Commission to review a dozen economic development incentives this year

The Oklahoma Incentive Evaluation Commission was established nearly a decade ago by lawmakers who wanted to keep track of costs and benefits of numerous incentives ranging from the state’s Training for Industry Program to its Construction Materials Tax Refund Program.

This year, incentives to be evaluated include the Oklahoma Rural Jobs Program, the Invest in Oklahoma Program, the Film Enhancement Rebate Program and others.

Commission Chairman Lyle Roggow said evaluations of 10 to 14 incentives have been conducted annually since 2016. A private company, PFM Group Consulting, has held a contract since then to assist the eight-member panel in defining evaluation criteria, collecting relevant data from the Oklahoma Tax Commission and Department of Commerce, receiving public input and compiling information and preparing a report released annually each December.

It’s not uncommon for the commission to make recommendations on how incentives might be modified or programs reconfigured to get better results for the state. It might also recommend the elimination of an incentive.

That’s what happened a few years ago in the case of Oklahoma’s former Zero Emissions Facilities tax credit, which was adopted in 2003 as a way to boost the wind energy industry but was eliminated by the Legislature in 2017.

Roggow said the incentive worked. When it was adopted, the state’s goal was to have at least 15% of its produced energy renewable by 2015. By 2017, Oklahoma’s wind energy industry was the third largest in the nation, and about 30% of the state’s produced energy was renewable. And Roggow pointed out that the industry has continued to grow since the incentive was dropped.

“When you’re dealing with incentives of any sort, it’s about transparency and proof that it is economically viable to be doing these things,” Roggow said. “The (Zero Emissions Facilities) incentive was created to help foster the initial investment of those types of activities, and it worked.”

Randall Bauer, the PFM Group’s director in Oklahoma, said it can be tough to quantify all of the costs and benefits of incentives. He said Tulsa might benefit, for example, from people who visit just because they want to see where the TV show “Tulsa King” was filmed, but drawing a clear line of connection between the Film and TV Production tax credit and Tulsa tourism would be difficult.

“The value of training is another example,” he said. “It isn’t necessarily just that the employer adds employees because you’ve given him an incentive to train. It’s that the worker now has a bigger skill set and is a more valuable employee. Those things you can’t put a dollar value on.”

Goals for incentives vary. Some were adopted to help diversify the state’s economy. Others have been embraced as ways to boost development in rural areas. In many ways, both of those goals have been achieved, Bauer said.

“Last time we did a report it included input from incentives affecting 60 counties,” he said.

Incentives adopted to encourage workforce development in the aerospace industry have helped to make that industry the second largest in Oklahoma, he added. The Department of Commerce has pegged the industry’s annual value at $44 billion.

Roggow said it makes sense to try to get the best measure possible of costs and benefits of incentives. He said the schedule and processes the Evaluation Commission follows in producing annual reports have improved over the years and that Oklahoma has been named among leading states in the nation for the way it monitors incentives outcomes.

The commission’s meeting schedule, agendas, a full listing of incentives to be reviewed this year, recommendations and complete reports from previous years and more can be found online at bit.ly/incentiveevaluationcommission.

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