ATTORNEY GENERAL LOVING HAS ASKED ME TO RESPOND TO YOUR LETTER REQUESTING AN OPINION ADDRESSING, IN EFFECT, THE FOLLOWING QUESTION:
DOES ARTICLE X, SECTION 6C OF THE OKLAHOMA CONSTITUTION ALLOW A MUNICIPALITY OR A MUNICIPAL INDUSTRIAL AUTHORITY TO ENTER INTO A TAX INCREMENT FINANCING ARRANGEMENT WHEREBY THE MUNICIPALITY OR THE MUNICIPAL INDUSTRIAL AUTHORITY AGREES TO REPAY TAX INCREMENT FINANCING BONDS WITHOUT FOLLOWING THE MANDATES OF ARTICLE X, SECTION 26(A) OF THE OKLAHOMA CONSTITUTION?
BECAUSE YOUR QUESTION CAN BE READILY ANSWERED BY REFERENCE TO THE OKLAHOMA CONSTITUTION AND A RECENT OKLAHOMA SUPREME COURT DECISION, THIS OFFICE HAS DECIDED TO RESPOND TO YOUR REQUEST FOR AN OPINION THROUGH THIS INFORMAL LETTER. THEREFORE, THE DISCUSSION WHICH FOLLOWS IS NOT AN OFFICIAL OPINION OF THE ATTORNEY GENERAL BUT RATHER MY CONCLUSIONS THAT HAVE BEEN REACHED AFTER CAREFUL RESEARCH AND ANALYSIS OF THE QUESTIONS YOU HAVE RAISED.
GENERALLY, TAX INCREMENT FINANCING "IS A STATUTORY MECHANISM WHEREBY MUNICIPALITIES MAY DEDICATE FUTURE AD VALOREM TAX REVENUES FOR THE PAYMENT OF COSTS OF UNDERTAKING AND CARRYING OUT URBAN RENEWAL AND URBAN REDEVELOPMENT PROJECTS." MUSKOGEE URBAN RENEWAL AUTHORITY V. THE EXCISE BOARD OF MUSKOGEE COUNTY, 64 O.B.J. 1924 (JUNE 19, 1993). IN MUSKOGEE, THE OKLAHOMA SUPREME COURT EXAMINED AN ISSUE REGARDING TAX INCREMENT FINANCING SIMILAR TO THE ISSUE RAISED BY YOUR REQUEST. THE ISSUE WAS WHETHER THE OKLAHOMA LEGISLATURE, PURSUANT TO 11 O.S. 38-115 AND 11 O.S. 38-120 THROUGH 11 O.S. 38-123 (1991), COULD REQUIRE THE APPORTIONMENT OF AD VALOREM TAX REVENUES TO RETIRE A LONG TERM DEBT OF A MUNICIPALITY'S URBAN RENEWAL AUTHORITY WITHOUT FOLLOWING THE MANDATES OF ART. X, 26 OF THE OKLAHOMA CONSTITUTION. MUSKOGEE, 64 O.B.J. AT 1927.
ACCORDING TO THE COURT IN MUSKOGEE, ARTICLE X, SECTION 26 OUTLINES:
"THE MANNER IN WHICH THE POLITICAL SUBDIVISIONS OF THIS STATE MAY VOLUNTARILY INCUR DEBTS THAT CANNOT BE PAID DURING THE FISCAL YEAR INCURRED: 1) THE DEBT MUST BE CERTIFIED AS BEING WITHIN THE POLITICAL SUBDIVISION'S DEBT LIMIT; 2) THE ANNUAL TAX TO BE LEVIED AND PLACED IN A SINKING FUND TO PAY THE INTEREST AND PRINCIPAL MUST BE PROPOSED OR IDENTIFIED TO THE VOTERS BEFORE OR AT THE TIME OF THE ELECTION; AND, 3) THE DEBT MUST BE AUTHORIZED BY THE VOTERS OF THE POLITICAL SUBDIVISION."
ID. AT 1928.
IN HOLDING THAT THE TAX INCREMENT FINANCING MECHANISM AND THE MANDATED APPORTIONMENT OF AD VALOREM TAX MILLAGE AND REVENUE GENERATED BY THE MILLAGE FOUND IN 11 O.S. 38-120 THROUGH 11 O.S. 38-123 VIOLATED THE PROVISIONS OF ARTICLE X, SECTION 26(A), THE COURT REASONED THAT THE LEGISLATURE "CANNOT CHART A DETOUR COURSE TO AVOID THE INSURMOUNTABLE CONSTITUTIONAL BARRIERS IMPOSED UPON OUR POLITICAL SUBDIVISIONS BY DIRECTING APPORTIONMENT OF AD VALOREM TAX REVENUES TO SPECIAL FUNDS OF THE MUNICIPALITIES FOR PAYMENT OF THE URBAN RENEWAL AUTHORITIES' DEBTS." ID. "THE INCONSISTENT POSITIONS REQUIRED OF A MUNICIPALITY TO FINANCE URBAN RENEWAL UNDER THE TAX INCREMENT ALLOCATION STATUTES DEMONSTRATE AN INTENT TO FRUSTRATE THE EXPRESS TERMS, INTENT AND MEANING OF ART. 10, 26." ID. AT 1929.
THE COURT ALSO DISCUSSED, BUT DID NOT CITE