– Oklahoma
Oklahoma spends heavily on job subsidies through numerous programs. Among the largest is the Investment/New Jobs Tax Credit, which ballooned from a cost of around $40 million in 2006 to over $100 million in 2008. In 2010 legislators considered suspending the credit but instead opted to defer tax credit refunds until 2012. An October 25, 2010 article in The Oklahoman reported that Weyerhaeuser had received more than $54 million in such credits since 2007 even though the company had closed or sold all but one of its manufacturing plants in the state.
Oklahoma currently offers at least two programs which allow companies to receive cash rebates drawn from the personal state income tax payments of their employees. They are the Quality Jobs program and the recently enacted 21st Century Quality Jobs program, which are jointly overseen by the Department of Commerce and the Oklahoma Tax Commission. In 2009 the state eased eligibility requirements to allow boatmaker Mercury Marine to receive Quality Jobs credits for its plant in Stillwater, only to see the company decide to move the jobs to Wisconsin.
The auto sector has been one of the bigger beneficiaries of Oklahoma’s subsidies. Tire plants run by Goodyear and Michelin have received millions in low-cost financing and other financial assistance (see below). In 2006 state and local officials put together a $35 million package for Beijing-based Nanjing Automobile Group for a sports car plant in Ardmore that was later put on hold (see below)
In the wake of record budget shortfalls, the push for greater accountability and transparency in state tax expenditures has increased. Disclosure advocates hope to build on the 2007 Taxpayer Transparency Act, which led to the creation of the state’s “Google government” website, OpenBooks. Among other things, the site provides data on the recipients of Investment/New Jobs Tax Credits.
On a separate website, the Oklahoma Tax Commission discloses Quality Jobs program awards in annual reports. Neither disclosure source includes basic outcome data such as job creation numbers or wage rates. No company-specific information is disclosed online for the three other major programs we examined. One of those, the 21st Century Quality Jobs program, was created recently, so there is still time to start disclosing and not miss many recipients.
In 2011 Oklahoma created a Tax Credit Task Force whose preliminary recommendations included the elimination of transferable tax credits; annual audit of tax credits; job creation or retention requirements; expiration dates and caps on new tax credits; a fiscal impact study of every new tax credit; and a ban on enacting new tax credits during the final days of legislative sessions.
- Show Us the Subsidies rank among the states: 28th
- Money for Something rank among the states: 6th
- Money-Back Guarantees rank among the states: 7th
Key Subsidy Programs
| Subsidy Program | Recent Annual Cost | Online Recipient Disclosure | Recipient Disclosure Score* | Job-Creation/Job-Quality Score** | Monitoring/Enforcement Score*** |
|---|---|---|---|---|---|
21st Century Quality Jobsquarterly cash rebates funded by worker personal income tax withholding for firms which meet job creation, wage, and benefit requirements |
not available |
None
|
0/100 | 109/100 | 87/100 |
Investment/New Jobs Tax Creditcorporate income tax and insurance premium tax credits, sales tax refunds for businesses which meet job creation, wage, and investment requirements |
$118.7 million (2008) | 49/100 | 25/100 | 45/100 | |
Opportunity Fund"deal closing" fund created in 2006; currently on hold |
$4 million (2009) |
None
|
0/100 | 45/100 | 58/100 |
Quality Jobsquarterly cash rebates funded by worker personal income tax withholding for firms which meet payroll, wage, and benefit requirements |
$61.8 million (2011) | 59/100 | 95/100 | 80/100 | |
Training for Industrycompanies are reimbursed in part or in full for the cost of providing customized workforce training |
$5.5 million (2008) |
None
|
0/100 | 55/100 | 50/100 |
* The score is derived from the Good Jobs First report Show Us the Subsidies (December 2010).
** The score is derived from the Good Jobs First report Money for Something (December 2011).
*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).
Major Subsidy Deals
Goodyear Tire & Rubber (2002 and 2010)
Eager to preserve and increase the 2,300 jobs at Goodyear’s plant in Lawton—said to be the world’s largest tire factory—state and local officials looked for ways to help the company finance a modernization effort costing $125-$250 million. In 2002 Comanche County’s commissioners got voters to endorse their plan for a sales tax increase, $3 million of which would go to the company. At the same time, the state legislature approved a proposal to give Goodyear $36 million in funding, to be financed through bonds issued by the Oklahoma Industrial Finance Authority.
The interest on the bonds was to be paid through the diversion of other subsidies already being received by the company based on employee withholding taxes. The plan was the subject of a lawsuit that was not resolved until 2004, when the Oklahoma Supreme Court upheld the bond issue, which was also to benefit a Michelin tire plant in the state. In August 2010 the finance authority approved an additional $20 million in bond financing for Goodyear that would again be funded through a diversion of employees' state income taxes. (Key sources)
Nanjing Automobile Group (2006)
In 2006 state and local officials in Oklahoma ponied up $35 million in subsidies for Beijing-based Nanjing Automobile Group, which planned to revive the MG sports car at a plant in Ardmore. With backing from the Chinese government and two U.S. partners, Nanjing Auto intended to invest a total of $63 million in the plant, offices in Oklahoma City and a university-based research center. The $20 million state portion of the subsidy package included $15 million from the newly-minted Oklahoma Opportunity Fund and a $5 million short-term loan. The Ardmore Development Authority pledged $11.5 million, backed by tax-increment financing, with the city to contribute another $3.5 million. Nanjing Auto said it would pay its workers about $57,000 annually, well above the state average. Progress on the venture slowed down in early 2007 after one of the U.S partners dropped out. By 2010 the deal was on hold and its future uncertain. (Key sources)
Wal-Mart in Oklahoma
- At least 3 Wal-Mart locations have received subsidies worth about $25.2 million in Oklahoma.
- At least 1 Wal-Mart location in Oklahoma has challenged its property tax assessment.
- Many Wal-Mart workers are ineligible for health coverage from their employer or choose not to purchase what is available, because it is too expensive or too limited in scope. These workers often turn to taxpayer-funded health programs such as Medicaid. Oklahoma is among those states that have not disclosed data on the employers with the most workers or their dependents enrolled in such programs.
For more information, see the Oklahoma page of Wal-Mart Subsidy Watch.
