Oklahoma Supreme Court blocks homestead tax initiative 5-4

The Oklahoma Supreme Court ruled 5-4 on Oct. 5 that State Question 843, Initiative Petition 455, is unconstitutional, stopping the proposed homestead property-tax exemption before supporters could gather signatures. The court granted a timely protest brought by 10 Oklahoma residents.

The majority found that the initiative’s planned full exemption would leave qualifying homesteads with a zero assessed value for ad valorem taxation. That conflicts with the state constitution’s requirement that real property be assessed at no less than 11% of fair cash value. The ruling does not change existing property-tax assessments or bills.

How the proposed exemption would have worked

The initiative proposed increasing the exemption for qualifying homesteads in stages: one-third of a homestead’s full assessed value for taxes payable in 2027, two-thirds in 2028, and the full assessed value in 2029 and later years. It would have applied statewide and used whichever amount was greater: the existing homestead exemption or the new proposed amount.

The proposed act set Jan. 1, 2027, as its effective date and said it would first apply to ad valorem taxes payable in 2027. Its petition materials estimated revenue reductions of about $400 million in 2027, $800 million in 2028 and $1.2 billion annually beginning in 2029. Those were estimates presented with the proposal, not findings by the court or a determination of actual revenue losses.

The majority relied on Article X, Section 8 of the Oklahoma Constitution, which sets the assessed value of real property for ad valorem taxation at between 11% and 13.5% of fair cash value. It concluded that the proposed full exemption would reduce homestead assessments to zero and violate that minimum. The justices did not decide the challengers’ other constitutional arguments.

Justices differed over review before a vote

The respondents argued that the initiative was constitutional and should be allowed to proceed to signature gathering. They also argued that Article XII-A of the state constitution permits the expansion of homestead exemptions.

Four justices dissented, with differing views on the court’s role and the timing of the challenge. Chief Justice Dustin Rowe urged the court to reconsider its practice of reviewing proposed measures before an election. Vice Chief Justice Dana Kuehn agreed the court could take the case but would have denied the challenge as premature. Justice Gregory Blackwell, joined by Kuehn and Justice John Kane, argued the court lacked authority to declare a proposed, unenacted law unconstitutional.

Five justices concurred, four dissented and Justice Travis Jett was recused. The order says it has not been released for publication and remains subject to revision or withdrawal. Unless revised or withdrawn, it prevents this petition from proceeding to signature gathering. The order does not identify a further procedural action.