Oklahoma Supreme Court Blocks Property-Tax Phaseout — Here’s Wat the 5-4 Decision Means

Oklahoma Supreme Court Blocks Property-Tax Phaseout in Narrow 5-4 Decision

Majority says State Question 843 conflicted with Oklahoma Constitution; dissenters question whether courts should stop citizen initiatives before voters act

By Miami News-Digest 

OKLAHOMA CITY — A divided Oklahoma Supreme Court has stopped an initiative that sought to phase out most property taxes on owner-occupied homes, ruling 5-4 that the proposal directly conflicted with Oklahoma’s Constitution before supporters could begin gathering signatures to place it before voters.

The court issued its decision Monday, Oct. 5, in Brooks v. Reynolds, 2026 OK 71, declaring State Question 843, Initiative Petition 455, “clearly and manifestly” unconstitutional. The decision presents two distinct questions that divided the court: whether the proposed tax exemption conflicted with existing constitutional rules governing property taxation, and whether the Supreme Court should decide such a constitutional question before an initiative has been enacted by voters at all.

The five-member majority answered the first question decisively.

SQ 843 proposed amending state statute to gradually exempt owner-occupied homesteads from ad valorem, or property, taxation. The exemption would have increased in stages — roughly one-third of assessed value in 2027, two-thirds in 2028 and 100% beginning in 2029. The proposal generally would not have applied to businesses or rental properties, and existing bonded indebtedness incurred by local governments before the end of 2026 would have remained outside the exemption.

But the proposal was written as a statutory amendment, not an amendment to the Oklahoma Constitution.

That distinction ultimately proved fatal...

Article X, Section 8 of the Oklahoma Constitution states that real property subject to ad valorem taxation must be assessed at no less than 11% and no more than 13.5% of its fair cash value. The majority concluded that SQ 843’s eventual full exemption would effectively reduce the taxable assessment on qualifying homesteads to zero, in direct conflict with that constitutional requirement.

“The proposed statutory amendment eliminates ad valorem taxes on homestead real property by 2029,” the court wrote, concluding that the resulting zero assessment could not be reconciled with the constitutional floor. Because that conflict alone was sufficient to invalidate the petition, the majority declined to decide the challengers’ additional constitutional arguments.

Justices James Winchester, James Edmondson, Douglas Combs, Noma Gurich and Richard Darby formed the majority.

Chief Justice Dustin Rowe, Vice Chief Justice Dana Kuehn, Justice M. John Kane IV and Special Justice Gregory Blackwell dissented. Justice Travis Jett recused from the case. Blackwell, a judge on the Oklahoma Court of Civil Appeals, participated as a special justice; KGOU reported Jett’s recusal came because Sen. Shane Jett, one of the initiative’s proponents and defendants in the case, is his cousin.

The dissent raises a different constitutional issue

The closeness of the 5-4 decision does not necessarily mean four justices concluded SQ 843 itself complied with Article X.

Instead, much of the dissent focused on a more fundamental separation-of-powers question: Should the Oklahoma Supreme Court be deciding whether a proposed law is constitutional before the people have enacted it?

Rowe traced Oklahoma initiative-petition jurisprudence back to the early years of statehood, noting that from 1910 until 1975 the court generally declined to judge the substance of proposed initiatives before voters acted.

That changed with a 1975 decision allowing pre-election constitutional review when doing so could prevent an unnecessary election. Oklahoma law was later amended to expressly allow citizens to file constitutional protests against initiative petitions. The modern court has consequently reviewed and, in some cases, blocked proposed measures before signature collection or an election.

Rowe argued that practice has gone too far.

“Our pre-election review places us at odds with the Constitution by transforming us into a pre-election gatekeeper,” he wrote.

He drew a comparison to the Legislature: courts do not ordinarily stop legislators from introducing or voting on a bill because judges believe it would be unconstitutional if enacted. In Rowe’s view, citizens exercising Oklahoma’s reserved initiative power should receive similar deference.

Kuehn likewise argued that a constitutional dispute over SQ 843 was premature. Until an initiative gathers enough signatures, survives procedural challenges, reaches an election and wins voter approval, she reasoned, there is not yet an enacted law for the court to invalidate. She acknowledged that a statute ultimately cannot override the Oklahoma Constitution, but said that question could be decided if and when the proposal actually became law.

Blackwell, joined by Kuehn and Kane, went further in questioning the court’s modern pre-election review doctrine. He argued that Oklahoma’s Constitution reserves legislative power to both the Legislature and the people and that the judiciary should not determine “the constitutional viability of would-be laws” before they exist as law.

The result is an unusual 5-4 decision in which the majority said the proposed statute plainly violated the Constitution while several dissenters argued that the judiciary should not have reached that question at this stage.

The proposal was filed by Sen. Shane Jett, R-Shawnee; Rep. Jay Steagall, R-Yukon; and former state Rep. Mike Reynolds.

For homeowners qualifying for Oklahoma’s homestead exemption, SQ 843 was intended eventually to eliminate most ordinary property-tax liability on their primary residence. Property taxes on commercial property, rental houses and other non-homestead property would have remained.

Existing bonded debt was also treated differently, meaning passage would not necessarily have caused every homestead property-tax bill to disappear immediately in 2029.

The proposal grew out of a broader Oklahoma debate over rising property valuations and the burden property taxes place on homeowners. Supporters argued that eliminating the tax on primary residences would allow homeowners to keep more of their income and reduce the recurring cost of owning a home.

Opponents focused on the other side of the ledger: property taxes are a major source of locally generated revenue for Oklahoma school districts, career-technology schools, counties and other local governmental entities. Oklahoma Policy Institute, citing state estimates, reported that public schools alone could experience roughly a $1.03 billion reduction in local funding if homestead property taxes were eliminated.

During June arguments before the Supreme Court, opponents contended that more than $1 billion in school funding could be affected. Supporters responded that the courts should give initiative petitions a strong presumption of constitutionality and allow Oklahoma voters to make the policy decision.

Senate President Pro Tempore Lonnie Paxton, R-Tuttle, had also criticized the proposal months before the ruling, arguing that removing homesteads from the property-tax base could shift pressure toward businesses, farmers, landlords and other property owners who remained taxable.

That policy argument, however, was not the basis for Monday’s ruling. The majority did not hold that Oklahoma must maintain its present property-tax burden or that voters can never substantially reduce homestead taxation. It held that this particular proposal attempted to accomplish its objective through a statute that conflicted with an existing constitutional command.

Could supporters try again?

Potentially...

The majority’s reasoning points to a significant difference between changing an Oklahoma statute and changing the Oklahoma Constitution itself.

SQ 843 sought a statutory change. Under Oklahoma’s current initiative system, statutory initiatives require signatures equal to 8% of the votes cast in the last gubernatorial election, while proposed constitutional amendments require 15%. For the current petition cycle, those thresholds have been 92,263 signatures for a statutory initiative and 172,993 for a constitutional initiative. Those numerical thresholds are scheduled to reset following the 2026 gubernatorial election. 

A future initiative drafted specifically to amend Article X could therefore address the particular conflict with Section 8 identified by the majority, although doing so would require the higher constitutional-amendment signature threshold and would not guarantee that a redesigned measure would survive other constitutional or procedural challenges.

Steagall told The Oklahoman following the ruling that he was disappointed with the decision and intends to continue pursuing changes to Oklahoma’s property-tax structure.

Another property-tax question is still going before voters...

The ruling on SQ 843 should not be confused with State Question 847, which is already scheduled for Oklahoma’s Nov. 3 general-election ballot.

SQ 847 is a legislatively referred constitutional amendment dealing with limits on how quickly taxable property values can increase. It would lower the annual assessment-growth cap on homestead and agricultural property from 3% to 1.75%, while reducing the cap on most other real property from 5% to 4%. It also contains provisions affecting some homeowners age 65 and older.

Unlike SQ 843, it does not abolish homestead property taxes...

That distinction may become increasingly important in Oklahoma’s property-tax debate. The Supreme Court’s decision does not close the door on property-tax reform, but it does establish a substantial legal obstacle to attempting a complete homestead exemption through an ordinary statutory initiative while Article X, Section 8 remains unchanged.

For now, SQ 843 will not proceed through the initiative process.

The larger dispute — how much homeowners should pay, how rapidly assessments should increase, how local services should be financed and how much authority courts should exercise over citizen initiatives before an election — remains unresolved.

Miami News-Digest will continue following Oklahoma property-tax proposals and the Nov. 3 vote on State Question 847.