

 

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