User Charges

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State and local agencies charge users who benefit from services. User charges differ from taxes, in that users pay charges for benefits they receive specifically, whereas taxes are general charges for services that benefit everyone.

User charges cover some or all of the cost of a service, depending on the policy goals of government. Because we believe that all of society benefits from higher education, tuition charges cover only part of the cost; the rest comes from taxes and federal grants. On the other hand, water and sewer utility costs are entirely paid by charges on those who use them. This helps keep the service from being over-used. The major disadvantage to user charges is that they often are unfair to lower-income people. Families of the same size pay about the same for water or the same highway toll regardless of their income, so it is a bigger burden for a low-income family. In some instances, like college tuition or the Low-Income Home Energy Assistance Program, government creates programs to help reduce the cost and impact on low-income customers and to ensure that everyone has access to services.

state-and-local-user-charges-by-type-2013

Oklahoma governments received approximately $5.4 billion in user charges in 2016, an increase of 47 percent in ten years. The average person paid $1,381 in user charges. Total revenue from user charges is split almost evenly between state government and local governments. The paragraphs below summarize the major revenue categories from largest to smallest in revenue.

Higher education tuition and fees represent the largest charge, at approximately $2 billion or 37 percent of all charges. In Oklahoma, tuition has increased 52 percent since 2006, faster than the cost of living and incomes. Aid for students in need also has increased, however.

Hospitals are the second largest collectors of user charges, at $1.3 billion or 25 percent of all fees collected. Hospital charges increased 24 percent from 2006 to 2016. Over three-fourths of this amount is collected by publicly-owned local hospitals operated by cities, counties, and special districts., with state-owned hospitals, including mental hospitals and teaching hospitals, collecting the rest. The charges are paid by those treated in the hospitals or their insurers.

Sewerage and solid waste user charges, collected mainly by local governments, generated over $416 million or 8 percent of total charges. These fees are based on how much waste each user generates and are designed to pay all costs of these operations. Additionally, most Oklahomans pay water, electric, and other fees that are left off this chart because the Census Bureau classifies these as utilities rather than user charges. These generated over $2 billion in 2016.

A number of transportation systems–highways, airports, parking, and ports–collected approximately $403 million or 8 percent of total fees in 2016. The largest of these charges is tolls and other fees paid to the Oklahoma Turnpike Authority. The other major transportation user charges are at airports, which charge airplane owners landing fees and collect revenue from passengers as well. Most of this revenue is collected by the state’s two major airports in Oklahoma City and Tulsa. They depend entirely on fees to pay ongoing costs but receive some grants for construction. 

Education fees raised approximately $317 million, or 6 percent of all fees, in 2016. These fees were at the local level, mostly from school districts. School lunch fees were the largest single source; others include fees for using facilities and for transportation. Fees make up a very small part of revenue for school districts. 

Natural resource and parks and recreation fees generated  $147 million in 2016. City and county park systems collected much of this revenue, but the Oklahoma Tourism and Recreation Department collected fees from users of state parks and the Oklahoma Department of Wildlife Conservation charged fees for hunting and fishing licenses.

Housing and community development fees represent just one percent of user charges and include rental payments for publicly-owned housing and building and zoning fees charged by local governments.

Other user charges, totaling 9 percent of all charges, include revenues from many public functions, such as arenas and convention centers and license fees paid by professions that are regulated by the state, from doctors to used car dealers.

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