Incentive Evaluation Commission Finalizes 2016 Recommendations

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The Incentive Evaluation Commission met in a special meeting held on Wednesday at the Oklahoma State Capitol and approved the recommendations of ten tax incentives conducted by Iowa-based vendor consultant, The PFM Group.

During the first hour of the meeting, the discussion centered on the nature of the commission’s duties and reporting scope. Chairman Lyle Roggow indicated his desire to provide legislative leaders with a blueprint reflecting the thought behind the IEC’s recommendations rather than a simple approval or rejection of PFM’s analysis.

“The role of the commission is to approve or disapprove the evaluation of the incentives,” said Preston Doerflinger, Office of Management and Enterprise Services Director, a non-voting member of the commission.

Despite the hiccup, Chairman Roggow and Commissioner Cynthia Rogers both indicated their desire to provide the commission’s determination as well as additional input provided by voting members.

Commissioners unanimously approved PFM’s recommendations on the following five tax incentives:

  • Aerospace incentives including tax credit for tuition reimbursement for aerospace employers; tax credit for aerospace employees; and tax credit for compensation paid by aerospace employers;
  • Excise tax exemption on aircraft sales;
  • Five-year ad valorem property tax exemption;
  • Historic rehabilitation tax credit; and
  • Tax incentive for Quality Events Program.

Four of the five voting members approved PRM’s recommendations on the tax credit for electricity generated by zero emission facilities. Chairman Roggow abstained from the vote.

PRM’s recommendation to sunset the Oklahoma Capital Investment Board tax incentive in 2018 was met with criticism by Commissioner Carlos Johnson.

“This is not something that happens in a short period of time and it is difficult to evaluate,” said Johnson. “There are some projects that would not have happened without their injection of capital.”

Three of the five voting members approved PRM’s recommendations while Johnson and Roggow voted no.

“This is an example of where I believe the evaluation was done appropriately but I disagree with the recommendation,” said Johnson.

PRM’s recommendation to keep the 2024 sunset provision for the Oklahoma Film Enhancement Rebate received four of the five voting members’ approval with Commissioner Johnson voting no on this incentive.

During the meeting, non-voting member and Oklahoma’s Secretary of Commerce and Education Deby Snodgrass asked for disqualification of the Industrial Access Road Program from the action list. Snodgrass explained that the program arises not in statute but rather through the administrative rules of the Department of Transportation. Snodgrass explained that the program is not a legislative line-item appropriation and, as such, should be tabled since it involves only public roads which are currently maintained through the DOT budget. IEC voting members opted to table action on the program. This issue will be addressed at the next meeting to be held on Tuesday, November 29.

Snodgrass indicated there were other incentives on the master list for analysis that are similarly situated through administrative rules rather than statutory design. She indicated that an Attorney General opinion on the commission’s authority to review certain programs may clear the way from additional roadblocks.

The IEC must provide their recommendations to the Governor and legislative leaders by December 15.

A link to the Incentive Evaluation Commission draft evaluations can be found at http://iec.ok.gov/documents.