OKLAHOMA CITY (KFOR) – The Oklahoma House of Representatives voted to advance a bill that would increase tax breaks for companies.
House Bill 4455, on a fast track as Governor Kevin Stitt works to beat out other states on a deal that could bring tens of thousands of jobs to the Sooner State.
“Now is the time to go after it. Tens of billions of dollars are going to be invested over the next 5 to 7 years in this space, and we want Oklahoma to be the spot that these folks land,” Gov. Stitt said Monday in a press conference.
HB4455, if passed into law, would create the Large-scale Economic Activity and Development (LEAD) Act of 2022. Representative Pro-Tem Kyle Hilbert, explaining on the House floor Tuesday that the legislation would give Oklahoma the opportunity, “to really be the center of an emerging industry.”
“It’s a great opportunity for our state,” said Rep. Hilbert. “I think many of us as legislators, probably all of us as legislators, Mr. Speaker, campaigned on the need to diversify our economy and grow our economy.”
Rep. Hilbert explained that the bill would create a 10-year investment rebate program for the cost of qualified capital expenditures for companies that created new direct jobs.
Up front, Oklahoma would put $698 million into a fund that would incentivize companies bringing their business to Oklahoma.
Although not directly stated, sources have told KFOR that the companies that could be impacted by this potential new law include Panasonic and Canoo.
However, Rep. Hilbert continued, stating that the qualifying company would not receive the full $698 million up front.
“What’s going to happen is that money we will deposit into the lead fund, still in the state’s control, and then should the company meet certain metrics, only then would they qualify for rebates from the lead fund,” said Rep. Hilbert. “Those rebates would be 3.4% of the investment and it would require a minimum capital expenditure of $3.606 billion and job requirements, full-time job requirements. Year one, 500 jobs. Year two, a thousand jobs. Year three, 2500 jobs and year four and five, 4000 jobs. If those job metrics are not hit, then the company would no longer qualify for the rebate, and then the legislature, we’d have the option of doing other things with those funds.”
Fellow representatives expressed their concern while on the House floor, stating the bill was being rushed through the legislative process.
Rep. Hilbert, clarifying the expedited process was due to the pending mega deal negotiations that Gov. Stitt was in.
“The company that he’s trying to bring in is looking to make a decision in the very near future, and so if we don’t pass legislation soon, then we won’t have an offer on the table and companies are going to go elsewhere,” said Rep. Hilbert.
Representative Emily Virgin, D-District 44 asked where the nearly $700 million needed for the fund would come from, to which Rep. Hilbert explained that underspending in the state’s budget over the years would make it possible.
“So what the legislature, what this body has done over the course of the last several budgets, is appropriated even less than our 95% authority. So we have more funding on the deck in general revenue that we can appropriate, and so that’s where these funds come from,“ said Rep. Hilbert. “Our surplus funds that we didn’t appropriate that were available to be appropriated in the FY22 cycle. And I’ll just say for our state savings, should we go through with this project, we’re estimated to be in excess of $2.7 billion in our state reserves even after funding this, which would finish the fiscal year with the largest reserves the state’s ever had in our state’s history.”
But other lawmakers balked at the idea of using Oklahoma taxpayer money to give out to companies.
“I’m wondering, philosophically, why we need to be giving money to a corporation and multinational corporation that doesn’t need it?” asked Representative Tom Gann, R-Inola. “So can you explain to me the constitutional principle, the Republican principle, the philosophical principle you might have about giving money, taxpayer dollars, to a company that does not need it, that has its outstanding revenues not only in gross but net?”
Rep. Hilbert, saying that if Oklahoma wants to bring in diverse forms of industry, they’ve got to be competitive.
“In an ideal world, I would say ideally we wouldn’t have state incentives. Ideally, nobody would, and you wouldn’t have to put these packages together and that would be the case. But unfortunately, it is the world we live in,” said Rep. Hilbert.
Ultimately, HB4455 did pass on the House floor with a 81-17 vote. It will now go to the Senate for consideration.