CLAREMORE — Rogers County voters will decide on June 26 if a $22.1 million debt should be paid for by a new sales tax.

On Monday, Rogers County commissioners unanimously approved a June 26 special election to allow voters to consider the levy of a one-third cent sales tax to be collected over a 15-year period to satisfy the debt incurred by a recent court ruling.

Currently, the $22.1 million debt is slated to be paid out of ad valorem (property) taxes — a means by which it will remain paid, should the sales tax vote fail.

In early March, Rogers County commissioners voted to retain the services of Johanning & Byrom PC to proceed on behalf of the county as bond attorney to determine “funding options” in the wake of the ruling.

Attorney Paul Johnanning, who laid out the county’s options to the commissioners, presented options.

“Basically, your first key decision on this matter is how long you think this (sales tax) should be, as this affects how much it would be — if you want to try to get rid of it in 10 years, it will take about 4/10 of a cent,” explained Paul Johanning, attorney, Johanning and Byrom, P.C., legal advisor to the commissioners. “Should you want to try for 15 years, that would be a third of a cent (tax) and 20 years would be a quarter (of a cent). However you decide to vote is up to you.”

“Regardless of how (long) we decide this should be, so that we’re clear, we can always pay if off early, correct?” asked Commissioner Kirt Thacker, to which Johanning concurred. “That being the case, I’d feel more comfortable if we stretched it (the sales tax) out a little bit — to have a ‘safety net’ — and then work to pay it off as soon as possible.”

“And the language used (in the sales tax proposition) provides that the minute the county has satisfied its debt — the minute you pay it off — it (the sales tax stops), as the debt  is paid,” Johanning said.

The incurred debt in discussion came from an incident in 1998, when a company known as Material Services leased more than 300 acres of property near Oologah with the intent to mine limestone, but before their operations could get underway, the Rogers County’s Planning and Zoning Commission annexed the land and brought it under its jurisdiction, a jurisdiction which prohibited zoning for mining of any kind.

Material Services filed suit against Rogers County, arguing legal notices announcing a public hearing about the annexation were “incomplete and therefore the annexation and zoning regulations were invalid,” records indicate.

The courts eventually ruled in favor of the company and in 2009, a Mayes County jury awarded $12.5 million in damages to Material Service.

Rogers County appealed the ruling, but the Oklahoma Supreme Court refused to hear the case, thus ending the appeals process, by which time, damages awarded to Material Services had increased to $22.1 million because of attorney fees, interest and other costsnot covered by insurance.

Although the commissioners who were on the board at the time of the incident are no longer employed by Rogers County, the fiduciary responsibility resulting from their actions 14 years ago remains on the shoulders of the current commissioners and Rogers County taxpayers.

Thacker inquired about the possibility of debt payment by a combination of sales tax and ad valorem tax — a “mixed” means of meeting the county’s obligation, but Johanning said such a mechanism proved impractical in its application.

“It’s my belief that if you’re going after putting something like this before the public, you want to keep it as simple as you possibly can,” Johanning said, “and to present it (to the public) in a ‘mixed’ form would lend the appearance of being overly complicated and as such, could make the possibility of the sales tax aspect of it (passing) far less likely. I have done ‘combination’ things before, and they’re tough to pass. They’re a tough sell to the public as they’re just too complicated for most people to fully understand how they’re set up.”

Before taking any formal actions, commissioner Mike Helm asked Johanning to reiterate that once the sales tax had collected enough monies to pay off the debt in full, it would “go away.”

“That is correct,” Johanning said. “With your saying such, this is enforceable, because the Oklahoma Constitution provides for that (enforceability). If you say this (sales tax) is to be used solely for one purpose, and you make conditions within the election for its (sales tax) passage, it must be carried out to those conditions.”

Commissioners and Johanning discussed the (proposed) sales tax, opting for a “sooner, rather than later” election date to reduce further interest being incurred (in the debt).

Commissioners eventually voted and approved the holding of a special election on June 26 to pursue debt resolution by way of sales tax rather than ad valorem taxes, which the debt would otherwise be paid, a means which Johanning said could be “disastrous” for many property owners.

“Everyone I’ve spoken to about this situation has agreed that leaving it to ad valorem would be too burdensome for most property owners. If you just let it go on (without passage of the sales tax), it would be a large tax burden. Deathly large for some people, I’m afraid,” he said. “Few people would want a new sales tax, but even fewer would be in a position to handle the burden of what the increased ad valorem would be, otherwise. This is really the best option.”

At Monday’s meeting, commissioners unanimously approved the creation of public trust to be known as the Rogers County Finance Authority, who will be accountable for the administration of the payment of the sales tax on the $22.1 million indebtedness incurred by the Material Services v. Rogers County judgment.