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HOUSE OF REPRESENTATIVES - FLOOR VERSION
STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
ENGROSSED SENATE
BILL NO. 936 By: Leewright and Hall of the
Senate
and
Wallace of the House
An Act relating to quality jobs; amending 68 O.S.
2011, Sections 3602, 3603, as last amended by Section
1, Chapter 156, O.S.L. 2018, 3604, as last amended by
Section 2, Chapter 144, O.S.L. 2018, 3605, 3606, as
last amended by Section 1, Chapter 138, O.S.L. 2020
and 3607, as amended by Section 26, Chapt er 227,
O.S.L. 2013 (68 O.S. Supp. 2020, Sections 3603, 3604,
3606 and 3607), which relates to the Oklahoma Quality
Jobs Program Act; modifying intent; modifying
definitions; creating definitions; authorizing
utilization of compound net benefit rate; requi ring
minimum net benefit rate; removing member of
Incentive Approval Committee for basic industry
establishments; eliminating quarterly incentive
payments for certain establishments; adding compound
net benefit rate to payment formula; removing
exception; modifying wage requirement; prohibiting
certain payments from wage requirement; removing tax
liability requirement; removing average working hours
requirement; requiring establishment to meet certain
payroll and jobs threshold before receiving payment;
requiring prior payments paid upon meeting certain
threshold; providing minimum payroll and job
requirements for certain qualification; removing
certain payroll requirements for qualification;
removing certain wage requirements for qualification
after certain date; removing exception for certain
negative economic event; authorizing political
subdivision to apply for and receive payments for
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attracting and developing certain facility for
certain term; limiting certain payments; providing
minimum payroll require ments for qualified federal
facility; removing determination requirement for
certain net benefits; removing limit for certain
incentive payment; requiring utilization of
cost/benefit analysis to determine certain benefit,
rate and payment; removing repayme nt requirement for
certain cessation of operations; requiring repayment
of incentives for certain relocation within a
provided timeframe; deleting certain fund deposit
formula; requiring deposit according to estimate
provided by Oklahoma Tax Commission; pr ohibiting
payments in excess of certain state benefits for
certain establishments; prohibiting application for
additional payments until certain job creation or
payroll thresholds are met; removing outdated and
repealed statutory references; updating statu tory
references; clarifying statutory language; repealing
68 O.S. 2011, Sections 3501, 3502, 3503, 3504, 3505,
3506, 3507 and 3508, which relate to the Oklahoma
Federal Facilities Development Act; repealing 68 O.S.
2011, Sections 3604.1, as amended by Sect ion 25,
Chapter 227, O.S.L. 2013, 3611 and 3612 (68 O.S.
Supp. 2020, Section 3604.1) , which relate to the
Oklahoma Quality Jobs Program Act; repealing 68 O.S.
2011, Sections 3801, 3802, 3803, 3804, 3805, 3806,
3807 and 3808, which relate to the Former Mili tary
Facility Development Act; repealing 68 O.S. 2011,
Sections 3901, 3902, 3903, as last amended by Section
1, Chapter 128, O.S.L. 2014, 3904, as last amended by
Section 1, Chapter 197, O.S.L. 2019, 3905, 3906,
3907, 3908, 3909 and 3910 (68 O.S. Supp. 2020,
Sections 3903 and 3904) , which relate to Small
Employer Quality Jobs Incentive Act; repealing 68
O.S. 2011, Sections 3911, 3912, 3913, 3914, as last
amended by Section 4, Chapter 144, O.S.L. 2018, 3915,
3916, 3917, 3918, 3919 and 3920 (68 O.S. Supp. 2020,
Section 3914), which relate to the 21st Century
Quality Jobs Incentive Act; and providing an
effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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SECTION 1. AMENDATORY 68 O.S. 2011, Section 3602, is
amended to read as follows:
Section 3602. It is the intent of the Legislature that:
1. a. The State of Oklahoma provide appropriate incentives
to support establishments of basic industries that
hold the promise of significant development of the
economy of the State of Oklahoma, and
b. to assist political subdivisions in attracting federal
facility development and consequent job creation and
ancillary economic growth within this state. In order
to achieve these essential public purposes, it is
necessary to assist and encourage political
subdivisions to develop facilities for use by the
federal government;
2. The amount of incentives provided pursuant to this act in
connection with a particular establishment:
a. be directly related to the jobs created as a resul t of
the establishment locating in the State of Oklahoma,
and
b. not exceed the estimated net direct state benefits
that will accrue to the state as a result of the
establishment locating or expanding in the State of
Oklahoma;
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3. The Oklahoma Department o f Commerce and the Oklahoma Tax
Commission implement the provisions of this act and exercise all
powers as authorized in this act. The exercise of powers conferred
by this act shall be deemed and held to be the performance of
essential public purposes; an d
4. Nothing herein shall be construed to constitute a guarantee
or assumption by the State of Oklahoma of any debt of any
individual, company, corporation or association nor to authorize the
credit of the State of Oklahoma to be given, pledged or loaned to
any individual, company, corporation or association.
SECTION 2. AMENDATORY 68 O.S. 2011, Section 3603, as
last amended by Section 1, Chapter 156, O.S.L. 2018 (68 O.S. Supp.
2020, Section 3603), is amended to read as follows:
Section 3603. A. As used in the Oklahoma Quality Jobs Program
Act:
1. a. “Basic industry” means:
(1) those manufacturing activities defined or
classified in the NAICS Manual under Industry
Sector Nos. 31, 32 and 33, Industry Group No.
5111 or Industry No. 11331,
(2) those electric power generation, transmission and
distribution activities defined or classified in
the NAICS Manual under U.S. Industry Nos. 221111
through 221122, if:
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(a) an establishment engaged therein qualifies
as an exempt wholesale genera tor as defined
by 15 U.S.C., Section 79z -5a,
(b) the exempt wholesale generator facility
consumes from sources located within the
state at least ninety percent (90%) of the
total energy used to produce the electrical
output which qualifies for the speciali zed
treatment provided by the Energy Policy Act
of 1992, P.L. 102-486, 106 Stat. 2776, as
amended, and federal regulations adopted
pursuant thereto,
(c) the exempt wholesale generator facility
sells to purchasers located outside the
state for consumption i n activities located
outside the state at least ninety percent
(90%) of the total electrical energy output
which qualifies for the specialized
treatment provided by the Energy Policy Act
of 1992, P.L. 102-486, 106 Stat. 2776, as
amended, and federal regula tions adopted
pursuant thereto, and
(d) the facility is constructed on or after July
1, 1996 those health care activities
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including medical and diagnostic laboratory
activities defined or classified in the
NAICS Manual under Industry Group No. 6215,
miscellaneous ambulatory health care
services defined as Industry Group No.
621999, and specialty hospitals, except
psychiatric and substance abuse hospitals,
in the NAICS Manual under U.S. Industry
Group No. 62231,
(3) those administrative and facilities suppor t
service activities defined or classified in the
NAICS Manual under Industry Group Nos. 5611 and
5612, Industry Nos. 51821, 519130, 52232 and
56142 or U.S. Industry Nos. 524291 and 551114,
those other support activities for air
transportation defined or c lassified in the NAICS
Manual under Industry Group No. 488190, and those
support, repair, and maintenance service
activities for the wind industry defined or
classified in the NAICS Manual under Industry
Group No. 811310 and those management of
companies and enterprises defined of classified
under Industry Group No. 5511 ,
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(4) those professional, scientific and technical
service activities defined or classified in the
NAICS Manual under U.S. Industry Nos. 541710 and
541380 5413, 5415, 5416 and 5417,
(5) distribution centers for retail or wholesale
businesses defined or classified in the NAICS
Manual under Sector No. 42 and warehousing and
storage businesses defined or classified in the
NAICS Manual under Sector No. 493 , if forty
percent (40%) or more of the i nventory processed
through such distribution center or warehouse is
shipped out-of-state,
(6) those adjustment and collection service
activities defined or classified in the NAICS
Manual under U.S. Industry No. 561440, if
seventy-five percent (75%) of the loans to be
serviced were made by out -of-state debtors those
information technology and other computer related
service activities defined or classified in the
NAICS Manual under Industry Group Nos. 5112, 518
and 519,
(7) (a) those air transportation activi ties defined
or classified in the NAICS Manual under
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Industry Group No. 4811, if the following
facilities are located in this state:
(i) the corporate headquarters of an
establishment classified therein, and
(ii) a facility or facilities at which
reservations for transportation
provided by such an establishment are
processed, whether such services are
performed by employees of the
establishment, by employees of a
subsidiary of or other entity
affiliated with the establishment or by
employees of an entity wi th whom the
establishment has contracted for the
performance of such services; provided,
this provision shall not disqualify an
establishment which uses an out -of-
state entity or employees for some
reservations services, or
(b) those air transportation act ivities defined
or classified in the NAICS Manual under
Industry Group No. 4811, if an establishment
classified therein has or will have within
one (1) year sales of at least seventy -five
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percent (75%) of its total sales, as
determined by the Incentive App roval
Committee pursuant to the provisions of
subsection B of this section, 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 government those
credit bureaus defined or classified in the
NAICS Manual under U.S. Industry No. 56145 ,
(8) flight training services and apprenticeship
program activities defined or classified in the
NAICS Manual under U.S. Industry Group No. Nos.
611512 and 611513, which for purposes of the
Oklahoma Quality Jobs Program Act shall include
new direct jobs for which gross payroll existed
on or after January 1, 2003, as identified in the
NAICS Manual,
(9) the following, if an establishment located in a
Tier 4 County or a Tier 5 County and classified
therein has or will have within one (1) year
sales of at least seventy -five percent (75%) of
its total sales twenty-four (24) months of the
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date of application, as determined by the
Oklahoma Department of Commerce, sales of at
least forty percent (40%) for the first two (2)
years and subsequently sixty percent (60%) of its
total sales, or if an establishment located in a
Tier 3 County and classified therein has or will
have within twenty-four (24) months of the date
of application, as determined by the Department,
sales of at least thirty -five percent (35%) for
the first two (2) years and subsequently fifty -
five percent (55%) of its total sales, or if an
establishment located in a Tier 1 County or Tier
2 County and classified therein has or will have
within twenty-four (24) months of the date of
application, as determined by the Department,
sales of at least twenty -five percent (25%) for
the first two (2) years and subsequently fifty
percent (50%) of its total sales, as determined
by the Incentive Approval Committee pursuant to
the provisions of subsection B of this section,
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
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customer or buyer for ultimate use, or to the
federal government:
(a) those transportation and warehousing
activities defined or classified in the
NAICS Manual under Industry Subsector No.
493, if not otherwise listed in this
paragraph, Industry Subsector Nos. 482 and
484 and Industry Group Nos. 4884 through
4889 481, 482, 483, 484 and 488 ,
(b) those passenger transportation activities
travel arrangement services defined or
classified in the NAICS Manual under
Industry Nos. 561510 and 561599 5615 and
56192,
(c) those freight or cargo transportation
activities defined or classified in the
NAICS Manual under Industry No. 541614,
(d) those insurance activities defined or
classified in the NAICS Manual under
Industry Group No. 5241,
(e) those services to dwellings and other
buildings, as defined or classified in the
NAICS Manual under Industry Group No. 5617,
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excluding U.S. Industry Nos. 561730, 56171,
56172, 56174 and 56179 ,
(f) those equipment rental and leasing
activities defined or classified in the
NAICS Manual under Industry Group No. 5324,
(g) those information technology and other
computer-related service activities defined
or classified in the NAICS Manual under
Industry Group Nos. 5112, 5182, 5191 and
5415 those securities, commodity contracts
and other financial investment activities
defined or classified in the NAICS Manual
under U.S. Industry Group No. 523 ,
(d) those insurance carriers and related
activities defined or classified in the
NAICS Manual under U.S. Industry Group No.
524,
(e) those funds, trusts and other financial
vehicles defined or classified in the NAICS
Manual under U.S. Industry Group No. 525 ,
(f) those financial and credit intermediation
activities defined or classified in the
NAICS Manual under Industry Group Nos.
522210, 522293, 522294, and 522320,
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(g) those heavy and civil engineering
construction activities defined or
classified in the NAICS Manual under U.S.
Industry Group No. 237 ,
(h) those business support service activities
defined or classified in the NAICS Manual
under U.S. Industry Nos. 561410 through
561430, excluding 56143, 561422 and Industry
No. 51911,
(i) those medical and diagnostic laboratory
activities defined or classified in the
NAICS Manual under Industry Group No. 6215,
(j) those professional, scientific and technical
service activities defined or classified in
the NAICS Manual under Industry Group Nos.
5412, 5414, 5415, 5416 and 5417, Industry
Nos. 54131, 54133, 54136 and 54137, and U.S.
Industry No. 541990, if not otherwise listed
in this paragraph those electric utility
activities defined or classified in the
NAICS Manual under U.S. Industry Group No.
2211,
(j) those professional, scientific and technical
services defined or classified in the NAICS
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Manual under U.S. Industry Group Nos. 5411,
5412, 5414, 5418 and 5419,
(k) those communication telecommunication
service activities defined or classified in
the NAICS Manual under Industry Nos. 51741
and 51791 No. 517,
(l) those refuse systems activities defined or
classified in the NAICS Manual under
Industry Group No. 5622, provided that the
establishment is primarily engaged in the
capture and distribution of methane gas
produced within a landfill,
(m) general wholesale distribution of groceries,
defined or classified in the NAICS Manual
under Industry Group Nos. 4244 and 4245,
(n) those activities relating to processing of
insurance claims, defined or classified in
the NAICS Manual under U.S. Industry Nos.
524210 and 524292; provided, activities
described in U.S. Industry Nos. 524210 and
524292 in the NAICS Manual other than
processing of insurance claims shall not be
included for purposes of this subdivision,
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(o) those agricultural activities classified in
the NAICS Manual under U.S. Industry Nos.
112120 and 112310 those real estate or
brokerage activities c lassified in the NAICS
Manual under U.S. Industry No. 53120 for
which at least seventy -five percent (75%) of
the establishment’s revenues are attributed
to out-of-state sales and at least seventy -
five percent (75%) of the real estate
transactions generatin g those revenues are
attributed to real property located outside
this state,
(n) those adjustment and collection service
activities defined or classified in the
NAICS Manual under U.S. Industry No. 561440,
if seventy-five percent (75%) of the loans
to be serviced were made by out -of-state
debtors,
(p)
(o) those business associations and professional
organization activities classified in the
NAICS Manual under U.S. Industry No. Nos.
813910 and 813920,
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(q) alternative energy structure construction
classified in the NAICS Manual under U.S.
Industry No. 237130,
(r)
(p) solar reflective coating application
classified in the NAICS Manual under U.S.
Industry No. 238160, and
(s)
(q) solar heating equipment installation
classified in the NAICS Manual under U.S.
Industry No. 238220,
(t) those wired telecommunications carriers
classified in the NAICS Manual under U.S.
Industry No. 517110, and
(u) those securities, commodity contracts and
investment activities classified in the
NAICS Manual under Industry Subsector No.
523,
(10) those activities related to extraction or
pipeline transportation of petroleum, natural gas
or refined petroleum products, defined or
classified in the NAICS Manual under Industry
Group No. 2111, 213111, 213112 or 486, subject to
the limitations provided in paragraph 3 of this
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subsection and paragraph 3 of subsection B of
this section,
(11) those activities performed by the federal
civilian workforce at a facility of the Federal
Aviation Administration located in this state if
the Director of the Oklahoma Department of
Commerce determines or is notified that the
federal government is soliciting proposals or
otherwise inviting states to compete for
additional federal civilian employment or
expansion of federal civilian employment at such
facilities,
(12) those activities defined or classified in the
NAICS Manual under U.S. Industry No. 711211 ( 2007
2017 version),
(13) those real estate or brokerage activities
classified in the NAICS Manual under U.S.
Industry No. 53120 for which at least seventy -
five percent (75%) of the establishment ’s
revenues are attributed to out -of-state sales and
at least seventy-five percent (75%) of the real
estate transactions generating those revenues are
attributed to real property located outside the
State of Oklahoma, or those performing arts
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companies defined or classified in the NAICS
Manual under U.S. Industry Group No. 7111,
(14) those support activities for rail transportation
and those support activities for water
transportation defined or classified in the NAICS
Manual under U.S. Industry Nos. 4882 and 4883 ,
(15) those motion picture and video industries defined
or classified in the NAICS Manual under U.S.
Industry Group No. 5121, and those sound
recording industries defined or classified in the
NAICS Manual under U .S. Industry Group No. 5122,
and those employees of film support industries
classified in the NAICS Manual under U.S.
Industry Group Nos. 7114, 7115 and 236220 when
contracting with a film studio or film production
located in this state,
(16) those agricultural activities classified in the
NAICS Manual under U.S. Industry Nos. 1114,
112120, 112310, 112340, 1125, 112910 and 115 , and
(17) equipment rental and leasing activities defined
or classified in the NAICS Manual under Industry
Group No. 5324.
b. An establishment described in subparagraph a of this
paragraph shall not be considered to be engaged in a
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basic industry unless it offers, or will offer within
one hundred eighty (180) days of employment, a basic
health benefits plan to the individuals it employ s in
new direct jobs in this state which is determined by
the Oklahoma Department of Commerce to consist of the
following elements or elements substantially
equivalent thereto:
(1) not more than fifty percent (50%) of the premium
shall be paid by the emplo yee,
(2) coverage for basic hospital care,
(3) coverage for physician care,
(4) coverage for mental health care,
(5) coverage for substance abuse treatment,
(6) coverage for prescription drugs, and
(7) coverage for prenatal care;
2. “Change-in-control event” means the transfer to one or more
unrelated establishments or unrelated persons, of either:
a. beneficial ownership of more than fifty percent (50%)
in value and more than fifty percent (50%) in voting
power of the outstanding equity securities of the
transferred establishment, or
b. more than fifty percent (50%) in value of the assets
of an establishment.
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A transferor shall be treated as related to a transferee if more
than fifty percent (50%) of the voting interests of the transferor
and transferee are owned, directly or indirectly, by the other or
are owned, directly or indirectly, by the same person or persons,
unless such transferred establishment has an outstanding class of
equity securities registered under Sections 12(b) or 15(d) of the
Securities Exchange Act of 1934, as amended, in which event the
transferor and transferee will be treated as unrelated; provided, an
establishment applying for the Oklahoma Quality Jobs Program Act as
a result of a change -in-control event is required to apply withi n
one hundred eighty (180) days of the change -in-control event to
qualify for consideration. An establishment entering the Oklahoma
Quality Jobs Program Act as the result of a change -in-control event
shall be required to maintain a level of new direct job s as agreed
to in its contract with the Oklahoma Department of Commerce and to
pay new direct jobs an average annualized wage which equals or
exceeds one hundred twenty -five percent (125%) of the average county
wage as that percentage is determined by the Oklahoma Department 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, healthcare premiums paid by the applicant for
individuals in new direct jobs shal l not be included in the
annualized wage. Such establishment entering the Oklahoma Quality
Jobs Program Act as the result of a change -in-control event shall be
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required to retain the contracted average annualized wage and
maintain the contracted maintenan ce level of new direct jobs numbers
as certified by the Tax Commission. If the required average
annualized wage or the required new direct jobs numbers do not equal
or exceed such contracted level during any quarter, the quarterly
incentive payments shall not be made and shall not be resumed until
such time as such requirements are met. An establishment described
in this paragraph shall be required to repay all incentive payments
received under the Oklahoma Quality Jobs Program Act if the
establishment is determined by the Tax Commission to no longer 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;
3. “New direct job”:
a. means full-time-equivalent employment in this state in
an establishment which has qualified to receive an
incentive payment pursuant to the provisions of the
Oklahoma Quality Jobs Program Act which employment did
not exist in this state prior to the date of approval
by the Department of the application of the
establishment pursuant to the provisions of Section
3604 of this title and with respect to an
establishment qualifying for incentive payments
pursuant to division (12) of subparagraph a of
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paragraph 1 of this subsection shall n ot include
compensation paid to an employee or independent
contractor for an athletic contest conducted in the
state if the compensation is paid by an entity that
does not have its principal place of business in the
state or that does not own real or perso nal property
having a market value of at least One Million Dollars
($1,000,000.00) located in the state, and the
employees or independent contractors of such entity
are compensated to compete against the employees or
independent contractors of an establish ment that
qualifies for incentive payments pursuant to division
(12) of subparagraph a of paragraph 1 of this
subsection and which is organized under Oklahoma law
or that is lawfully registered to do business in the
state and which does have its principal place of
business located in the state and owns real or
personal property having a market value of at least
One Million Dollars ($1,000,000.00) located in the
state; provided, that, if an application of an
establishment is approved by the Oklahoma Departme nt
of Commerce after a change -in-control event and the
Director of the Oklahoma Department of Commerce
determines that the jobs located at such establishment
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are likely to leave the state, “new direct job” shall
include employment that existed in this stat e prior to
the date of application which is retained in this
state by the new establishment following a change in
control event, if such job otherwise qualifies as a
new direct job, and
b. shall include full-time-equivalent employment in this
state of employees who are employed by an employment
agency or similar entity other than the establishment
which has qualified to receive an incentive payment
and who are leased or otherwise provided under
contract to the qualified establishment, if such job
did not exist in this state prior to the date of
approval by the Department of the application of the
establishment or the job otherwise qualifies as a new
direct job following a change -in-control event. A job
shall be deemed to exist in this state prior to
approval of an application if the activities and
functions for which the particular job exists have
been ongoing at any time within six (6) months prior
to such approval. With respect to establishments
defined in division (10) of subparagraph a of
paragraph 1 of this subsection, new direct jobs shall
be limited to those jobs directly comprising the
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corporate headquarters of or directly relating to
manufacturing, maintenance, administrative, financial,
engineering, surveying, geological or geophysical
services performed by the establishment. Under no
circumstances shall employment relating to field
services be considered new direct jobs , and
c. shall include full-time-equivalent employment at a
qualified federal facility which did not exist in this
state prior to the date of approval by the Department
of Commerce of the application of the political
subdivision for a qualified federal facility ;
4. “Estimated direct state benefits ” means the tax revenues
projected by the Department to accrue to the state as a result of
new direct jobs;
5. “Estimated direct state costs ” means the costs projected by
the Department to accrue to the state as a result of new direct
jobs. Such costs shall include, but not be limited to:
a. the costs of education of new state resident chi ldren,
b. the costs of public health, public safety and
transportation services to be provided to new state
residents,
c. the costs of other state services to be provided to
new state residents, and
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d. the costs of other state services direct state costs
as deemed relevant by the Oklahoma Department of
Commerce;
6. “Estimated net direct state benefits ” means the estimated
direct state benefits less the estimated direct state costs;
7. “Estimated indirect state benefits ” means the indirect new
tax revenues projected by the Oklahoma Department of Commerce to
accrue to the state including, but not limited to, revenue generated
from ancillary support jobs directly related to the establishment;
8. “Estimated indirect state costs ” means the costs projected
by the Department to accrue to the state as a result of new indirect
jobs. Such costs shall include, but not be limited to, costs
enumerated in subparagraphs a, b, c and d of paragraph 5 of this
subsection;
9. “Estimated net direct and indirect state benefit s” means the
estimated direct and indirect state benefits less the estimated
direct and indirect state costs;
10. “Net benefit rate” means the estimated net direct state
benefits computed as a percentage of gross payroll; provided:
a. except as otherwise provided in this paragraph, the
net benefit rate may be variable and shall not exceed
five percent (5%), and
b. the net benefit rate shall not exceed six percent (6%)
in connection with an establishment which is owned and
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operated by an entity which has be en awarded a United
States Department of Defense contract for which:
(1) bids were solicited and accepted by the United
States Department of Defense from facilities
located outside this state,
(2) the term is or is renewable for not less than
twenty (20) years, and
(3) the average annual salary, excluding benefits
which are not subject to Oklahoma income taxes,
for new direct jobs created as a direct result of
the awarding of the contract is projected by the
Oklahoma Department of Commerce to equal or
exceed Forty Thousand Dollars ($40,000.00) within
three (3) years of the date of the first
incentive payment,
c. except as otherwise provided in subparagraph d of this
paragraph, in no event shall incentive payments,
cumulatively, exceed the estimated net direc t state
benefits,
d. the net benefit rate shall be five percent (5%) for an
establishment locating:
(1) in an opportunity zone located in a high -
employment county, as such terms are defined in
subsection G of Section 3604 of this title, or
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(2) in a county in which:
(a) the per capita personal income, as
determined by the Department, is eighty -five
percent (85%) or less of the statewide
average per capita personal income,
(b) the population has decreased over the
previous ten (10) years, as determined by
the Oklahoma Department of Commerce based on
the most recent U.S. Department of Commerce
data, or
(c) the unemployment rate exceeds the lesser of
five percent (5%) or two percentage points
above the state average unemployment rate as
certified by the Oklahoma Employment
Security Commission,
e. the net benefit rate shall not exceed six percent (6%)
in connection with an establishment which:
(1) is, as of the date of application, receiving
incentive payments pursuant to the Oklahoma
Quality Jobs Program Act and has been receiving
such payments for at least one (1) year prior to
the date of application, and
(2) expands its operations in this state by creating
additional new direct jobs which pay average
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annualized wages which equal or exceed one hundred
fifty percent (150%) of the average annualized
wages of new direct jobs on which incentive
payments were received during the preceding
calendar year, except as otherwise provided in
this section, in no event shall incentive payments
based on the net benefit rate, cu mulatively,
exceed the estimated net direct state benefits ;
f. with
11. “Compound net benefit rate ” means the estimated net direct
benefits and indirect state benefits computed as a percentage of
gross payroll, provided:
a. the compound net benefit rate m ay be variable, may be
less than five percent (5%), and shall not exceed ten
percent (10%), and
b. in no event shall incentive payments, cumulatively,
exceed the estimated net direct benefit and indirect
state benefits;
12. With respect to an establishmen t defined or classified in
the NAICS Manual under U.S. Industry No. 711211 (2007 version) or
any establishment defined or classified in the NAICS Manual as a
U.S. Industry Number which is not included within the definition of
“basic industry” as such term is defined in this section on April
17, 2008, the net benefit rate shall not exceed the highest rate of
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income tax imposed upon the Oklahoma taxable income of individuals
pursuant to subparagraph (g) or subparagraph (h), as applicable, of
paragraph 1 and paragraph 2 of subsection B of Section 2355 of this
title. Any change in such highest rate of individual income tax
imposed pursuant to the provisions of Section 2355 of this title
shall be applicable to the computation of incentive payments to an
establishment as described by this subparagraph and shall be
effective for purposes of incentive payments based on payroll paid
by such establishment on or after January 1 of any applicable year
for which the net benefit rate is modified as required by this
subparagraph,; and
g. the net benefit rate shall not exceed six percent (6%)
in connection with an establishment which employs
United States military veterans in at least ten
percent (10%) of its gross payroll. The net benefit
rate for an establishment which em ploys United States
military veterans in at least ten percent (10%) of its
payroll shall not be lower than five percent (5%).
13. An establishment that employs United States military
veterans whose wages make up at least ten percent (10%) of its gross
payroll may utilize the compound net benefit rate. The net benefit
rate for an establishment that employs United States military
veterans whose wages make up at least ten percent (10%) of its
payroll shall not be lower than five percent (5%).
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Incentive payments made pursuant to the provisions of this
subparagraph paragraph shall be based upon payroll associated with
such new direct jobs. For purposes of this subparagraph paragraph,
the amount of health insurance premiums or other benefits paid by
the establishment shall not be included for purposes of computation
of the average annualized wage;
8. 14. “Gross payroll” means wages, as defined in Section
2385.1 of this title for new direct jobs;
9.
15. a. “Establishment” means any business, nonprofit or
governmental entity, no matter what legal form ,
including, but not limited to, a nonreligious 501(c)3,
501(c)6, qualified federal facility , a sole
proprietorship; , partnership;, limited liability
company; , corporation or combination of corporations
which have a central parent corporation which makes
corporate management decisions such as those involving
consolidation, acquisition, merger or expansion;
federal agency; political subdivision of the State of
Oklahoma; or trust authority; provided, distinct,
identifiable subunits of such entities may be
determined to be an establishment, for all purposes of
the Oklahoma Quality Jobs Program Act, by the
Department subject to the following conditions:
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(1) within three (3) years of the first complete
calendar quarter following the start date, the
entity must have a minimum payroll of Two Million
Five Hundred Thousand Dollars ($2,500,000.00) at
least the payroll threshold required in the
county where it is located and the subunit must
also have or will have a minimum pay roll of Two
Million Five Hundred Thousand Dollars
($2,500,000.00) at least the payroll threshold
required in the county where it is located,
(2) the subunit is engaged in an activity or service
or produces a product which is demonstratively
independent and separate from the entity ’s other
activities, services or products and could be
conducted or produced in the absence of any other
activity, service or production of the entity,
(3) has an accounting system capable of tracking or
facilitating an audit of th e subunit’s payroll,
expenses, revenue and production. Limited
interunit overlap of administrative and
purchasing functions shall not disqualify a
subunit from consideration as an establishment by
the Department,
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(4) the entity has not previously had a su bunit
determined to be an establishment pursuant to
this section; provided, the restriction set forth
in this division shall not apply to subunits
which qualify pursuant to the provisions of
subparagraph b of paragraph 7 of this subsection ,
and
(5) it is determined by the Department that the
entity will have a probable net gain in total
employment within the incentive period.
b. The Department may promulgate rules to further limit
the circumstances under which a subunit may be
considered an establishment. The Department shall
promulgate rules to determine whether a subunit of an
entity achieves a net gain in total employment. The
Department shall establish criteria for determining
the period of time within which such gain must be
demonstrated and a method for determining net gain in
total employment;
10. 16. “NAICS Manual” means any manual, book or other
publication containing the North American Industry Classification
System, United States, 1997, promulgated by the Office of Management
and Budget of the United States of America, or the latest revised
edition;
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11. “Qualified federal contract ” means a contract between an
agency or instrumentality of the United States government, including
but not limited to the Department of Defense or any branch of the
United States Armed Forces, but exclusive of any contract performed
for the Federal Emergency Management Agency as a direct result of a
natural disaster declared by the Governor or the President of the
United States with respect to damage to property located in Oklahoma
or loss of life or personal injury to persons in Oklahoma, and a
lawfully recognized business entity, whether or not the business
entity is organized under the laws of the State of Oklahoma or
whether or not the principal place of business of t he business
entity is located within the State of Oklahoma, for the performance
of services, including but not limited to testing, research,
development, consulting or other services in a basic industry, if
the contract involves the performance of such ser vices performed on
or after July 1, 2009, by the employees of the business entity
within the State of Oklahoma or if the contract involves the
performance of such services performed on or after July 1, 2009, by
employees of a lawfully recognized business e ntity that is a
subcontractor of the business entity with which the prime contract
has been formed. A qualified federal contract described in this
paragraph shall not qualify unless both the qualified federal
contractor and any subcontractors originally i nvolved in the work or
added subsequently during the period of performance verify to the
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qualified federal contractor verifier that it offers, or will offer
within one hundred eighty (180) days of employment of its respective
employees, a basic health bene fits plan as described in subparagraph
b of paragraph 1 of this subsection to individuals who perform
qualified labor hours in this state;
12. “Qualified federal contractor verifier ” means a nonprofit
entity organized under the laws of the State of Oklaho ma, having an
affiliation with a comprehensive university which is part of The
Oklahoma State System of Higher Education, and having the following
characteristics:
a. established multiyear classified and unclassified
indefinite-delivery/indefinite-quantity federal
contract vehicles in excess of Fifty Million Dollars
($50,000,000.00),
b. current capability to sponsor and maintain personnel
security clearances and authorized by the federal
government to handle and perform classified work up to
the Top Secret Sensitive Compartmented Information
levels,
c. at least one on-site federally certified Sensitive
Compartmented Information Facility,
d. on-site secure mass data storage complex with the
capability of isolating, segregating and protecting
corporate proprietary and classified information,
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e. trusted agent status by maintaining no ownership of,
vested interest in, nor royalty production from any
intellectual property,
f. at least one hundred thousand (100,000) square feet of
configurable laboratory and suppor t space,
g. the direct access to restricted air space through a
formalized memorandum of agreement with the Department
of Defense,
h. at least five thousand (5,000) acres available for
outdoor testing and training facilities, and
i. the ability to house st ate-of-the-art surety
facilities, including chemical, biological,
radiological, explosives, electronics, and unmanned
systems laboratories and ranges;
13. “SIC Manual” means the 1987 revision to the Standard
Industrial Classification Manual, promulgated b y the Office of
Management and Budget of the United States of America;
14. 17. “Start date” means the date on which an establishment
may begin accruing benefits for the creation of new direct jobs,
which date shall be determined by the Department;
15. 18. “Effective date” means the date of approval of a
contract under which incentive payments will be made pursuant to the
Oklahoma Quality Jobs Program Act, which shall be the date the
signed and accepted incentive contract is received by the
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Department; provided, an approved project may have a start date
which is different from the effective date;
16. “Total qualified labor hours ” means the reimbursed payment
amount for hours of work performed by the State of Oklahoma
workforce of a qualified federal contra ctor or the State of Oklahoma
workforce of a subcontractor of a qualified federal contractor and
which are required for the full performance of a qualified federal
contract;
17. “Qualified labor rate ” means the fully reimbursed labor
rate paid through a q ualified federal contract for qualified labor
hours to the qualified federal contractor or subcontractor;
18. “Qualified federal contractor ” means a business entity:
a. maintaining a prime contract with the federal
government as defined in paragraph 11 of this
subsection,
b. providing notice of intent to apply to the Department
within one hundred eighty (180) days of July 1, 2010,
or one hundred eighty (180) days of the date of the
award of a qualified federal contract or award of a
new qualified subcontra ct under an existing qualified
federal contract, and
c. adding substantively to the contract by performing at
least eight percent (8%) of the total labor whether
qualified and nonqualified labor as determined by the
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federal contractor verifier on a direct contract or
individual task order or delivery order on an
indefinite-delivery/indefinite-quantity or other
blanket contract vehicle.
Should a prime contractor provide notice to the Department of
its intent not to apply for incentive for a qualified federal
contract or fails to qualify under the criteria above,
subcontractors in order of tier ranking as determined by the federal
contract verifier may assume the role of the prime and apply to
become a qualified federal contractor provided the entity meets the
same criteria above with the exception that notice of intent to
apply with the Department must be provided within sixty (60) days of
the prime’s disqualification or one hundred eighty (180) days of the
award of its subcontract, whichever is later; and
19. “Proxy establishment” means a public trust which:
a. is organized and existing under Section 176 of Title
60 of the Oklahoma Statutes for the benefit of a
geographic area which includes a city or county or
some combination thereof, and
b. benefits a geographic area where new direct jobs which
meet the requirements of the Oklahoma Quality Jobs
Program Act are created by an establishment, other
than the proxy establishment, which is a branch of the
Armed Forces of the United States.
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A proxy establishment ma y be determined to be an establishment
for all purposes of the Oklahoma Quality Jobs Program Act by the
Department and incentive payments may be made to such proxy
establishment for new direct jobs otherwise qualified pursuant to
the Oklahoma Quality Jobs Program Act. The Department may
promulgate rules to further specify the circumstances under which a
proxy establishment may be considered an establishment for the
purposes of making application for incentive payments pursuant to
the Oklahoma Quality Jobs Program Act. Provided however, that with
respect to any data on qualifying direct new jobs from a branch of
the Armed Forces of the United States, such rules shall only require
a proxy establishment to provide such data as would otherwise be
publicly releasable by the branch of the Armed Forces of the United
States.
19. “Full-time employment” means employment of persons residing
in this state, and subject to the tax imposed by Section 2355 of
this title, and working an annual average of thirty (30) or mor e
hours per week in new direct jobs located in this state;
20. “Qualified federal facility ” means a facility developed by
or at the expense of a political subdivision of this state and
leased or conveyed to the government of the United States which
primarily houses federal employees;
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21. “Political subdivision ” means a municipality, a county or a
public trust, the beneficiary or beneficiaries of which are a
municipality, a county , this state or a combination thereof;
22. “Project term” means the length of time a political
subdivision may receive incentive payments associated with a
qualified federal facility pursuant to the provisions of this act;
provided, the project term shall not exceed twenty (20) years from
the date of the first incentive payment;
23. “Develops” means acquires, maintains, constructs, improves,
enlarges, renews, renovates, replaces, leases, equips, furnishes or
operates;
24. “Average county wage” means the annualized average county
wage as determined by the Department of Commerce ba sed on the most
recent United States Department of Commerce data for the county in
which the new direct jobs are located. For purposes of this
paragraph, health care premiums paid by the applicant for
individuals in new direct jobs shall not be included i n the
annualized wage;
25. “State threshold wage ” means an annualized average wage of
Forty Thousand Dollars ($40,000.00). This maximum wage threshold
shall be indexed and modified from time 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 United States Department of Commerce.
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For purposes of this paragraph, health care premiums paid by the
applicant for individual s in new direct jobs shall not be included
in the annualized wage;
26. “Small employer wage” means the average county wage of
employers with less than five hundred employees located in that
county as that percentage is determined by the Department of
Commerce based upon the most recent wage and employment data from
the Oklahoma Employment Security Commission for the county where the
new direct jobs are located. For purposes of this paragraph, health
care premiums paid by the applicant for individuals in n ew direct
jobs shall not be included in the annualized wage ;
27. “Tier 1 County” means a county that has a population of
less than ten thousand (10,000) as identified by the most recent
federal decennial Census from the U nited States Census Bureau;
28. “Tier 2 County” means a county that has a population of
greater than or equal to ten thousand (10,000) and less than thirty
thousand (30,000) as identified by the most recent federal decennial
Census from the United States Census Bureau;
29. “Tier 3 County” means a county that has a population of
greater than or equal to thirty thousand (30,000) and less than
sixty thousand (60,000) as identified by the most recent federal
decennial Census from the U nited States Census Bureau;
30. “Tier 4 County” means a county that has a population of
greater than or equal to sixty thousand (60,000) and less than three
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hundred thousand (300,000) as identified by the most recent federal
decennial Census from the U nited States Census Bureau;
31. “Tier 5 County” means a county that has a population of
greater than or equal to three hundred thousand (300,000) as
identified by the most recent federal decennial Census from the
United States Census Bureau;
32. “Former military facility ” means any tract or parcel of
real property used primarily for a military purpose during a state
of war, armed conflict or during peace time, title to has been
vested in the United States Government, any branch of the Armed
Forces of the United States of America or was subsequently conveyed
by such entities to this state, any political subdivision of this
state, or any public trust having this state or any political
subdivision of this state as its beneficiary, whether singly or in
combination with other government entities prior to the date the
establishment acquired its interest ;
33. “Tier 3 County basic industry ” means all industries defined
as basic industries in subsection A of this section and includes:
a. forest nurseries and gathering of forest products
activities defined or classified in th e NAICS Manual
under Industry Group No. 1132,
b. arts, entertainment and recreation activities defined
or classified in the NAICS Manual under Industry Group
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Nos. 711219, 711310, 7121, 713110, 713940 and 713990 ,
and
c. electronic and precision equipment re pair and
maintenance activities defined or classified in the
NAICS Manual under Industry Group No. 8112, and
support, repair, and maintenance service activities
for the wind industry defined or classified in the
NAICS Manual under Industry Group No. 811310 ;
34. “Tier 2 County basic industry ” means all industries
included in Tier 3 County basic industry and includes:
a. mining activities, except oil and gas, defined or
classified in the NAICS Manual under Industry Group
No. 212,
b. support activities for no nmetallic minerals mining
activities defined or classified in the NAICS Manual
under Industry Group No. 213115, and
c. materials recovery and remediation services activities
defined or classified in the NAICS Manual under
Industry Group Nos. 562910 and 562 920; and
35. “Tier 1 County basic industry ” means all industries
included in Tier 2 County basic industry and Tier 3 County basic
industry and includes:
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a. depository credit intermediation activities defined or
classified in the NAICS Manual under Industr y Group
No. 5221, and
b. hospitals and health care activities defined or
classified in the NAICS Manual under Industry Group
No. 622.
B. The Incentive Approval Committee is hereby created and shall
consist of the Director of the Office of Management and E nterprise
Services, the Director of the Department and one member of the
Oklahoma Tax Commission appointed by the Tax Commission, or a
designee from each agency approved by such member. It shall be the
duty of the Committee to determine the eligibility of all applicants
for the Oklahoma Quality Jobs Program Act, subject to the applicable
requirements.
C. For an establishment defined as a “basic industry” pursuant
to division (4) of subparagraph a of paragraph 1 of subsection A of
this section, the Incenti ve Approval Committee shall consist of the
members provided by subsection B of this section and the Executive
Director of the Oklahoma Center for the Advancement of Science and
Technology, or a designee from the Center appointed by the Executive
Director.
SECTION 3. AMENDATORY 68 O.S. 2011, Section 3604, as
last amended by Section 2, Chapter 144, O.S.L. 2018 (68 O.S. Supp.
2020, Section 3604), is amended to read as follows:
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Section 3604. A. Except as otherwise provided in subsect ion I
or subsection L of this section, an establishment which meets the
qualifications specified in the Oklahoma Quality Jobs Program Act
may receive quarterly incentive payments for a ten -year period from
the Oklahoma Tax Commission pursuant to the provis ions of the
Oklahoma Quality Jobs Program Act ; provided, such an establishment
defined or classified in the NAICS Manual under U.S. Industry No.
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 or the compound net benefit rate multiplied by
the actual gross payroll of new direct jobs for a calendar quarter
as verified by the Oklahoma Employment Security Commission.
B. In order to receive incentive p ayments, an establishment
shall apply to the Oklahoma Department of Commerce. The application
shall be on a form prescribed by the Department and shall contain
such information as may be required by the Department to determine
if the applicant is qualifie d. An establishment may apply for an
effective date for a project, which shall not be more than twenty -
four (24) 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 In order to qualify to receive such incentive payments,
the establishment applying shall be required to:
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1. Be engaged in a basic industry , a Tier 3 County basic
industry in a Tier 1, Tier 2 or Tier 3 County, a Tier 2 County basic
industry in a Tier 1 or Tier 2 County or Tier 1 County basic
industry in a Tier 1 County ;
2. Have an annual gross payroll for new direct jobs projected
by the Department to equal or exceed Two Million Five Hundred
Thousand Dollars ($2,500,000.00) within three (3) years of the f irst
complete calendar quarter following the start date Pay new direct
jobs an average annualized wage which equals or exceeds the average
county wage, the state threshold wage, or when the establishment has
less than five hundred (500) employees, pay new direct jobs an
average annualized wage which equals or exceeds the small employer
wage. For purposes of this paragraph, health care premiums paid by
the applicant for individuals in new direct jobs shall not be
included in the annualized wage ; 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 hours per week in new direct jobs
located in this state equal to or in excess of eighty percent (80%)
of the total number of new direct jobs.
D. In Before receiving its first quarterly payment, an
establishment shall meet the payroll and/or the new jobs
requirements set forth in this section and stipulated in the
agreement with the state. When these req uirements are met, the
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establishment shall be paid the prior quarter incentive payments and
the current quarter incentive payments for those quarters when the
average wage threshold was also met. Except as otherwise provided
in this section, in order to qualify to receive incentive payments
as authorized by the Oklahoma Quality Jobs Program Act, an
establishment engaged in an activity described under shall be
required to have an annual gross payroll for new direct jobs
projected by the Department to equal or exceed:
1. Five Hundred Thousand Dollars ($500,000 .00) within three (3)
years of the first complete calendar quarter following the start
date in a Tier 1 County;
2. One Million Dollars ($1,000,000 .00) within three (3) years
of the first complete calen dar quarter following the start date in a
Tier 2 County;
3. One Million Five Hundred Thousand Dollars ($1,500,000.00)
within three (3) years of the first complete calendar quarter
following the start date in a Tier 3 County;
4. Two Million Dollars ($2,00 0,000.00) within three (3) years
of the first complete calendar quarter following the start date in a
Tier 4 County; and
5. Two Million Five Hundred Thousand Dollars ($2,500,000.00)
within three (3) years of the first complete calendar quarter
following the start date in a Tier 5 County .
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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 Dolla rs ($1,500,000.00)
within three (3) years of the first complete calendar
quarter following the start date and 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 Comm ittee pursuant to the
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 government,
unless the annual gross payroll equals or exceeds Two
Million Five Hundred Thousand Dollars ($2,500,000.00)
in which case the requirements for purchase of output
provided by this subparagraph shall not apply, 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 number of new direct
jobs; and
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2. Division (4) of subparagraph a of paragraph 1 o f 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 to equal or exceed One
Million Five Hundred Thousand Dollars ($1,500,000.00)
within three (3) years of the f irst complete calendar
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 number of new direct
jobs.
E. An establishment with less than five hundred (500) total
jobs may also qualify to receive incentive payments as authorized by
the Oklahoma Quality Jobs Program Act if the establishment:
1. Creates at least five (5) new qualifying job s with at least
Two Hundred Thousand Dollars ($200,000.00) in gross payroll within
two (2) years of the first complete calendar quarter following the
start date in a Tier 1 County;
2. Creates at least five (5) new qualifying jobs with at least
Two Hundred Fifty Thousand Dollars ($250,000.00) in gross payroll
within two (2) years of the first complete calendar quarter
following the start date in a Tier 2 County;
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3. Creates at least ten (10) new jobs with at least Four
Hundred Thousand Dollars ($400,000.00) in gross payroll within two
(2) years of the first complete calendar quarter following the start
date in a Tier 3 County;
4. Creates at least fifteen (15) new jobs with at least Five
Hundred Thousand Dollars ($500,000.00) in gross payroll within two
(2) years of the first complete calendar quarter following the start
date in a Tier 4 county; and
5. Creates at least fifteen (15) new jobs with at least Seven
Hundred Thousand Dollars ($700,000.00) in gross payroll within two
(2) years of the first complete calendar quarter following the start
date in a Tier 5 county.
F. 1. An establishment which locates its principal business
activity within a site consisting of at least ten (10) acres which:
a. is a federal Superfund removal site,
b. is listed on the Nati onal Priorities List established
under Section 9605 of Title 42 of the United States
Code,
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 regulated
by a federal or state statute governing environmental
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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 shall conduct the activity
resulting in at least fifty percent (50% ) of its Oklahoma taxable
income or adjusted gross income, as determined under Section 2358 of
this title, whether from the sale of products or services or both
products and services, at the physical location which has been
determined not to comply with th e federal or state statutes
described in this subsection with respect to environmental
conditions for real property. The establishment shall be subject to
all other requirements of the Oklahoma Quality Jobs Program Act
other than the exemptions provided b y this subsection.
3. In order to qualify for the incentive payments pursuant to
this subsection, the entity shall obtain from the Department of
Environmental Quality a letter of concurrence that:
a. the site designated by the entity does meet one or
more of the requirements listed in paragraph 1 of this
subsection, and
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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 available to it,
but may also require the applying entity to provide additional data
and information as necessary.
4. If authorized by the Department of Environmental 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 qualify for
incentive payments based on employment associated with the portion
of the site.
F. Except as otherwise provided by subsection G of this
section, for applications submitted on and after June 4, 2003, in
order to qualify to receive incentive payments as authorized by the
Oklahoma Quality Jobs Program Act, in addition to other
qualifications specified he rein, an establishment shall be required
to pay new direct jobs an average annualized wage 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 the county in which the new
direct jobs are located. For purposes of this paragraph, health
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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 county wage as
that percentage is determined by the Department 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 individuals in new
direct jobs shall not be included in the annualized wage.
Provided, no average wage requirement shall exceed Twenty -five
Thousand Dollars ($25,000.00), in any county. This maximum wage
threshold shall be indexed and modified from time 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 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 percent (30%) of the residents
have annual gross household incomes from all sources below the
poverty guidelines established by the U.S. Department of Health and
Human Services. An establishment which is otherwise qualified to
receive incentive payments and which locates its principal business
activity in an opportunity zone shall not be subj ect to the
requirements of subsection F of this section.
2. As used in this subsection:
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a. “negative economic event ” means:
(1) a man-made disaster or natural disaster as
defined in Section 683.3 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 county of this
state have been lost due to an establishment
changing its structure, consoli dating 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, as determined by
the Bureau of Labor Statistics, for a county wh ich 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
most recent twelve-month period in which employment is
measured, preceding the event.
An establishment which is otherwise qualified 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
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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. In order to qualify to receive
incentive payments as authorized by the Oklahoma Quality Jobs
Program Act, a political subdivision that attracts a federal
facility and develops, or causes to be developed, a qualified
federal facility may apply to the Oklahoma Department of Commerce
and receive quarterly incentive payments from the Oklahoma Tax
Commission for the project term pursuant to the provisions of this
act in an amount which shall be equal to the net benefit rate
multiplied by the actual gross payroll of new direct jobs at the new
qualified federal facility for a calendar quarter; provided, the
total amount of such payments shall not exceed the total net
benefit. The qualified federal facility must have gross payroll
that are projected by the Department to equal or exceed:
1. One Million Dollars ($1,000,000.00) within three (3) years
of the first complete calendar quarter following the start date in a
Tier 1 or Tier 2 County;
2. One Million Five Hundred Thousand Dollars ($1,500,000.00)
within three (3) years of the first complete c alendar quarter
following the start date in a Tier 3 County;
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3. Two Million Dollars ($2,000,000.00) within three (3) years
of the first complete calendar quarter following the start date in a
Tier 4 County; or
4. Two Million Five Hundred Thousand Dollars ($2,500,000.00)
within three (3) years of the first complete calendar quarter
following the start date in a Tier 5 County.
H. The Department shall determine if the applicant is qualified
to receive incentive payments.
I. If the applicant is determined t o 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/benefit 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 follo wing 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) or for the
project term for a political subdivision applying in conjunction
with a qualified feder al facility. In conducting such cost/benefit
analysis, 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
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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
subparagraph d of paragraph 7 of subsection A of Section 3603 of
this title. The cost/benefit analysis shall determine the estimated
net direct state benefit, the net benefit rate and the incentive
payment for an applicant, except:
1. In Tier 1 Counties, the cost/benefit analysis shall
determine the estimated net d irect and indirect state benefits, the
compound net benefit rate and the incentive payment for an applicant
if the establishment pays average county wages equal to or in excess
of one hundred twenty -five percent (125%) of the average county
wage;
2. In Tier 2 and Tier 3 Counties, the cost/benefit analysis
shall determine the estimated net direct and indirect state
benefits, the compound net benefit rate and the incentive payment
for an applicant if the establishment pays average county wages
equal to or in excess of one hundred fifty percent (150%) of the
average county wage;
3. In Tier 4 and Tier 5 Counties, the cost/benefit analysis
shall determine the estimated net direct and indirect state
benefits, the compound net benefit rate and the incentive payme nt
for an applicant if the establishment pays average county wages
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equal to or in excess of two hundred percent (200%) of the average
county wage.
J. Upon approval of such an application, 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 Progr am Act. The approved
establishment shall file quarterly claims with the Tax Commission
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 3 606 of this title, or until it is
no longer qualified to receive incentive payments. The
establishment may be audited by the Tax Commission to verify such
eligibility. Once the establishment is approved, an agreement shall
be deemed to exist between the establishment and the State of
Oklahoma, requiring the continued incentive payment 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
this title and within th e 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
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Oklahoma Tax Commission to no longer have business operations in the
state have moved the business operations that received incentive
payments to another 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 which an establishment eligible to
receive quarterly incentive payments pursuant to the provis ions 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 payment. The
amount of such claim shall not exceed amounts paid by the
municipality for direct costs of municipal infrastruc ture
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 establishment 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
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.
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L. For any contract executed by an establishment on or after
the effective date of this act August 1, 2018, five percent (5%) of
the quarterly incentive payment amount shall be transferred by the
Oklahoma Tax Commission to the Oklahoma Quick Action Closing Fund.
SECTION 4. AMENDATORY 68 O.S. 2011, Section 3605, is
amended to read as follows:
Section 3605. There is hereby created within the State Treasury
a special fund for the Oklahoma Tax Commission to be designated the
“Quality Jobs Program Ince ntive Payment Fund”. The Oklahoma Tax
Commission is hereby authorized and directed to withhold a portion
of the taxes levied and collected pursuant to Section 2355 of Title
68 of the Oklahoma Statutes for deposit into the fund. The amount
deposited shall equal the sum of an amount determined by multiplying
the net benefit rate provided by the Department of Commerce by the
gross payroll as determined pursuant to the provisions estimated by
the Tax Commission to be sufficient to pay incentive payments
claimed pursuant to the provisions of subsection A of Section 6 of
this act Section 3606 of this title . All of the amounts deposited
in such fund shall be used and expended by the Tax Commission solely
for the purposes and in the amounts authorized by the Okla homa
Quality Jobs Program Act. The liability of the State of Oklahoma to
make the incentive payments under this act shall be limited to the
balance contained in the fund created by this section.
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SECTION 5. AMENDATORY 68 O.S. 2011 , Section 3606, as
last amended by Section 1, Chapter 138, O.S.L. 2020 (68 O.S. Supp.
2020, Section 3606), is amended to read as follows:
Section 3606. A. As soon as practicable after the end of the
first complete calendar quarter following the start dat e, the
establishment shall file a claim for the payment with the Oklahoma
Tax Commission and shall specify the actual number and gross payroll
of new direct jobs for the establishment for the calendar quarter.
The Tax Commission shall verify the actual gr oss payroll for new
direct jobs for the establishment for such calendar quarter. If the
Tax Commission is not able to provide such verification utilizing
all available resources, the Tax Commission may request such
additional information from the establis hment as may be necessary or
may request the establishment to revise its claim. An establishment
may file for an extension of the initial filing date with the
Oklahoma Department of Commerce. Any such extension shall be based
solely upon an extraordinary adverse business circumstance which
prevented the establishment from hiring the new direct jobs as
projected. If an establishment fails to file claims as required by
this section, it shall forfeit the right to receive any incentive
payments after three ( 3) years from the start date. If an
establishment has filed at least one claim pursuant to this section
but fails to file another claim within two (2) years of the most
recent claim, the Tax Commission, after consulting with the
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Department of Commerce, ma y dismiss the establishment from the
program, forfeiting the establishment ’s right to receive incentive
payments based on that contract.
B. 1. Except as otherwise provided in paragraph 2 of this
subsection, if the actual verified gross payroll for four ( 4)
consecutive calendar quarters does not equal or exceed the
applicable total required by Section 3604 of this title within three
(3) years of the start date, or does not equal or exceed the
applicable total required by Section 3604 of this title at any o ther
time during the ten-year period after the start date or during the
fifteen-year period after the start date for establishments defined
or classified in the NAICS Manual under U.S. Industry No. 711211
(2007 version), the incentive payments shall not be made and shall
not be resumed until such time as the actual verified gross payroll
equals or exceeds the amounts specified in Section 3604 of this
title. If an establishment fails to achieve the required gross
payroll within three (3) years of the start date, the establishment
shall not make a new or renewal application for incentive payments
authorized pursuant to the Oklahoma Quality Jobs Program Act for a
period of twelve (12) months from the last day of the last month of
the three-year period during w hich the required gross payroll amount
was not achieved.
2. Any establishment which does not meet the quarterly payroll
requirements provided pursuant to paragraph 1 of this subsection
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during the time period which begins on April 1, 2020, and ends on
June 30, 2021, shall continue to receive incentive payments and
shall be exempt from the prescribed limitations.
C. If the average annualized wage required for an establishment
does not equal or exceed the amount specified in paragraph 1 or 2 of
subsection F paragraph 2 of subsection C of Section 3604 of this
title during any calendar quarter, the incentive payments shall not
be made and shall not be resumed until such time as such
requirements are met.
D. In no event shall incentive payments, cumulatively, e xceed
the estimated net direct state benefits, except for establishments
subject to the provisions of subparagraph d of paragraph 7 of
subsection A of Section 3603 of this title :
1. The estimated net direct state benefits for establishments
utilizing the net benefit rate; or
2. The estimated net direct and indirect state benefits for
establishments utilizing the compound net benefit rate .
E. An establishment that has qualified pursuant to Section 3604
of this title may receive payments only in accordance with the
provisions of the law under which it initially applied and was
approved. If an establishment that is receiving incentive payments
expands, it may apply for additional incentive payments based on the
gross payroll anticipated from the expansion o nly, pursuant to
Section 3604 of this title. Provided, an establishment which has
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suffered an extraordinary adverse business circumstance, as
certified by the Incentive Approval Committee, may be allowed to
voluntarily withdraw from the Oklahoma Quality J obs Program, repay
to the Tax Commission the total amount of incentive payments
received pursuant to the provisions of this section, plus interest
at the rate specified in Section 727.1 of Title 12 of the Oklahoma
Statutes, and reapply to the Department fo r a new incentive contract
if the establishment qualifies pursuant to the provisions of the
Oklahoma Quality Jobs Program Act. Any funds received by the Tax
Commission pursuant to the provisions of this subsection shall be
apportioned in the manner that i ncome tax revenues are apportioned.
F. An establishment that is receiving incentive payments may
not apply for additional incentive payments for any new projects
until twelve (12) quarters after receipt of the first incentive
payment, or until the establi shment’s actual verified gross payroll
for new direct jobs or new job creation equals or exceeds Two
Million Five Hundred Thousand Dollars ($2,500,000.00) the payroll or
job threshold requirements specified in subsection D or subsection G
of Section 3604 of this title during any four consecutive -calendar-
quarter period, whichever comes first. After meeting the
requirements of this subsection, an establishment may apply for
additional incentive payments based upon the gross payroll
anticipated from an expan sion only.
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G. As soon as practicable after verification of the actual
gross payroll as required by this section and except as otherwise
provided by subsection K of Section 3604 of this title, the Tax
Commission shall issue a warrant to the establishment i n the amount
of the net benefit rate multiplied by the actual gross payroll as
determined pursuant to subsection A of this section for the calendar
quarter.
SECTION 6. AMENDATORY 68 O.S. 2011, Section 3607, as
amended by Section 2 6, Chapter 227, O.S.L. 2013 (68 O.S. Supp. 2020,
Section 3607), is amended to read as follows:
Section 3607. A. Notwithstanding any other provision of law,
if a qualified establishment receives an incentive payment pursuant
to the provisions of Section 3 601 et seq. of this title, neither the
qualified establishment nor its contractors or subcontractors shall
be eligible to receive the credits or exemptions provided for in the
following provisions of law in connection with the activity for
which the incentive payment was received:
1. Paragraphs 16 and 17 of Section 1357 of this title;
2. Paragraph 7 of Section 1359 of this title;
3. Section 2357.4 of this title; except as provided in
subsection B of this section;
4. Section 2357.7 of this title;
5. Section 2-11-303 of Title 27A of the Oklahoma Statutes;
6. Section 2357.22 of this title;
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7. 5. Section 2357.31 of this title;
8. 6. Section 54003 of this title; or
9. Section 54006 of this title;
10. 7. Section 625.1 of Title 36 of the Oklahoma Statutes ;
11. Subsections C and D of Section 2357.59 of this title;
12. Section 2357.13 of this title; or
13. Section 4201 of this title .
B. Any establishment which has qualified to receive quarterly
incentive payments pursuant to subsection B of Section 3604 of this
title for a ten-year period with a project start date after January
1, 2010, shall be eligible to receive the credit provided for in
Section 2357.4 of this title if such establishment:
1. Qualifies for the credit allowed pursuant to paragraph 1 of
subsection B of Section 2357.4 of this title based on an investment
made after January 1, 2010;
2. Pays an average annualized wage which equals or exceeds the
average state wage as determined by the Department of Commerce based
on the most recent U.S. De partment of Commerce data; and
3. Obtains a determination letter from the Oklahoma Department
of Commerce that the business activity of the entity will result in
a positive net benefit rate.
C. For purposes of the exception provided for in this section:
1. “Estimated direct state benefits ” has the meaning set out in
paragraph 4 of subsection A of Section 3603 of this title;
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2. “Estimated indirect state benefits ” means the indirect new
tax revenues projected by the Oklahoma Department of Commerce to
accrue to the state, including, but not limited to, revenue
generated from ancillary support jobs directly related to the
primary business;
3. “Estimated direct state costs ” has the meaning set out in
paragraph 5 of subsection A of Section 3603 of this title; and
4. “Estimated indirect state costs ” means the costs projected
by the Oklahoma Department of Commerce to accrue to the state as a
result of new indirect jobs. Such costs shall include, but not be
limited to, costs enumerated in paragraph 3 of this su bsection.
D. Any establishment which has qualified to receive quarterly
incentive payments pursuant to subsection B of Section 3604 of this
title for a ten-year period with a project start date after January
1, 2010, shall be eligible to receive the credi t provided for in
Section 2357.4 of this title pursuant to the provisions of this
section if such establishment obtains a determination letter from
the Oklahoma Department of Commerce that the business activity of
the entity will result in a positive net b enefit rate, to be
computed by the Oklahoma Department of Commerce using a methodology
which provides for the analysis of estimated direct state benefits,
estimated indirect state benefits, estimated direct state costs and
estimated indirect state costs. The Oklahoma Department of Commerce
shall use such information as it determines to be relevant for the
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analysis required by this subsection including, but not limited to,
the type of business activity in which the entity is engaged or will
be engaged, amount of capital investment, type of assets acquired or
utilized by the business entity, economic impact of the business
activity within the relevant geographic region and such other
factors as the Department determines to be relevant. The Oklahoma
Department of Commerce may use information regarding the business
entity alone or in conjunction with relevant information regarding
other business activity in a geographically relevant area
surrounding the principal business location of the primary business
entity in order to perform the computation of the net benefit rate.
If the result of the analysis is a positive net benefit rate, the
establishment shall be allowed to qualify to receive quarterly
incentive payments pursuant to subsection B of Section 3604 of t his
title for a ten-year period and shall be eligible to receive the
credit provided for in Section 2357.4 of this title. The Oklahoma
Department of Commerce shall transmit a determination letter to the
authorized representative of the establishment and s hall also
transmit a copy of the determination letter to the Oklahoma Tax
Commission, regardless of whether the result is a positive or
negative net benefit rate.
SECTION 7. REPEALER 68 O.S. 2011, Sections 3501, 3502,
3503, 3504, 3505, 3506, 3507 and 3508, are hereby repealed.
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SECTION 8. REPEALER 68 O.S. 2011, Sections 3604.1, as
amended by Section 25, Chapter 227, O.S.L. 2013, 3611 and 3612 (68
O.S. Supp. 2020, Section 3604.1) , are hereby repealed.
SECTION 9. REPEALER 68 O.S. 2011, Sections 3801, 3802,
3803, 3804, 3805, 3806, 3807 and 3808, are hereby repealed.
SECTION 10. REPEALER 68 O.S. 2011, Sections 3901, 3902,
3903, as last amended by Section 1, Chapter 128, O.S.L. 2014, 3904,
as last amended by Section 1, Chapter 197, O.S.L. 2019, 3905, 3906,
3907, 3908, 3909 and 3910 (68 O.S. Supp. 2020, Sections 3903 and
3904), are hereby repealed.
SECTION 11. REPEALER 68 O.S. 2011, Sections 3911, 39 12,
3913, 3914, as last amended by Section 4, Chapter 144, O.S.L. 2018,
3915, 3916, 3917, 3918, 3919 and 3920 (68 O.S. Supp. 2020, Section
3914), are hereby repealed.
SECTION 12. This act shall become effective November 1, 2021.
COMMITTEE REPORT BY: COMMITTEE ON APPROPRIATIONS AND BUDGET, dated
04/01/2021 - DO PASS.