The group reviewing Oklahoma’s various economic incentives is recommending lawmakers overhaul one the state has $557 million in liabilities for and fully repeal three others.
The Investment/New Jobs credit offers certain businesses 5 percent of capital investments of at least $40 million or $2,500 dollars per new employee over five years. Those amounts are doubled if businesses invest or create jobs in state-designated Enterprise Zones, and businesses may carry forward indefinitely the $557 million in unused credits on the books right now.
"You don’t want the Oklahoma Tax Commission to be caught in a situation where somebody in one year all of a sudden wants to use a tax credit and it creates a problem for the revenue stream of the state of Oklahoma to be able to fund other core services," said Incentive Evaluation Commission Chairman Lyle Roggow.
The commission recommends nine changes, including reducing the credit amount, placing a seven-year cap on carrying the credit forward, instituting a provision to rescind credits if companies don’t maintain jobs or investments over five years, tweaking the credit so it targets specific industries and high-paying jobs, and limiting it only to new capital investment.
Lawmakers will weigh those recommendations during the upcoming session.
"If they choose not to make any action on these, it’s totally up to their hands, but at least we have found some things that could be improved or enhanced," Roggow said.
The state has temporarily capped payouts for the credit to $25 million per year.
One of the three incentives the commission recommends fully repealing is the Quality Jobs Investment Program, which has the state take on bond debt to put money toward potential new businesses.
The program is more than $3 million in the red, and Roggow said the Oklahoma Development Finance Authority says it isn’t worth it.
"If the program isn’t working, the entity who is governed to oversee it recommends as well that we need to do something about it, that’s the reason we decided the best thing for us would be to repeal it," Roggow said.
The Quality Jobs Investment Program is separate from the Quality Jobs Program.
The commission is also recommending repeal of the New Products Development Income Tax Exemption (Incentives for Inventors) and the Energy Efficient Residential Construction Tax Credit.
In its third year evaluating Oklahoma's various state economic incentives, the commission looked at 11 of them.
