CHICKASHA, Okla. – May 25, 2023 – The Chickasha City Council voted on Thursday, May 18 to call for a vote of citizens to approve a permanent 1.25% sales tax, to go into effect on January 1, 2024. If passed, Chickasha shoppers would notice a .5% increase in the cost of sales tax, as the City’s current .75% CIP sales tax is set to expire on December 31, 2023. Revenue generated from this sales tax will be used to build a new water treatment facility and fund other capital projects.
Currently, on a $10 purchase, shoppers are paying $0.90 in total sales tax, for a total of $10.90. If the sales tax is passed, shoppers would pay an additional $0.05 on a $10 purchase, making the total bill $10.95.
Chickasha’s water treatment facility, which is the sole source of drinking water for the City, was built in the 1950s. It is operating past its useful life and is at risk of catastrophic failure, which would leave the City unable to provide water services to its citizens. The facility is currently operating under consent orders from the DEQ to make repairs that will address these problems.
The new facility is estimated to be approximately $74 million, which the City plans to finance using an approximate $69 million 30-year loan from the Oklahoma Water Resource Board plus $5 million in available existing capital outlay funds, and is estimated to take about 3 years to complete, including engineering and construction. In addition to the construction of the plant, the funding covers engineering and purchasing land.
The sales tax is estimated to generate approximately $4.67 million in revenue each year, of which approximately $3 million would be used to pay the annual debt payments, leaving $1.6 million for other capital projects. City officials have identified several projects and improvements for these funds, starting with improvements to existing police and fire facilities, equipping firefighters and police officers with needed tools and equipment to serve citizens, and providing for other capital needs of a growing City, including buying or building a new fire station and making much-needed road, water line and sewer line repairs. Funds will be allocated based on priority and the ability to make the biggest impact.
Should the water treatment plant come in at less than the amount of the $69 million Water Resource Board loan, the City is able to use the loan for other water-related projects, including replacing water lines.
Currently, shoppers in Chickasha pay a total of 9% sales tax, which is made up of a 4.5% Oklahoma sales tax, .75% Grady County sales tax, and 3.75% Chickasha sales tax. Shoppers in nearby cities are levied the following total sales tax rates: Blanchard – 10%; Newcastle – 9%; and Tuttle – 9.75%.
If the sales tax fails to pass, City Council voted to automatically raise water rates on October 1, 2023 to pay off the loan needed for the water treatment facility. A resident who uses 5,000 gallons of water and currently pays $34.00 per month would see their bill increase by 82%, to approximately $61.87 per month. The base water rate would increase from $23.50 to $42.80. These increased rates would not allow additional funding for other capital expenditures, including fire and police facility and equipment improvements or road repairs. The rate increase will not take effect if the sales tax is passed.