A tax fight is heating up in Johnston County and throughout the state.
Johnston County Commissioners this week formally endorsed a new statewide organization designed to lobby for a tax on the production of silica, sand, gravel and other aggregates, which are mostly used in the construction of roads, bridges and other capital projects.
Oklahoma Citizens for Aggregate Benefits will encourage county commissioners, county officials, rural fire departments and others to support HB 1876, which would allow counties to set a tax of up to 7 percent on the production of aggregates.
“In a lot of areas of the state, we have nonrenewable resources leaving the state with very little financial benefit to the areas where those natural resources are severed,” said Rep. Charles McCall, a Republican from Atoka, who authored the bill.
“The bill is designed to mirror the Oklahoma gross production tax, which is imposed on other minerals, but does not define rock sand and gravel.”
Aggregate industry representatives oppose the tax, which could be set at different rates in different counties.
“This would be a nightmare for the companies operating in those counties to keep track correctly of this tax,” said Jim Rodriguez, executive director for the Oklahoma Aggregates Association.
“It would also create an imbalance within our industry, having materials counted one way in one county and another way in a neighboring country. It's a very bad idea,” Rodriquez said.
Rodriguez pointed out that the only state in the region with a severance tax is Arkansas, which charges 4 cents a ton. The proposed Oklahoma tax, he said, would translate to up to 42 cents a ton.
“This is a high-volume, low-cost product,” he said. “What happens when you significantly increase the cost of a low-cost item that is produced in high quantities?”
Oklahoma County Commissioner Ray Vaughn said he expects most county commissioners to support the tax proposal.
“The initial issue was that in those counties, especially where those big mines are located, they don't have the funds to keep up with maintenance of the roads and bridges,” he said. “They were looking for a funding source to take care of the roads and restore them.