In debating a $698 million incentive package to lure a $3 billion to $5 billion electric vehicle battery factory to Pryor, no one in the Oklahoma House of Representatives on Tuesday really disputed the claim that such a project would bring arc-bending change to the community, the region and even the state.
The arguments were about whether change is good or bad, and whether the state should be involved in such things at all.
“I can’t get past the question, why are we giving ... hard-earned tax money away ... and give it to a corporation that doesn’t need it?” said Rep. Tom Gann, R-Inola, whose district includes Pryor and the Mid-America Industrial Park, where the plant would be built.
“It is immoral to give taxpayer money to a corporation that doesn’t need it or has a business model that doesn’t work.”
One of the House’s most austere conservatives, Gann said the people of the area do not want the proposed plant and neither do other MAIP tenants — a claim proponents of the project disputed.
Rep. Wendi Stearman, R-Collinsville, answered promises of jobs, growth and economic diversification by saying, “I don’t want Oklahoma to change, and the majority of my constituents do not want Oklahoma to change.”
But Gann and Stearman were among a small minority. By a vote of 81-17, the incentive program — in the form of House Bill 4455 — was sent to the Senate Tuesday morning.
Gov. Kevin Stitt hopes to have the bill by Friday.
Speaker Pro Tem Kyle Hilbert, R-Bristow, who presented the bill, said legislators had to decide whether they are really want to diversify the state’s economy or consider it "something we just talk about on the doorstep" when campaigning.
“If we pass this bill and land this deal, the future of the automotive industry runs through Oklahoma,” Hilbert said. “The future of technology is running through Oklahoma.
“Every other commercial on the Super Bowl was an electric vehicle commercial,” he continued. “Whether you support electric vehicles, whether you oppose electric vehicles, whatever your stance is on that, it doesn’t matter. That’s where the industry is going. … The electric vehicle industry is growing, and we have a chance to be at the front and center.”
A common complaint, even among those who voted for HB 4455, is the secrecy surrounding the deal.
HB 4455, entitled the Large-scale Economic Activity and Development Act, calls for a 3.4% state rebate on qualified capital expenditures with a minimum investment of $3.06 and a maximum of $4.5 billion. The rebates also require meeting certain employment minimums and other conditions over five years.
A $4.5 billion minimum investment would result in rebates totaling $613 million, Hilbert said later Tuesday.
The remaining $85 million would be available to an unnamed second, “separate establishment,” referred to as “Player 2” in explanations of the program. Player 2 would have to invest $500 million to be eligible.
The LEAD program would be limited to the initial $698 million, which would come from state reserve funds and placed in a segregated account. Anything left after 10 years would return to the general fund.
Any additions to the program would have to go through the Legislature.
Hilbert said the $698 million total is a bump of $198 million over what the two target companies would qualify for under the state’s existing 2% capital refund program.
In its final form, the incentive package differs from the request outlined by Stitt Monday afternoon, hours before HB 4455 was introduced in legislative committees.
Stitt had asked that the rebate rates for Quality Jobs — a program that reimburses 5% of payroll for qualifying jobs — and capital investment be increased.
Instead, the Legislature created LEAD, which requires capital investment and job creation but calculates rebates based solely on the capital investment.
The target businesses apparently could also qualify for Quality Jobs, which on the $250 million annual payroll mentioned over the past two days works out to as much as $12.5 million a year for 10 years.
Separately, the Legislature is also considering a phase out of the state’s corporate income tax, which, if adopted, would be another perk.
Hilbert said he understands total incentives from all sources for the project are around $1 billion.
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