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STATE OF OKLAHOMA
2nd Session of the 58th Legislature (2022)
SENATE BILL 1782 By: Rader
AS INTRODUCED
An Act relating to incentive payments; amendin g 68
O.S. 2021, Sections 3604 and 3604.1, which relate to
the Oklahoma Quality Jobs Program ; modifying period
of incentive payments for applications submitted
after certain date; modifying period for e ffective
date of agreement; modifying wage requirement for
certain applicants; requiring the establishment to
meet wage requirements at certain pe riod of the
agreement; limiting maximum wage requ irement to
certain period; updating statutory reference; and
providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 3604, is
amended to read as follo ws:
Section 3604. A. Except as otherwise provided in subsection I
or subsection L of this section, an establ ishment which meets the
qualifications specified in the Oklahoma Quality Jobs Program Act
may receive quarterly incentive payments fo r a ten-year period from
the Oklahoma Tax Commission pursuant to the provis ions of the
Oklahoma Quality Jobs Program Act; provide d, such an establish ment
defined or classified in the NAICS Manual und er U.S. Industry No.
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711211 (2007 version) may receive quarterly incentive payments for a
fifteen-year period. The amount of such p ayments shall be equal to
the net benefit rate multipl ied by the actual gr oss payroll of new
direct jobs for a calendar quar ter as verified by the Oklahoma
Employment Security Commission.
B. In order to receive incentive payments, an establishment
shall apply to the Oklahoma Department of Commerce. The appl ication
shall be on a form prescribed by the Department and shall cont ain
such information as may be required by the Department to determine
if the applicant is qualified. An establishment may apply fo r an
effective date for a project, which shall not be more than twenty-
four (24) months twelve (12) months from the date the application is
submitted to the Department.
C. Except as otherwise provided by subsection D or E of this
section, in order to qualify to receive such payments, the
establishment applyi ng shall be required to:
1. Be engaged in a basic industry;
2. Have an annual gross p ayroll for new direct jobs projected
by the Department to equal or exceed Two Million Five Hundred
Thousand Dollars ($2,500,000.00) wi thin three (3) years of the first
complete calendar quarter following the start date; and
3. Have a number of full -time-equivalent employees subject to
the tax imposed by Section 2355 of this title and working an annual
average of thirty (30) or more hour s per week in new direct jobs
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located in this state equal to or in excess of eighty percent (80%)
of the total number of n ew direct jobs.
D. In order to qualify to receive incentive payments as
authorized by the Oklahoma Quality Jobs Program Act, an
establishment engaged in an activity des cribed under:
1. Industry Group Nos. 3111 through 3119 of the NAICS Manual
shall be required to:
a. have an annual gross payroll for new direct jobs
projected by the Department to equal or exceed One
Million Five Hundred Thousand Dollars ($1,500,000.00)
within three (3) years of the first complete calendar
quarter following the start date a nd make, or which
will make within one (1) year, at least seventy-five
percent (75%) of its total sales, as determined by the
Incentive Approval Committee pursuant to th e
provisions of subsection B of Section 3603 of this
title, to out-of-state customers or buyers, to in-
state customers or buyers if the product or service is
resold by the purchaser to an out -of-state customer or
buyer for ultimate use, or to the federal g overnment,
unless the annual gross payroll equals or exceeds Two
Million Five Hundred T housand Dollars ($2,500,000.00)
in which case the requirements for purchase of output
provided by this subparagraph shall not apply, a nd
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b. have a number of full -time-equivalent employees
working an average of thirty (30) or more hours per
week in new direct jobs equal to or in excess of
eighty percent (80%) of the total number of new direct
jobs; and
2. Division (4) of subparagraph a o f paragraph 1 of subsection
A of Section 3603 of this title, shall be required to:
a. have an annual gross payroll for new direct jobs
projected by the Department t o equal or exceed One
Million Five Hundred Thousand Dollars ($1,500,000.00)
within three (3) years o f the first complete calend ar
quarter following the start date, and
b. have a number of full -time-equivalent employees
working an average of thirty (30) or more hours per
week in new direct jobs equal to or in excess of
eighty percent (80%) of the total nu mber of new direct
jobs.
E. 1. An establishment which locates its principal business
activity within a site cons isting of at least ten (10) acres which:
a. is a federal Superfund removal site,
b. is listed on the National Priorities List established
under Section 9605 of Title 42 of the United States
Code,
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c. has been formally deferred to the state in lieu of
listing on the National Priorities List, or
d. has been determined by the Department of Environmental
Quality to be contaminated by any substance re gulated
by a federal or state statute governing environmental
conditions for real property pursuant to an order of
the Department of Environmental Quality,
shall qualify for incentive payments irrespective of its actual
gross payroll or the number of full -time-equivalent employees
engaged in new direct jobs.
2. In order to qualify for the incentive payments pursuant to
this subsection, the establishment shal l conduct the activity
resulting in at least fifty percent (50%) of its Oklahoma taxable
income or adjusted gross income, as de termined under Section 2358 of
this title, whether from the sale of products or service s or both
products and services, at the ph ysical location which has been
determined not to comply with the federal or state statutes
described in this subsection with re spect to environmental
conditions for real property. The establishment shall be subjec t to
all other requirements of the Oklahom a Quality Jobs Program Act
other than the exemptions provided by this subsection.
3. In order to qualify for the incentive pay ments pursuant to
this subsection, the entity shall obtain from the Department of
Environmental Quality a letter of concurrence t hat:
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a. the site designated by the entity does meet one or
more of the requirements listed in paragr aph 1 of this
subsection, and
b. the site is being or has been remediated to a level
which is consistent with the intended use of the
property.
In making its determination, the Department of Environmental
Quality may rely on existing data and information a vailable to it,
but may also require the applying entity to provide additional data
and information as necessary.
4. If authorized by the Department of Env ironmental Quality
pursuant to paragraph 3 of this subsection, the entity may utilize a
remediated portion of the property for its intended purpose prior to
remediation of the remainder of the site, and shall quali fy for
incentive payments based on employm ent associated with the portion
of the site.
F. Except as otherwise provided by subsection G of thi s
section, for applications submitted on and after June 4, 2003, in
order to qualify to receive incentive payments as authorized by the
Oklahoma Quality Job s Program Act, in addition to other
qualifications specified herein, an establishment shall be requi red,
both at the effective date of the agreement and the beginning of the
sixth year of the agreement, to pay new direct jobs an average
annualized wage which equals or exceeds:
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1. One hundred ten percent (110%) of the average cou nty wage as
determined by the Department of Commerce based on the most recent
U.S. Department of Commerce data for the count y in which the new
direct jobs are located. F or purposes of this paragraph, health
care premiums paid by the applicant for individu als in new direct
jobs shall be included in the annualized wage; or
2. One hundred percent (100%) of the average county wag e as
that percentage is determined by the Depa rtment of Commerce based
upon the most recent U.S. Department of Commerce data for the county
in which the new jobs are located. For purposes of this paragraph,
health care premiums paid by the applicant for i ndividuals in new
direct jobs shall not be inc luded in the annualized wage.
Provided, no average wage requirement shall exceed Twent y-five
Thousand Dollars ($25,000.00), in any county, for applications
received before January 1, 2023. This maximum wage threshold shall
be indexed and modified from tim e to time based on the latest
Consumer Price Index year -to-date percent change release as of the
date of the annual average county wage data release from the Bu reau
of Economic Analysis of the U.S. Department of Commerce.
G. 1. As used in this subsection , “opportunity zone” means one
or more census tracts in which, according to the most recent Federal
Decennial Census, at least thirty pe rcent (30%) of the resid ents
have annual gross household incomes from all sources below the
poverty guidelines establish ed by the U.S. Department of Health and
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Human Services. An establishment which is otherwise qualified to
receive incentive payments and which locates its princ ipal business
activity in an opportunity zone shall not be subject to the
requirements of subsec tion F of this section.
2. As used in this subsection:
a. “negative economic event ” means:
(1) a man-made disaster or natural disaster as
defined in Section 68 3.3 of Title 63 of the
Oklahoma Statutes, resulting in the loss of a
significant number of jobs within a particular
county of this state, or
(2) an economic circumstance in which a significant
number of jobs within a particular coun ty of this
state have been lost due to an establishment
changing its structure, consolidating with
another establishment , closing or moving all or
part of its operations out of this state, and
b. “significant number of jobs ” means Local Area
Unemployment Statistics (LAUS) data, a s determined by
the Bureau of Labor Statistics, for a county which are
equal to or in excess of five percent (5%) of the
total amount of Local Area Unemployment Statistics
(LAUS) data for that county for the calendar year, or
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most recent twelve-month period in which employment is
measured, preceding the event.
An establishment which is otherwise qual ified to receive
incentive payments and which locates in a county in which a negative
economic event has occurred within the eighteen -month period
preceding the start date shall not be subject to the requirements of
subsection F of this section; provided, an establishment shall not
be eligible to receive incentive payments based upon a negative
economic event with respect to jobs that are transferred from one
county of this state to another.
H. The Department shall determine if the applicant is qualified
to receive incentive payments.
I. If the applicant is determined to be qualified by the
Department and is not subject to the provisions of subparagraph d of
paragraph 7 of subsection A of Section 3603 of this title, the
Department shall conduct a cost/bene fit analysis to determine the
estimated net direct state benefits and the net benefit rate
applicable for a ten-year period beginning with the first complete
calendar quarter following the start date and to estimate the amount
of gross payroll for a ten-year period beginning with the first
complete calendar quarter following the start date or for a fifteen -
year period for an establishment defined or classified in the NAICS
Manual under U.S. Industry No. 711211 (2007 version). In conducting
such cost/benefit an alysis, the Department shall consider
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quantitative factors, such as the anticipated level of new tax
revenues to the state along wit h the added cost to the state of
providing services, and such other criteria as deemed appropriate by
the Department. In no event shall incentive payments, cumulatively,
exceed the estimated net direct state benefits, except for
applicants subject to the provisions of subparagra ph d of paragraph
7 of subsection A of Section 3603 of this title.
J. Upon approval of such an appl ication, the Department shall
notify the Tax Commission and shall provide it with a copy of the
contract and the results of the cost /benefit analysis. The Tax
Commission may require the qualified establishment to submit such
additional information as may be necessary to administer the
provisions of the Oklahoma Quality Jobs Program Act. The approved
establishment shall file quarterly claims with the Tax Com mission
and shall continue to file such quarterly claims during the ten-year
incentive period to show its continued eligibility for incentive
payments, as provided in Section 3606 of this title, or until it is
no longer qualified to receive incentive payme nts. The
establishment may be audited by the Tax Commission to verify such
eligibility. Once the e stablishment is approved, an agreement shall
be deemed to exist between the establishment and the State of
Oklahoma, requiring the continued incentive payme nt to be made as
long as the establishment retains its eligibility as defined in and
established pursuant to this section and Sections 3603 and 3606 of
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this title and within the limitations contained in the Oklahoma
Quality Jobs Program Act, which existed at the time of such
approval. An establishment described in this subsection shall be
required to repay all incentive payments received under the Oklahoma
Quality Jobs Program Act if the establishment is determined by the
Oklahoma Tax Commission to no long er have business operations in the
state within three (3) years from the beginning of the calendar
quarter for which the first incentive payment claim is filed.
K. A municipality with a population of less than one hundred
thousand (100,000) persons in whi ch an establishment eligible to
receive quarterly incentive payments pursuant to the provisions of
this section is located may file a claim with the Tax Commission for
up to twenty-five percent (25%) of the amount of such pa yment. The
amount of such claim shall not exceed amounts paid by the
municipality for direct costs of municipal infrastructure
improvements to provide water and sewer service to the
establishment. Such claim shall not be approved by the Tax
Commission unless the municipality and the es tablishment have
entered into a written agreement for such claims to be filed by the
municipality prior to submission of the application of the
establishment pursuant to the provisions of this section. If such
claim is approved, the amount of the payment to the establishment
made pursuant to the provisions of Section 3606 of this title shall
be reduced by the amount of the approved claim by the municipality
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and the Tax Commission shall issue a warrant to the municipality in
the amount of the approved claim in the same manner as warrants are
issued to qualifying establishments.
L. For any contract execut ed by an establishment on or after
the effective date of this act August 2, 2018, five percent (5%) of
the quarterly incenti ve payment amount shall be trans ferred by the
Oklahoma Tax Commission to the Oklahoma Quick Actio n Closing Fund.
SECTION 2. AMENDATORY 68 O.S. 2021, Section 3604.1, is
amended to read as follows:
Section 3604.1. A. A qualified federal contractor may receive
quarterly incentive payments for renewable ten-year periods from the
Oklahoma Tax Commission pursuant to the provisions of the Oklahoma
Quality Jobs Program Act and the provisions of this section.
B. The amount of such payments shall b e equal to a net benefit
rate of not less than twenty-five hundredths of one percent (0 .25%),
but not greater than two percent (2%), multiplied by the total
qualified labor hour s worked by employees of the federal contractor
or employees of a qualified fed eral subcontractor, or both, pursuant
to a qualified federal contract for a calendar qu arter as verified
by the Oklahoma Employment Security Commission and certified by a
qualified federal contractor verifier. The net benefit rate for a
qualified federal contractor shall be scaled to annual
subcontracting goals that account for both total q ualified
subcontract labor hours and the ratio of qualified subcontract labor
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hours to total qualified labor hours. Unless limited by the
cost/benefit analysis, the net benefit rate shall:
1. Not exceed twenty-five hundredths of one percent (0.25%)
when annual qualified subcontr act labor hours are less than Two
Hundred Thousand Dollars ($200, 000.00) or when annual qualified
subcontract labor is less than one percent (1% ) of the annual total
qualified labor hours claimed;
2. Not be less than five -tenths of one percent (0.5%) when
subcontract goals are met with a minimum of Two Hundred Thousand
Dollars ($200,000.00) of annual total qualified subcontractor labor
hours and these hours are a minimum of one perc ent (1%) of the
annual total qualified hours claim ed;
3. Not be less than one percent (1%) when subcontract goals are
met with a minimum of One Million Dollars ($1,000,000.00) of annual
total qualified subcontractor la bor hours and when these hours
represent a minimum of five percent (5%) of the annual t otal
qualified hours clai med;
4. Not be less than one and five-tenths percent (1.5%) when
subcontract goals are met with a minimum of Two Million Dollars
($2,000,000.00) of annual total qualified subcontra ctor labor hours
and these hours are a minimum of ten percent (10%) of the annual
total qualified hours claimed; and
5. Not be less than tw o percent (2.0%) when subcontract goals
are met with a minimum of Four Million Dollars ($4,000,000.00) of
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annual total qualified subcontractor labor hours and these h ours are
a minimum of twenty percent (20%) of the annual total qualified
hours claimed.
C. In order to receive incentive payments, a qualified federal
contractor shall apply to the Oklahoma Department of C ommerce within
one hundred eighty (180) days follo wing the date of the awar d of a
qualified federal contract or award of a new qualified sub contract
under an existing qualified federal contract. The application shall
be on a form prescribed by the Departm ent and shall contain such
information as may be r equired by the Department to determine if the
applicant is qualified. Once qualified by t he Department, the
applicant shall submit qualified federal contracts to the fe deral
contract verifier. The federal contract verifier shall establish
with the applicant an information system (s) or contract(s) as may be
required to certify the total qualif ied labor hours, qualified labor
rates, and reimbursement through the qualified federal contract. A
qualified federal contractor may apply for an effective date for a
project, which shall no t be more than twenty-four (24) months twelve
(12) months from the date the applicat ion is submitted to the
Department. No state agency shall b e required to make any payment
to a qualified federal contract verifier for any informa tion needed
by the agency to perform any dut y imposed upon it pursuant to the
provisions of Section 3601 et s eq. of this title. All costs for the
federal contract verif ier shall be reimbursed through value -added
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services on the qualified federal contract or other mechanisms
agreed to by the federal contractor verifier and the federal
contract performers.
D. In order to qualify to receive incentive payments as
authorized by the Oklahoma Quality Jobs Program Act, in addition to
other qualifications specifie d herein, a qualified federal
contractor shall be required to pay direct jobs an average
annualized wage, both at the effective date of the agreement and the
beginning of the sixth year of the agreement, which equals or
exceeds:
1. One hundred ten percent (110%) of the average county wage as
determined by the Department of Commerce based on the most recent
U.S. Department of Commerce data for th e county in which the new
direct jobs are located. For purpose s of this paragraph, health
care premiums paid by the applicant for individuals in new direct
jobs shall be included in the annualized wage; or
2. One hundred percent (100%) of the average cou nty wage as
that percentage is determined by the Department of Commerce based
upon the most recent U.S. Departmen t of Commerce data for the county
in which the new jobs are located. For purposes of this paragraph,
health care premiums paid by the applican t for individuals in new
direct jobs shall not be included in t he annualized wage.
Provided, no average wage requ irement shall exceed Twenty -nine
Thousand Four Hundred Nine Dollars ($29,409.00), in any county , for
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applications received before January 1, 20 23. This maximum wage
threshold shall be indexed and modified from time to time based on
the latest Consumer Pri ce Index year-to-date percent change release
as of the date of the annual average county wage data release from
the Bureau of Economic Analysis of the U.S. Department of Commerce.
3. For qualified subcontr actor work, the qualified federal
contractor shall have a minimum average qualified labor rate
requirement paid to the subcontractor of Thirty -one Dollars ($31.00)
per hour, in any county. Thi s maximum wage threshold s hall be
indexed and modified from tim e to time based on the latest Consumer
Price Index year-to-date percent change release as of the date of
the annual average county wage data release from the Bureau of
Economic Analysis of the U.S. Department of Commerc e.
E. The Department shall determine if the applicant is qualified
to receive incentive payments using information supplied to the
Department by the qualified federal contractor verifier. The NAICS
code or codes under which the federal government awarded the
qualified federal contract shall be used to determine the basic
industry for a qualified federal contractor. For federal contracts
awarded under NAICS codes not within the definition of basic
industry pursuant to paragraph 1 of subsection A of Sectio n 3603 of
this title, the Department of Commerce, with the federal contract
verifier, may evaluate and utilize individual statement of work
items that would qualify within a basic industry definition.
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F. If the applicant is deter mined to be qualified by t he
Department, the Department shall c onduct a cost/benefit analysis to
determine the estimated net direct state benefits and the net
benefit rate, as provided by subsection B of this section,
applicable for a ten-year period beginning with the first comple te
calendar quarter following the sta rt date and to estimate the amount
of gross payroll and total qualified labor hours for a ten-year
period beginning with th e first complete calendar quarter following
the start date. In conducting such cost/benefit ana lysis, the
Department shall consider quantitative factors, such as the
anticipated level of new tax revenues to the state along with the
added cost to the state of providing services, and such other
criteria as deemed appropriate by the Department. In no event shall
incentive payments, cumul atively, exceed the estimated net direct
state benefits. Using this net cost/benefit analysis model, the
Department may establish the renewable ten-year contract with a
qualified federal contractor at the entity level to encompass any
current or future qu alified federal contracts that meet the
cost/benefit analysis metrics as determined by the federal
contractor verifier and confirmed by the Department.
G. Upon approval of such an application, the Department shall
notify the Tax Commission and shall provi de it with a copy of the
contract that has been co signed by the federal contractor verifier
and the results of the cost/benefit analysis. The Tax Commission
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may require the qualified federal contractor, federal contrac t
verifier, and qualified subcontract ors to submit such additional
information as may b e necessary to administer the provisions of the
Oklahoma Quality Jobs Program Act. The approved qualified federal
contractor shall file quarterly claims with the Tax Co mmission and
shall continue to file s uch quarterly claims during the ten-year
incentive period to show its continued eligibility for incentive
payments, as provided in Section 3606 of this title, or until it is
no longer qualified to receive incentive paym ents. The qualified
federal contractor may be audited by the Tax Commission to verify
such eligibility. Once the qualified federal contractor is
approved, an agreement shall be deemed to exist between the
qualified federal contractor and the State of Okl ahoma, requiring
the continued incent ive payment to be made as long as the qualified
federal contractor retains its eligibility as defined in and
established pursuant to this section and Sections 3603 and 3606 of
this title and within the limitations conta ined in the Oklahoma
Quality Jobs Program Act, which existed at the time of such
approval.
H. For qualified federal contracts with periods of performance
exceeding two (2) years, if the actual annual verified gross
qualified labor hours for four (4) conse cutive calendar quarters
does not equal or exceed Two Million Five Hundred Thousand Dol lars
($2,500,000.00) within three (3) years of the start date, or does
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not equal or exceed actual annual gross qualified labor hours of Two
Million Five Hundred Thousand Dollars ($2,500,000.00) at any other
time during the ten-year period after the start date, the incentive
payments shall not be made and shall not be resumed until such time
as the actual annual qualified labor hours exceed Two Million Five
Hundred Thousand Dollars ($2,500,000.00).
I. If the average annualized wage or minimum average qualif ied
labor rate required by subsection H of this section is not met
during any calendar quarter, the incentive payments shall not be
made and shall not be resumed until s uch time as such requirements
are met.
J. Before approving a quarterly incentive payme nt for a
qualified federal contract, the federal contract verifier must first
determine through the Department that neither the qualified federal
contractor nor the subc ontractor are receiving incentiv e payments
under the Oklahoma Quality Jobs Program Act, the Saving Quality Jobs
Act, the 21st Century Quality Jobs Incentive Act or the Former
Military Facility Development Act for the performance of the same
such services under the qualified federal contr act and is not
qualified for approval of an application for incentive payments
under the Oklahoma Quality Jobs Program Act, the Saving Quality Jobs
Act, the 21st Century Quality Jobs Incentive Act or the Former
Military Facility Development Act for the per formance of the same
such services under the qualified federal contract. If the
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qualified federal contractor or the subcontractor are receiving or
have an approved application for incentive payments under the
Oklahoma Quality Jobs Program Act, the Saving Quality Jobs Act, the
21st Century Quality Jobs Incenti ve Act or the Former Military
Facility Development Act for the performance of the same such
services under the qualified federal contract, each may choose to
defer in part or in entirety the other ince ntives for the qualified
federal contractor to receive the incentives pursuant to subsection
B of this section. The federal contract verifier shall confirm any
deferrals and ensure the total for all quality jobs incentive
payments on any individual does n ot exceed the total net benefit to
the state. Should n either the federal contractor nor the
subcontractor defer in part or in entirety their incentive payments
such that the total for all Quality Jobs incentive payments exc eeds
the total net benefit to th e state, the priority for incentive
payments shall go to the entity with the earliest recognized start
date indentified identified within the current Department of
Commerce Quality Jobs contract.
SECTION 3. This act shall become effective November 1, 2022.
58-2-2937 QD 1/20/2022 7:29:04 PM