Oklahoma's tax system is very centralized. As compared to the rest of the country, more of Oklahomans' taxes go to the state capitol rather than to their local governments. Local governments collect 32 percent of all tax revenue, compared to 41 percent nationally. The same is true of nontax revenue. Considering all revenue except transfers between governments, 36 percent of all revenue is local in Oklahoma, compared to 45 percent nationally.

There are some positive aspects to centralized revenues, including:

• Taxes and fees are more uniform across the state than in less centralized states; and
• Centralized taxes and fees can shift the burden of paying for government away from lower-income communities like rural areas and older suburbs.

On the other hand, a centralized revenue system has troubling aspects.

• People have less ability to set revenues to meet the needs of their own communities. This is both because state laws put many limits on local funding sources and choices and because high state collections "crowd out" local funding options.
• Local governments are beholden to the state for funding, which can be reduced or eliminated by the Legislature and Governor. Recent Oklahoma examples include sales and property tax exemptions that cut funding for local services without providing a substitute. In 2008, however, Oklahoma local governments got 36 percent of their revenue from the state, compared to the national average of 33 percent. Both nationwide and in Oklahoma, local government dependence on state funding rose three percentage points from 2006 to 2008.

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