Case Title: City of Tulsa v. Oklahoma

Citation: 

Docket Number: 109559

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2012-05-15T00:00:00Z

Document:
CITY OF TULSA v. STATE2012 OK 47Case Number: 109559Decided: 05/15/2012THE SUPREME COURT OF THE STATE OF OKLAHOMA
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN 
THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR 
WITHDRAWAL. 

CITY OF TULSA, a municipal corporation, 
Plaintiff/Appellee,v.THE STATE OF OKLAHOMA, 
Defendants/Appellant,andThe State of Oklahoma, ex rel. OKLAHOMA TAX 
COMMISSION, Defendant.
APPEAL FROM THE DISTRICT COURT OF OKLAHOMA COUNTY
Honorable Bill Graves, Trial Judge
¶0 In 2010, the Oklahoma Legislature amended the Oklahoma Tax Code, 
68 O.S. Supp. 2010 
§2702(A) to require municipalities to contract with the State of Oklahoma 
through the Oklahoma Tax Commission to assess, collect and enforce municipal 
taxes. Prior to the amendment becoming effective, the City of Tulsa contracted 
with a private company to collect municipal taxes. On August 19, 2010, Tulsa 
filed a petition for declaratory judgment in the District Court of Oklahoma 
County to challenge the statute's constitutionality. The trial court, Honorable 
Bill Graves, found the statute unconstitutional. The State appealed and we 
retained the cause. We hold that the amendments to 68 O.S. Supp. 2010 §2702(A) requiring the 
Commission to collect municipal sales and use taxes do not unconstitutionally 
impair Tulsa's obligation of contracts or infringe its inherent powers granted 
by the Constitution or the City's charter. 
APPEAL PREVIOUSLY RETAINED;TRIAL COURT REVERSED.
Gerald M. Bender, Steven G. Cousparis, Ellen R. Hinchee, Jessica E. Rainey, 
Attorneys for City of Tulsa, Tulsa, Oklahoma, for Plaintiff/Appellee.Scott 
D. Broughton, Nancy A. Zerr, Assistants Attorney General, Oklahoma City, 
Oklahoma, for Defendant/Appellant.
KAUGER, J:
¶1 In 2010, the Oklahoma Legislature amended the Oklahoma Tax Code, 
68 O.S. Supp. 2010 
§2702(A)1 to require municipalities to contract with the State of 
Oklahoma through the Oklahoma Tax Commission (the Commission) to assess, collect 
and enforce municipal taxes. On June 1, 2010, prior to the amendment becoming 
effective on July 1, 2010, the plaintiff/appellee, City of Tulsa (City/Tulsa) 
contracted with a private company to collect municipal taxes. On August 19, 
2010, Tulsa filed a petition for declaratory judgment in the District Court of 
Oklahoma County to challenge the constitutionality of §2702(A). The trial court, 
Honorable Bill Graves, found the statute unconstitutional. The State appealed 
and we retained the cause on July 22, 2011, and ordered the parties to brief the 
issues. 
¶2 The constitutional questions are consolidated into two, whether: 1) 
68 O.S. Supp. 2010 
§2702(A)2which requires municipalities to contract with the 
Commission to assess, collect and enforce municipal taxes unconstitutionally 
impairs Tulsa's obligation of contracts; and 2) the statutory amendment 
infringes upon Tulsa's inherent powers granted by the Oklahoma Constitution and 
its city charter. We hold that requiring the Tax Commission to collect municipal 
sales and use taxes does not unconstitutionally impair Tulsa's obligation of 
contracts or infringe its inherent powers granted by the Constitution or the 
City's charter.
OKLAHOMA'S EFFORT TO STREAMLINE LOCAL SALES AND USETAX 
COLLECTION, PROCEDURAL HISTORY, AND UNDISPUTEDFACTS.
¶3 Prior to July 1, 2010, the Oklahoma Tax Code, 68 O.S. Supp. 2002 §2702(A)3 authorized municipalities 
such as Tulsa to contract with the Tax Commission to collect and enforce Tulsa's 
municipal taxes. The Commission was also authorized to collect up to 1 and 3/4 % 
of the funds it collected as a service fee.
¶4 Tulsa admits that, historically, it has voluntarily chosen to contract 
with the Commission for such services and that such contracts were terminable by 
either party upon proper notice as specified in the contract. In fact, it 
contracted with the Commission for a service fee of 1% of the municipal sales 
and use taxes, interest, and penalties it collected for Tulsa until May of 
2010.4
¶5 The backdrop to this dispute is found throughout the Oklahoma Tax Code.5 The Commission has long 
been authorized to enter into agreements with cities, town, and municipalities 
(collectively municipalities) to collect and administer local sales and use 
taxes for a fee on behalf of the municipalities.6 However, it was not until 
the 2000 legislative session, that the Oklahoma Legislature, along with other 
states, began actively modernizing and streamlining municipal tax collections. 

¶6 In 2000, the Oklahoma Legislature adopted the Streamlined Sales Tax System 
Act (the 2000 Act)7 in response to Legislative findings that: 
1) state and local tax transactions should be treated competitively and 
neutral;2) sales and use tax systems should be simplified; 3) revenue 
sources and fiscal sovereignty should be preserved; and 4) the 
administrative burden of collection should be reduced.8 
The purpose of the Act was to direct the Commission to work with other states 
in developing and participating in a streamlined system for sales tax and use 
tax collection and administration.9 
¶7 The next year, in 2001, the Legislature, in an apparent response to the 
Commission's work, adopted the Streamlined Sales and Use Tax Administration Act, 
which applied to state, county or municipality sales and use tax collection.10 The purpose of the 2001 Act was to simplify and 
streamline sales and use tax collections and reduce and eliminate the burden and 
costs of collecting taxes for both the state and its political subdivisions.11 
¶8 As part of the simplification process, the Legislature authorized the 
State to work with other states and enter into agreements simplifying and 
modernizing sales and use tax administration to substantially reduce a 
taxpayer's burden of tax compliance.12 The agreements reduced the burdens of complying with 
local sales and use taxes by requiring states to administer sales and use taxes 
levied by local jurisdictions.13 
¶9 Some nine years later, the legislature expanded its streamlining efforts 
during the 2010 Legislative session,14 when it passed House Bill 2359 which amended §2702(A) 
to require municipalities to contract with the Commission for collection of 
municipal taxes and set the required collection fee at 1 and 3/4 % of what was 
collected.15 On June 1, 2010, Tulsa entered into an agreement with 
RDS, a private company who specializes in the collection and recovery of taxes 
for cities in various states. On June 9, 2010, the 2010 legislative amendment to 
§2702 was signed by the Governor to become effective July 1, 2010.
¶10 On June 30, 2010, Tulsa amended its contract with RDS, making some minor 
adjustments to their arrangement. The next day, the statutory mandates of §2702 
became effective. On August 19, 2010, Tulsa filed a petition for declaratory 
judgment in Oklahoma County District Court, seeking to have §2702 declared 
unconstitutional.16 It objected to two sections of the statute, §A, which 
required municipalities to contract with the commission,17 and, §D, which concerned auditing efforts of 
municipalities, based upon the premise that they were required to contract with 
the Commission.18 
¶11 Tulsa argued that the statute was unconstitutional because it: 1) 
impaired its obligation of contracts; 2) limited its power to assess and collect 
its own taxes; 3) limited its ability to maximize its tax revenue; and 4) 
abrogated or limited City powers which were reserved in its city charter. Both 
the State and the City filed Motions for Summary Judgment. The trial court, on 
May 9, 2011, in a twenty-two page order determined the statute to be 
unconstitutional and it granted Tulsa's motion for summary judgment and denied 
the State's motion.19 
¶12 The Commission appealed to this Court on June 9, 2011, and requested that 
we retain the cause rather than assign it to the Court of Civil Appeals. The 
motion to retain was granted on July 22, 2011, and additional brief's were 
ordered. The briefing cycle was completed on August 29, 2011.
¶13 REQUIRING THE COMMISSION TO COLLECT MUNICIPALSALES AND 
USE TAXES DOES NOT UNCONSTITUTIONALLY IMPAIRTULSA'S OBLIGATION OF 
CONTRACTS.
¶14 The Oklahoma Constitution, art. 2, §15 provides:
No bill of attainder, ex post facto law, nor any law impairing the obligation 
of contracts, shall ever be passed. No conviction shall work a corruption of 
blood or forfeiture of estate: Provided, that this provision shall not prohibit 
the imposition of pecuniary penalties.
This provision also has a federal counterpart.20 Tulsa argues that the 2010 amendment requiring the 
Commission to collect Tulsa's sales and use taxes impairs its obligation of 
contracts -- specifically, the contract it entered into with the private vendor, 
RDS, on June 1, 2010, before the amendment's effective date. The Commission 
counters that contractual obligations may constitutionally be impaired even if 
the impairment is substantial when a significant and legitimate public purpose 
is being served by the State and the impairment is reasonable and necessary.
¶15 In Edmondson v. Pearce, 2004 OK 23, 91 P.3d 605, cert. denied by Tally v. 
Edmondson, 543 U.S. 987, 125 S. Ct. 495, 160 L. Ed. 2d 371 (2004) we 
thoroughly examined the constitutional prohibition against the impairment of the 
obligation of contracts. Edmondson involved the constitutionality of a 
statute which outlawed cockfighting. It was alleged that private contracts to 
sell birds to be used for cockfighting could not legally be performed if the 
statute were upheld. 
¶16 We recognized that the prohibition against impairing the obligation of 
contracts was not absolute because the constitutional provision does not operate 
to obliterate the police power of the state.21 When a state law has been alleged to fail to pass 
constitutional muster under the Contract Clause in regard to a contract between 
private parties, a three-part test is employed: 1) whether the law has, in fact, 
operated as a substantial impairment of a contractual relationship; 2) if so, 
whether the law serves a legitimate public purpose such as remedying a broad and 
general social or economic problem; and 3) if so, whether the adjustment of the 
rights and responsibilities of the contracting parties is based on reasonable 
conditions and is of a character appropriate to the public purpose behind the 
law's adoption.22 
¶17 The public purpose requirement guarantees that the State is exercising 
its police power rather than providing a benefit to a special interest.23 When the State itself is not a contracting party to the 
contract which is alleged to have been impaired, we defer to legislative 
judgment as to the need and reasonableness of any specific law.24
¶18 Clearly, the contract between Tulsa and RDS is substantially impaired by 
the legislative change because it will no longer be subject to legal performance 
without running afoul of the Act. However, such an impairment does not 
necessarily constitute a violation of the Contract Clause. It is also 
unquestionable that the Legislature was acting in the furtherance of a 
legitimate police power. 
¶19 The power to collect taxes, whether collected by the state or its 
subdivisions is inherent and is a necessary attribute of sovereignty. Without 
the power of taxation and its collection, necessary public services would be 
non-existent. The broad and general purpose being served is stated with the Act 
itself-- to simplify and streamline sales and use tax collections and reduce and 
eliminate the burden and costs of collecting taxes for both the state and its 
political subdivisions. 
¶20 Historically, Tulsa had always contracted with the Tax Commission to 
provide such services. Given the deference to which the legislative judgment is 
entitled as to the need and reasonableness of this measure, there appears no 
deficiency in terms of the Act being an appropriate character to carry out or 
implement the purpose behind it. What better way exists to ensure that the 
burden and costs of collecting taxes for both the state and its political 
subdivisions be simplified, streamlined and reduced? 
¶21 Nevertheless, summary judgment was granted in favor of the City declaring 
the statute unconstitutional. The City argues that: 1) the State has not made 
any connection or showing that the stated legislative purpose of the Act would 
actually be simplified, streamlined, and the burden and costs reduced by the 
State's collection rather than the City's; 2) there is no evidence that 
businesses or the City is more or less burdened or that the economy will suffer 
or thrive if the City were allowed to collect their own taxes; 3) nothing shows 
how the State's collection would be more uniform than if the City collected 
their own taxes; and 4) the State benefits financially from having a monopoly on 
municipal tax collection and has no incentive to charge anything less than the 
statutory cap of 1 3/4 % . 
¶22 The burden is not on the State to answer the City's concerns. Rather, the 
burden is on the City to make such showings to overcome the presumption of 
constitutionality. In Lafalier v. Lead-Impacted Communities 
Relocation Assistance Trust, 2010 OK 48, 237 P.3d 181 at ¶15, we clearly expressed:
Even though the moving party must show that there is no dispute of fact and 
that they are entitled to judgment as a matter of law, there is a presumption 
that every statute is constitutional. The party seeking a statute's invalidation 
as unconstitutional has the burden to show the statute is clearly, palpably, and 
plainly inconsistent with the Constitution. We scrutinize a constitutional 
attack on a statute with great caution and grave responsibility. (Citations 
omitted.)
Requiring the Commission to collect municipal sales and use taxes does not 
unconstitutionally impair Tulsa's obligation of contracts.
TULSA'S CONSTITUTION AND CHARTER POWER IS NOT INFRINGED. 

¶23 The City argues that 68 O.S. Supp. 2010 §2702(A)25 unconstitutionally infringes upon the inherent powers 
as granted by the City's charter and the Oklahoma Constitution. In other words, 
the State overstepped its constitutional boundaries by interfering with the 
City's taxation power and revenue stream. It also insists that whenever a 
conflict exists between general state law and a city charter, the charter must 
prevail. The State contends that: 1) neither the City's ability to assess and 
receive sales and use tax nor its charter are infringed; and 2) even if a 
conflict existed, the charter must yield to wider public interest in uniform tax 
collection.
¶24 Tulsa is a municipal corporation organized under the Oklahoma 
Constitution art. 18 §§1-2.26 It is also a chartered city under a commission form of 
government with duly organized legislative and executive departments.27 Tulsa, pursuant to the Oklahoma Constitution art. 10, 
§20,28 and the Tax Code, 68 O.S. Supp. 2007 §§2701 et seq. has the 
legal authority to assess and collect municipal taxes for public purposes.29 Tulsa has adopted its own sales and use tax code for 
the purpose of assessing and collecting municipal taxes.30 Tulsa is also generally allowed to make contracts 
necessary to carry out its municipal affairs.31
¶25 The conflict between a city's and the State's taxing authority has long 
existed.32 Initially, it seemed, a city could, with limitations, 
provide in its charter for the assessment, levy, and collection of taxes in a 
manner other than provided by the general laws of the state. For example, in 
City of Collinsville v. Ward, 1917 OK 151, 165 P. 1145, overruled in part by Bodine 
v. Oklahoma City, 1919 OK 368, 187 P. 209, in addressing a city's taxing authority, 
the Court held that the power of taxation provided in a city's freeholders' 
charter, framed and adopted in accordance with the Constitution and state law, 
superseded the general revenue laws of the state in conflict in so far as the 
taxation involved "purely" municipal matters.33 The Court did not define "purely" municipal.
¶26 Two years later, Ward supra, was modified in so far as the City's 
tax purview being limited to "purely" municipal purposes in Bodine v. 
Oklahoma City, 1919 OK 368, 187 P. 209. In Bodine, the Legislature created 
a county excise board and when the City of Oklahoma City submitted its budget to 
the county board, the board tried to revise and correct the budget. The Court 
held that the city's power to assess and collect taxes is implied in its charter 
and the charter terms usurped the Legislature's general laws. The power of 
revision and correction of the city's tax budget lie with the mayor and city 
commissioners pursuant to the city's charter and not with the county excise 
board.
¶27 Bodine also recognized that: 1) a city charter may provide for the 
assessment, levy, and collection of a tax independent of the instrumentalities 
provided by the general laws of the state; and 2) a city had an inherent power 
to impose taxes for all necessary municipal purposes to function and that power 
is not limited to purposes which are "purely" municipal, expressly overruling 
Ward to the extent it conflicted with Bodine's holding. While 
Bodine touches on a city's power and authority to impose and collect 
municipal taxes, it is not totally dispositive of this cause because it did not 
squarely address the Legislature's authority to mandate a particular method of 
municipal tax collection and at what cost, if any, to a municipality. 
¶28 In other cases, the Court recognized that while the Legislature delegates 
taxing authority to municipalities, it is Constitutionally prohibited from 
directly assessing municipal taxes itself.34 Nor may it do indirectly that which cannot be done 
directly.35 In still others, the Court addressed this delegation 
when a city operating under a freeholders' charter attempted to provide a method 
of enforcement of the collection of municipal taxes contrary to the 
Legislature's general statutes. 
¶29 For example, in City of Sapulpa v. Land, 
1924 OK 92, 223 P. 640, the City's charter provided that the 
board of commissioners may, by ordinance, provide a system for assessment, levy 
and collection of all municipal taxes. The board did so by adopting a city 
ordinance authorizing the district or superior courts to foreclose city ad 
valorem tax liens. The City of Sapulpa, just as Tulsa does in the present cause, 
relied upon the line of cases such as Bodine, supra and Ward, 
supra, which recognized that provisions of a city's charter become the organic 
law of the municipality and supersede the laws of the state which conflict with 
it. 
¶30 The Sapulpa Court disagreed. Reviewing a multitude of 
constitutional provisions,36 stating in ¶¶20-22:
Upon a careful consideration of the provisions of section 3A, art. 18, of the 
Constitution, supra, it is manifest that it was the intention of the framers of 
the Constitution that all charter provisions must be subject to the general laws 
of the state, and by constitutional provisions, supra, no special laws shall be 
enacted where a general law may be made applicable. It is quite evident it was 
never the intention of the framers of the Constitution for municipal charter 
provisions, as authorized, to prevail over any general law of the state when its 
operation must be applicable to citizens alike throughout the state and all 
citizens are entitled to its protection.
Taxation is the exercise of sovereign authority, and the limitations placed 
by the Constitution upon the exercise of this sovereign authority must be 
construed so as to give effect to the intention, as evidenced by the language of 
such provisions. While it may be conceded that it was the intention of the 
framers of the Constitution by authorizing municipalities of over 2,000 
inhabitants to adopt a charter to afford such inhabitants the fullest measure of 
local self-government consistent with the Constitution and laws of the state, 
yet it must be borne in mind that such municipalities, in exercising the power 
of taxation, become involved in a matter under our system of government which is 
the proper subject of constitutional and general law. This, for the reason that 
the exercise of the arbitrary power of taxation is subject to the regulation of 
the supreme sovereign power, which in such case is the state. This is necessary 
in order that the tax system may be uniform and afford all citizens equal 
protection of the law. 
It is quite obvious from a fair and full consideration of the various 
provisions of our Constitution, supra, that it was the evident intention that 
our system of taxation be one uniform in its operation and effect and that such 
purpose may only be accomplished by the regulation of the subject by general and 
uniform laws.
¶31 The Court in Sapulpa also noted that: 
1) under the expressed provisions of the Constitution must be collected 
pursuant to general laws and this method excludes every other; 2) taxes in 
this state must be assessed and collected pursuant to and under the authority of 
general laws enacted by the Legislature; 3) under our form of government, 
there can be no absolute self-governing American cities, no matter how limited 
as to subject, otherwise, an impossible sovereign within a sovereign would 
exist; 4) municipal corporations are bodies political and corporate created 
by the Legislature as governmental agencies of the state and they can only 
exercise such power as they derive from their source of creation; 5) the 
powers which municipalities exercise are at all times subject to legislative 
control and the state has power to determine what matters are of general public 
concern; and 6) the exercise of its power of a municipal government must be 
consistent with the organic law of the state and subject to the supreme powers 
of the Legislature.
¶32 Similarly, in Ryan v. Roach Drug Co., 
1925 
OK 912, 239 P. 912, a case in which a city attempted by charter provision to substitute its 
own system of budget approval contrary to the statutory system, the Court 
clearly stated that cities in this state receive authority to make tax levies by 
virtue of general laws enacted by the Legislature and not otherwise, and in the 
absence of legislative authority the city has no power to assess or collect a 
tax at all. 
¶33 While nothing in the aforementioned decisions is dispositive of this 
cause, from all of those decisions the Court can conclude that: 1) 
municipalities through their charters may provide for municipal taxation and 
collection; 2) the Legislature through general laws of the state may provide for 
a uniform tax collection system; 3) the Legislature has the authority to 
determine that matters such as streamlining sales and use tax collection to 
reduce and eliminate the burden of costs of collecting taxes for both the state 
and its political subdivision are of public concern; and 4) the city's charter, 
to the extent it conflicts with the Legislature's streamlining scheme must yield 
in favor of the supreme powers of the Legislature.
¶34 The Supreme Court of Utah in Merkley v. State Tax 
Commission, 11 Utah 2d 336, 358 P.2d 991 (1961), reached a similar 
result when it reviewed a state statute that: 1) granted municipalities and 
counties the authority to levy sales and use taxes; and 2) mandated that the 
municipalities contract with the state tax commission to administer and operate 
its collection and distribution. The statute was challenged under various 
articles of Utah's Constitution including the prohibition of legislative 
delegation; the prohibition of the legislature levying municipal taxes; unlawful 
interference with the tax commission and local governmental agencies; 
prohibition of special laws; and that it was unreasonable, arbitrary, vague, and 
ambiguous.
¶35 The Utah Supreme Court upheld the statute noting that:
1) it was obvious that no legislative authority over cities was granted to 
counties nor delegated to the tax commission; 2) both cities and counties 
benefitted from the statute;3) the tax commission was given no power over 
any county or city, but instead was burdened with a duty to collect the taxes 
for them, if levied, for an apparent modest fee; and4) to require local 
governmental agencies to collect its own tax, would be duplication leading to a 
more expensive and quite impractical situation.
This rationale is very persuasive and appears equally applicable to the facts 
of this cause.37 We hold that Tulsa's constitutional and charter 
authority is not unconstitutionally infringed by the legislation.
¶36 The only remaining concern, if any, would be the "apparent modest fee." 
Here, the Legislative mandate includes a statutory mandated fee capped at 1 3/4% 
of the collection. Tulsa does not contend that this nominal fee is unrelated to 
the costs of collection or that it is an attempt by the State to do indirectly 
what it cannot do directly -- impose municipal taxes.38 Nor does Tulsa present any facts showing the mandated 
fee does anything other than merely recoup the costs of collection. 
Consequently, there is no reason to consider the fee as anything other than an 
apparent nominal fee related to the costs of collection.
CONCLUSION
¶37 Given the deference to which the legislative judgment is entitled as to 
the need and reasonableness of a simplified and streamlined sales and use tax 
collection for both the state and its political subdivisions, requiring the tax 
commission to collect municipal sales and use taxes does not unconstitutionally 
impair Tulsa's pre-existing contract with a private vendor for tax collection. 
Nor does such a statewide general legislative scheme of municipal tax collection 
infringe Tulsa's constitutional and charter powers. Accordingly, the trial court 
is reversed. 
APPEAL PREVIOUSLY RETAINED;TRIAL COURT REVERSED.
ALL JUSTICES CONCUR. 
FOOTNOTES
1 Title 68 O.S. Supp. 2010 §2702(A) provides:
A. The governing body of any incorporated city or town and the Oklahoma Tax 
Commission shall enter into contractual agreements whereby the Tax Commission 
shall have authority to assess, to collect and to enforce any taxes or, 
penalties or interest thereon, levied by such incorporated city or town, and 
remit the same to such municipality. Said assessment, collection, and 
enforcement authority shall apply to any taxes, penalty or interest liability 
existing at the time of contracting. Upon contracting, the Tax Commission shall 
have all the powers of enforcement in regard to such taxes, penalties and 
interest as are granted to or vested in the contracting municipality. Such 
agreement shall provide for the assessment, collection, enforcement, and 
prosecution of such municipal tax, penalties and interest, in the same manner as 
and in accordance with the administration, collection, enforcement, and 
prosecution by the Tax Commission of any similar state tax except as provided by 
agreement. Such agreement shall authorize the Tax Commission to retain an amount 
not to exceed one and three-fourths percent (1 3/4%) as a retention fee of 
municipal tax collected for services rendered in connection with such 
collections; provided, if a municipality files an action resulting in collection 
of delinquent state and municipal taxes, the Tax Commission shall remit one-half 
(1/2) of the retention fee applied to the amount of such taxes to the 
municipality to be apportioned as are other sales tax revenue. All funds 
retained by the Tax Commission for the collection services to municipalities 
shall be deposited in the Oklahoma Tax Commission Revolving Fund in the State 
Treasury. The municipality shall agree to refrain from any assessment, 
collection, or enforcement of the municipal tax except as specified in an 
agreement made pursuant to subsections A, C, D and E of this section.
This statute was amended in 2010, which is the version at issue in this cause 
and again in 2011. However, the relevant portions of the 2011 amendment remain 
substantially unchanged. 
2 Title 68 O.S. Supp. 2010 §2702(A), see note 1, supra. 

3 Title 68 O.S. Supp. 2002 §2702(A), see note 1, supra, 

4 The most recent agreements that the City and the 
Commission were operating under were initially entered into on January 17, 2007, 
which were renewable without action of either party for 1 year increments 
provided that the current tax rate remained unchanged and neither party had 
notice to terminate the agreement. One agreement was for collection of the 
municipal use tax and the other was for collection of the municipal sales tax. 

5 Title 68 of the Oklahoma Statutes is known as the 
Oklahoma Tax Code. Title 68 O.S. 2001 §101 provides:
The several tax laws recodified as Tax Codes, together with this act, shall 
be known as the Oklahoma Tax Code. 
6 For instance, the statute at issue here, 
68 O.S. Supp. 2010 
§2702 was originally enacted in 1965 and the original version, 
68 O.S. Supp. 1965 
§2702 provided:
The governing body of any incorporated city or town and the Oklahoma Tax 
Commission is authorized and empowered to enter into contractual agreements 
whereby the Oklahoma Tax Commission shall have authority to collect any of the 
taxes assessed by such incorporated city or town , and remit the same to such 
municipality. Such agreement may also provide for an agreed amount to be allowed 
the Oklahoma Tax Commission for services rendered in connection with such 
collections. 
7 Title 68 O.S. Supp. 2000 §§1354.7-.13. §1354.7 
provides:
This act shall be known and may be cited as the 'Streamlined Sales Tax System 
Act.'
The Act became effective July 1, 2000. 
8 Title 68 O.S. Supp. 2000 §1354.8 provides:
The Legislature finds that: 
1. State and local tax systems should treat transactions in a competitively 
neutral manner; 
2. A simplified sales and use tax system that treats all transactions in a 
competitively neutral manner will strengthen and preserve the sales and use tax 
as vital state and local revenue sources and preserve state fiscal sovereignty; 

3. Remote sellers should not receive preferential tax treatment at the 
expense of local "Main Street" merchants, nor should such vendors be burdened 
with special, discriminatory or multiple taxes; 
4. The state should simplify sales and use taxes to reduce the administrative 
burden of collection; and 
5. While states have the sovereign right to set their own tax policies, 
states working together have the opportunity to develop a more simple, uniform 
and fair system of state sales and use taxation without federal government 
mandates or interference. 
9 Title 68 O.S. Supp. 2000 §1354.9-.10. The Tax Commission 
was given until March 1, 2001, to report its findings. Title 68 O.S. Supp. 2000 §1354.13. See also, 
2009 OK AG 39¶¶8-9. 
10 Title 68 O.S. 2001 §§1354.14-.23. The Act defines 
"Sales tax" as taxes levied by the state county or other entity under Section 
1350 et seq. of the Tax Code and municipalities under section 2701 of the Tax 
Code. "Use tax" is also defined as a tax levied by the state, county or 
municipality. Title 68 O.S. 2001 §1354.15. The 2001 Act was amended 
in 2003. 
11 Title 68 O.S. 2001 §1354.16 provides:
The Legislature finds that a simplified sales and use tax system will reduce 
and, over time, eliminate the burden and cost for all vendors to collect sales 
and use taxes levied by this state and its political subdivisions. The 
Legislature further finds that this state should participate in multistate 
discussions to review or amend the terms of the Agreement to simplify and 
modernize sales and use tax administration in order to substantially reduce the 
burden of tax compliance for all sellers and for all types of commerce.
The statute was amended in 2003 to use the word "streamlined" instead of 
"simplified." 
12 Title 68 O.S. 2001 §1354.18. 
13 Title 68 O.S. 2001 §1354.20(5) provides:
5. Local Sales and Use Taxes. The Agreement must provide for reduction of the 
burdens of complying with local sales and use taxes through the following: 
a. restricting variances between the state and local tax bases, 
b. requiring states to administer any sales and use taxes levied by local 
jurisdictions within the state so that sellers collecting and remitting these 
taxes will not have to register or file returns with, remit funds to, or be 
subject to independent audits from local taxing jurisdictions, 
c. restricting the frequency of changes in the local sales and use tax rates 
and setting effective dates for the application of local jurisdictional boundary 
changes to local sales and use taxes, and 
d. providing notice of changes in local sales and use tax rates and of 
changes in the boundaries of local taxing jurisdictions; 
14 Tulsa mistakenly argues that the State, improperly 
interjected additional facts by discussion of the history of Streamlined Sales 
and Use Tax Agreements into the appellate briefs. This argument is unconvincing 
because most, if not all, of the information provided by the State can be 
gleaned from the statutory language expressed in both the 2000 and 2001 
enactments. This information is the law and it is relevant to the extent it 
provides a historical backdrop to the State's involvement in local tax 
collections. Nothing precluded the trial court from considering these laws which 
were in effect when the cause was filed and nothing precludes their 
consideration today. 
15 Title 68 O.S. Supp. 2010 §2702(A), see note 1, supra. 

16 The City brought the proceeding pursuant to 
12 O.S. 2001 §1651 et. seq. Section 
1651 provides:
District courts may, in cases of actual controversy, determine rights, 
status, or other legal relations, including but not limited to a determination 
of the construction or validity of any foreign judgment or decree, deed, 
contract, trust, or other instrument or agreement or of any statute, municipal 
ordinance, or other governmental regulation, whether or not other relief is or 
could be claimed, except that no declaration shall be made concerning liability 
or nonliability for damages on account of alleged tortious injuries to persons 
or to property either before or after judgment or for compensation alleged to be 
due under workers' compensation laws for injuries to persons. The determination 
may be made either before or after there has been a breach of any legal duty or 
obligation, and it may be either affirmative or negative in form and effect; 
provided however, that a court may refuse to make a determination where the 
judgment, if rendered, would not terminate the controversy, or some part 
thereof, giving rise to the proceeding. 
17 Title 68 O.S. Supp. 2010 §2702(A), see note 1, supra. 

18 Title 68 O.S. Supp. 2010 §2702(D) provides:
D. Provided further that, upon the request of any incorporated city or town, 
the Oklahoma Tax Commission shall enter into contractual agreements with such 
municipality whereby the municipality would be authorized to implement or 
augment the enforcement, either directly or through contract with private 
auditors or audit firms, of the municipal tax. Any person performing an audit 
shall first be approved by the Oklahoma Tax Commission and, once approved, shall 
be appointed as an agent of the Oklahoma Tax Commission for purposes of the 
audit. Contracts with a private auditor or audit firm shall not be subject to 
the limitations of Section 262 of this title and shall and are hereby authorized 
to provide that the municipality, private auditors or audit firms and the 
Oklahoma Tax Commission may exchange necessary information to effectively carry 
out the terms of such agreements. The municipality, its officers and employees 
and private auditors or audit firms may receive all information necessary to 
perform audits and shall preserve the confidentiality of such information in the 
same manner and be subject to the same penalties as provided by Section 205 of 
this title. Municipalities conducting audits directly or by contracting for 
private auditors or audit firms pursuant to this subsection shall furnish to the 
Oklahoma Tax Commission the audit results and all relevant supporting 
documentation. Further, such municipalities shall provide for the payment of 
private auditors or audit firms by deduction from the tax assessment resulting 
from the audit conducted by said private auditors or audit firms unless a 
municipality contracts with the auditor or audit firm for another method of 
payment. Any municipal sales tax funds recovered as a result of the services 
provided under this subsection will not be included in calculating the retention 
fee retained by the Oklahoma Tax Commission pursuant to subsection A of this 
section. The contracts authorized by subsection A of this section shall provide 
that the Oklahoma Tax Commission shall not have any obligations thereunder to 
any municipality that does not participate in an audit conducted under this 
subsection. 
19 On May 18, 2011, the trial court filed an amendment to 
its May 9, 2011, order making a small correction, but leaving the entire order 
substantially intact. 
20 This Constitutional provision parallels the United 
States Constitution, art. I, §10 which provides in pertinent part:
...No State shall enter into any Treaty, Alliance, or Confederation; grant 
Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing 
but gold and silver Coin a Tender in Payment of Debts; pass any Bill of 
Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or 
grant any Title of Nobility. . . .
We explained in Edmondson v. Pearce, 2004 OK 23, ¶¶26-28, 91 P.3d 605, cert. denied by Tally v. 
Edmondson, 543 U.S. 987, 125 S. Ct. 495, 160 L. Ed. 2d 371 (2004) 
after a lengthy discussion of the federal Constitutional provision that the 
federal Contract Clause was primarily focused on legislation designed to adjust 
pre-existing debtor-creditor relations. 
21 Edmondson v. Pearce, see note 20, supra. 
Although facially absolute, its prohibition must be accommodated to the inherent 
police power of the state to safeguard the vital interests of the people. The 
clause does not prevent the State from exercising its powers even though 
previously entered contracts between individuals will be impaired or perhaps 
destroyed. Edmondson, supra at ¶27, citing Keystone 
Bituminous Coal Association v. DeBenedictis, 
480 U.S. 470, 502, 107 S. Ct. 1232, 94 L. Ed. 2d 472 (1987); Energy 
Preserves Group, Inc. v. Kansas Power 
and Light Co., 459 U.S. 400, 103 S. Ct. 697, 74 L. Ed. 2d 569 (1983); Allied Structural Steel Co. v. 
Spannaus, 438 U.S. 234, 241-42, 98 S. Ct. 2716, 57 L. Ed. 2d 727 
(1978); United States Trust Co. v. New 
Jersey, 431 U.S. 1, 22, 97 S. Ct. 1505, 52 L. Ed. 2d 92 (1977). 

22 Edmondson v. Pearce, see note 20, supra 
at ¶29. See also, Energy Preserves Group, 
Inc. v. Kansas Power and Light Co., 
note 21, supra; Allied Structural Steel Co. v. 
Spannaus, note 21, supra; United States Trust 
Co. v. New Jersey, note 21, supra. 
23 Edmondson v. Pearce, see note 20, supra 
at ¶29. Energy Preserves Group, Inc. v. 
Kansas Power and Light Co., note 21, supra. 

24 Edmondson v. Pearce, see note 20, supra 
at ¶29. Energy Preserves Group, Inc. v. 
Kansas Power and Light Co., see note 21, 
supra; United States Trust Co. v. New 
Jersey, see note 21, supra. In other words, when the State itself enters 
into a contract, it cannot simply walk away from its financial obligations by 
enacting a statute to impair the obligations of the contract. See 
discussion, Energy , supra at fn. 14. United States 
Trust Co. v. New Jersey, see note 21, supra. This is 
clearly not the case in this cause. 
25 Title 68 O.S. Supp. 2010 §2702(A), see note 1, supra. 

26 The Okla. Const. art. 18, §1 provides:
Municipal corporations shall not be created by special laws, but the 
Legislature, by general laws shall provide for the incorporation and 
organization of cities and towns and the classification of same in proportion to 
population, subject to the provisions of this article. 
Section 2 provides:
Every municipal corporation now existing within this State shall continue 
with all of its present rights and powers until otherwise provided by law, and 
shall always have the additional rights and powers conferred by the 
Constitution. 
27 The authority to adopt a charter form of government is 
provided in section 3a, art. 18 of the Oklahoma Constitution. Bodine v. 
Oklahoma City, 1919 OK 368, ¶5, 187 P. 209. The Okla. Const. art. 18, §3(a) 
provides:
Any city containing a population of more than two thousand inhabitants may 
frame a charter for its own government, consistent with and subject to the 
Constitution and laws of this State, by causing a board of freeholders, composed 
of two from each ward, who shall be qualified electors of said city, to be 
elected by the qualified electors of said city, at any general or special 
election, whose duty it shall be, within ninety days after such election, to 
prepare and propose a charter for such city, which shall be signed in duplicate 
by the members of such board or a majority of them, and returned, one copy of 
said charter to the chief executive officer of such city, and the other to the 
Register of Deeds of the county in which said city shall be situated. Such 
proposed charter shall then be published in one or more newspapers published and 
of general circulation within said city, for at least twenty-one days, if in a 
daily paper, or in three consecutive issues, if in a weekly paper, and the first 
publication shall be made within twenty days after the completion of the 
charter; and within thirty days, and not earlier than twenty days after such 
publication, it shall be submitted to the qualified electors of said city at a 
general or special election, and if a majority of such qualified electors voting 
thereon shall ratify the same, it shall thereafter be submitted to the Governor 
for his approval, and the Governor shall approve the same if it shall not be in 
conflict with the Constitution and laws of this State. Upon such approval it 
shall become the organic law of such city and supersede any existing charter and 
all amendments thereof and all ordinances inconsistent with it. A copy of such 
charter, certified by the chief executive officer, and authenticated by the seal 
of such city, setting forth the submission of such charter to the electors and 
its ratification by them shall, after the approval of such charter by the 
Governor, be made in duplicate and deposited, one in the office of the Secretary 
of State, and the other, after being recorded in the office of said Register of 
Deeds, shall be deposited in the archives of the city; and thereafter all courts 
shall take judicial notice of said charter. The charter so ratified may be 
amended by proposals therefor, submitted by the legislative authority of the 
city to the qualified electors thereof (or by petition as hereinafter provided) 
at a general or special election, and ratified by a majority of the qualified 
electors voting thereon, and approved by the Governor as herein provided for the 
approval of the charter. 
28 The Okla. Const. art 10, §20 provides:
The Legislature shall not impose taxes for the purpose of any county, city, 
town, or other municipal corporation, but may, by general laws, confer on the 
proper authorities thereof, respectively, the power to assess and collect such 
taxes. 
29 Title 68 O.S. Supp. 2007 §§2701 et seq. Section 2701 
provides in pertinent part:
A. Any incorporated city or town in this state is hereby authorized to 
assess, levy, and collect taxes for general and special purposes of municipal 
government as the Legislature may levy and collect for purposes of state 
government, subject to the provisions of subsection F of this section, except ad 
valorem property taxes. Provided: 
30 The City's tax code can be found at Titles 43 and 45 of 
the Tulsa Revises Ordinances. Tulsa's city charter art. 1, pg. 2 §3D provides 
the City the power to "levy, assess, and collect taxes." 
31 Title 11 O.S. 2011 §22-101 provides:
All incorporated municipalities shall be bodies corporate and politic, and 
shall have the powers to:
1. Sue and be sued;
2. Purchase and hold real and personal property for the use of the 
municipality;
3. Sell and convey any real or personal property owned by the municipality 
and make orders respecting the same as may be conducive to the best interests of 
the municipality;
4. Make all contracts and do all other acts in relation to the property and 
affairs of the municipality, necessary to the good government of the 
municipality, and to the exercise of its corporate and administrative powers; 
and
5. Exercise such other powers as are or may be conferred by law. 
32 See generally, Power of City Under Freeholder's 
Charter, 35 A.L.R. 883 (Originally published in 1925). 
33 In Rogers v. Bass & 
Harbour Co., 1917 OK 482, 168 P. 212, overruled in part by Bodine 
v. Oklahoma City, 1919 OK 368, 187 P. 209 the holding in City of 
Collinsville v. Ward, 1917 OK 151, 165 P. 1145, overruled in part by 
Bodine v. Oklahoma City, 1919 OK 368, 187 P. 209, appeared to be expanded because 
Ward was also applied when type of city's charter was not revealed. 
34 The Okla. Const. art. 10 §20, see note 28, supra. In 
Board of Com'rs of Grady County et 
al v. Hammerly, 1921 OK 356, ¶29, 204 P. 445, the Court, addressing the 
constitutionality of an Act relating to Sheriff sales, stated:
The framers of our Constitution, recognizing the rights of free government 
and that the rights of personal liberty and private property should be held 
sacred and that such government would not be free if the rights of property were 
left solely dependent upon the legislative body without any restraint, solemnly 
declared that taxes should not be levied or collected except by general laws and 
for public purposes only, and that the Legislature should not have the power to 
impose taxes for the purpose of any county, city, town, or other municipal 
corporation, but that should be done by the proper authorities of such counties, 
cities, towns, or other municipalities, respectively, under a general law of the 
state, and that the power of the levying and collection of such taxes should be 
delegated to the proper authorities of the respective counties and 
municipalities. State constitutions are restrictions upon legislative power 
rather than a grant of such power, and when it declares how a right or duty may 
be exercised, the Legislature is without power to provide its exercise in some 
other way. 
35 City of Ardmore v. Excise 
Board of Carter County, 1932 OK 48, ¶12, 8 P.2d 2. 
36 The Court in City of Sapulpa v. 
Land, 1924 OK 
92, ¶¶11-19, 223 P. 640 reviewed constitutional provisions concerning uniform taxation, 
assessment for local improvements, levying taxes for public purpose only, 
taxation for municipal purposes, extension of authority, uniformity of laws, 
judicial power and jurisdiction. The Okla. Const. art. 10 §§5, 7, 14, 20, art. 5 
§§36, 59, art. 7 §§1, 10, and art. 5 §46, respectively. 
37 In Thurston v. Caldwell, 1913 OK 714, 137 P. 683, the Court upheld as constitutional the 
Legislature's empowerment of a county clerk to collect taxes for a charter city. 
In contrast, Tulsa relies on a Washington state case, State ex.rel 
Tax Commission v. Redd, 166 Wash. 132, 6 2d 619 (1932) 
which references prior decisions from the State of Kentucky. [Our Court 
acknowledged in Redd that our constitutional provision art. 10 §20 was 
directly taken from the Kentucky constitution.] Redd involved the state 
tax commission acting under a state statute attempting to reassess local county 
assessor's real property assessments. The court held the statute 
unconstitutional as an attempt by the Legislature to encroach on the Cities' 
right of self governance. While we could apply this rationale here as 
persuasive, it seems to be contrary to the Court's language and rationale in 
City of Sapulpa v. Land, 1924 OK 92, 223 P. 640, as previously discussed and it's 
rationale was later criticized by the Washington Supreme Court in 1969 in 
Carkonen v. Williams, 76 Wash. 2d 617, 458 P.2d 280 
(1969). Additionally, real property taxation and assessment are governed 
specifically governed by the Okla. Const. art. 10, §§6, 8. 
38 The Okla. Const. art. 10 §20, see note 28, supra; 
Board of Com'rs of Grady County et 
al v. Hammerly, see note 34, supra; City of 
Ardmore v. Excise Board of Carter 
County, see note 35, supra.