The City of Lawton has a new funding source for its campaign to add more sidewalks to the community.
Council members voted last week to create a special fund for the sales tax it receives from the sale of medical marijuana and related products. Under the terms of the ordinance approved last week to create the fund, all proceeds will be spent replace existing sidewalks and building new ones, when adjacent to arterials. The ordinance goes into effect in 30 days.
Ward 4 Councilman Jay Burk, who initiated the item with Ward 3 Councilman Caleb Davis, noted the benefits of the plan, although city staff indicated it may be difficult to determine exactly how much revenue is generated from those sales.
But Burk, who owns a medical marijuana facility in Lawton, said the new business is good for patients, as well as the City of Lawton because it is funding source. And, he said those funds are new, rather than merely taking money away from existing businesses.
“We needed to be able to capture this money,” he said, adding that what he wants is the 2 percent of the tax that is dedicated to city operations.
When shoppers buy something in Lawton and pay a 9 percent sales tax, 4⅛ goes to the City of Lawton. But, 2⅛ percent is dedicated to the temporary (meaning, it expires) Capital Improvements Program. The remaining 2 percent (a permanent tax) goes to the City of Lawton for operations, and it is that amount that Burk and Davis want to capture from medical marijuana sales.
The issue of sidewalks has been an on-going one for council members and city officials as they debate the most economical way to give residents the sidewalks they want in the places they are most needed.
Burk said while the sales tax from marijuana sales isn’t yet a huge amount, it will grow. And, he wants that steadily increasing revenue source dedicated to a special fund that finances work on sidewalks.
“Once it goes into the general fund, it is gone,” he said.
Burk, who also chairs the Lawton Enhancement Trust Authority, said LETA can provide that special account that will fund sidewalks. He said LETA would focus on small projects and “get those jobs done,” after first seeking council approval for any project it wants to start.
Ward 5 Councilman Dwight Tanner asked whether that sales tax revenue wasn’t already calculated into this year’s budget, suggesting that Burk and Davis wait until the next budget year to take the revenues. But, Burk said the amount placed in the budget equates to about $15,000 because city officials hadn’t had much experience estimating it, and he doesn’t want to wait to until next year to start the sidewalk program.
Deputy City Manager Bart Hadley said it might be difficult to pull out the exact amount of money that is being generated by medical marijuana sales. He said while the city’s auditors can tell city administrators what an individual business is paying in sales tax, state officials don’t pull out sales taxes by category. And, medical marijuana dispensaries sell things other than marijuana, such as the items you would need to use the marijuana.
Burk said there is a way to calculate the total, adding that “99 percent” of the dispensary sales come from marijuana. Hadley said the city doesn’t have a way to calculate the tax that comes out of a single business.
“It’s an estimate,” Hadley said, adding that based on talks with the Oklahoma Tax Commission, “they are struggling to delineate it out.”
Burk said it’s not complicated, noting that his business pays two separate tax bills: the 7 percent medical marijuana tax charged by the State of Oklahoma and the 9 percent sales tax. The taxes are calculated on a specific form, he said.
Davis said that while he knows city administrators want to keep the sales tax revenue in the general fund for city operations, that’s not what the council wants to do.
“It’s our duty to respond to what citizens needs are,” he said, adding it is possible to make credible estimates of that tax revenue and place it into the special account held by LETA.