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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
HOUSE BILL 2700 By: Kendrix
AS INTRODUCED
An Act relating to public finance; amending 62 O.S.
2021, Sections 7003, 7004 and 7005, which relate to
the Incentive Evaluation Act; modifying references to
terms of service; providing for schedu le of review;
imposing requirement with respect to scope of
services; providing exception; modifying provisions
related to release of information to the Incentive
Evaluation Commission; and declaring an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHO MA:
SECTION 1. AMENDATORY 62 O.S. 2021, Section 7003, is
amended to read as follows:
Section 7003. A. There is hereby established the Incentive
Evaluation Commission consisting of:
1. A certified public accountant appointed by the Oklahoma
Accountancy Board whose term shall expire on June 30, 2019 begin on
December 31, 2025, and serve a term of no more than four (4) years ;
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2. The president of the Oklahoma Professional Economic
Development Council Select Oklahoma or his or her designee who is
also a member of the Oklahoma Professional Economic Development
Council Select Oklahoma who shall serve during his or her term of
office as president of the Oklahoma Professional Economic
Development Council Select Oklahoma;
3. An auditor who is employed as an internal auditor by a
company or who is employed by a private auditing firm appointed by
the Governor whose term shall expire on June 30, 2019 begin on
December 31, 2025, and serve a term of no more than four (4) years ;
4. An economist from an Oklahoma college or university
appointed by the President Pro Tempore of the Oklahoma State Senate
whose term shall expire on June 30, 2020 begin on December 31, 2022,
and serve a term of no more than four (4) years ;
5. A lay person who is not a n elected official appointed by the
Speaker of the Oklahoma House of R epresentatives whose term shall
expire June 30, 2020 begin on December 21, 2022, and serve a term of
no more than four (4) years;
6. The Chairman Chair of the Oklahoma Tax Commission or his or
her designee who is also a member of the Oklahoma Tax Commission,
which shall be an ex officio and nonvoting position;
7. The Director of the O ffice of Management and Enterprise
Services or his or her designee who is an employee of the Office of
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Management and Enterprise Services which shall be an ex officio and
nonvoting position; and
8. The Oklahoma Secretary of Commerce or his or her designee
who is an employee of the Oklahoma Department of Commerce which
shall be an ex officio and nonvoting po sition.
B. Thereafter persons shall be appointed for terms of four (4)
years beginning on July 1 January 1. Any vacancy shall be filled by
the appointing author ity for the remainder of the unexpired term.
C. No person shall serve on the Commission or be appointed to
the Commission who is employed by a company that receives any
incentive or who holds a substantial interest in ownership in a
company that receives any incentive. As used in this subsection,
"substantial interest " shall mean the ownership, d irectly or
indirectly, of more than fifty percent (50%) of the equity interest
with voting rights for any lawfully recognized business entity.
D. No person shall be appointed to the Commission who at the
time of his or her appointment is an elected offici al. Any person
who is appointed to the Commission who subsequently becomes an
elected official during his or her term on the Commission shall be
required to vacate his or her position on the Commission.
E. The Office of Management and Enterprise Services shall
provide staff and administrative support to the Incentive Evaluation
Commission. The Oklahoma Department of Commerce and the Oklahoma
Tax Commission shall assist the Office of Management and Enterprise
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Services as needed in providing staff and admi nistrative support to
the Commission.
F. The Incentive Approval Committee is hereby created as a
subcommittee of the Incentive Evaluation Commission and shall
consist of the Director of the Office of Management and Enterprise
Services or his or her design ee, the Secretary of Commerce or his or
her designee, and the Chairman of the Tax Commission or his or her
designee. It shall be the duty of the Committee to det ermine:
1. Upon initial application on a form approved by the
Committee, if an establishment is engaged in a basic industry as
defined in subdivision (b) of division (7) or in subdivisions (a)
through (n) of division (9) of subparagraph a of paragraph 1 o f
subsection A of Section 3603 of Title 68 of the Oklahoma Statutes or
as otherwise provided b y subsection C of Section 3603 of Title 68 of
the Oklahoma Statutes;
2. If an establishment would have been defined as a "basic
industry" prior to the amendments to Section 3603 of Title 68 of the
Oklahoma Statutes to convert from SIC Codes to NAICS Codes . If the
Committee so determines, the establishment shall be considered as a
"basic industry" for purposes of the Oklahoma Quality Jobs Program
Act; and
3. If employees of an establishment as defined in division (10)
of subparagraph a of paragraph 1 of s ubsection A of Section 3603 of
Title 68 of the Oklahoma Statutes meet the requirements to be
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considered employed in new direct jobs as specified in paragraph 3
of subsection A of Section 3603 of Title 68 of the Oklahoma
Statutes.
G. For an establishment d efined as a "basic industry" pursuant
to division (4) of subparagraph a of paragraph 1 of subsection A of
Section 3603 of Title 68 of the Oklahoma Statutes, the I ncentive
Approval Committee shall consist of the members provided by
subsection A of this sect ion 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 Dire ctor.
SECTION 2. AMENDATORY 62 O.S. 2021, Section 7004, is
amended to read as follows:
Section 7004. A. The Incentive Evaluation Commission shall
ensure that each incentive is evaluated at least once every four (4)
years unless the Commi ssion determines that the incentive is exempt
from evaluation. The Comm ission may exempt from evaluation any
incentive that it concludes has a minimal fiscal impact. The
Commission shall determine a specific threshold amount which shall
be considered as a minimal fiscal impact for the current evaluation
cycle.
B. By January 1, 2016, and by January 1 each year thereafter,
For calendar years 2016 through 2022, the Incentive Evaluation
Commission shall develop a four -year schedule for evaluating
incentives. Beginning December 1, 2022, and each Dec ember 1 of all
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subsequent years, the Commission shall develop a schedu le of
incentives to be evaluated during the fo llowing calendar year. The
schedule for evaluating the incentives shall be developed so that
the incentives having the highest fisc al impact to the state revenue
system, including but not limited to the General Revenue Fund, shall
be evaluated before othe r incentives. Each schedule shall include a
list of all incentives in the state, including any it exempts from
evaluation. In dete rmining whether a program is an incentive , the
Incentive Evaluation Commission may consider legislative intent and
may also consider whether the program is promoted as an incentive by
any state agency. For each incentive listed in the schedule, the
Commission shall attempt to identify the goal o r goals of the
incentive.
C. Upon approval of the schedule, the Commission shall p rovide
the schedule to the Governor, President Pro Tempore of the Senate
and Speaker of the House of Representatives.
SECTION 3. AMENDATORY 62 O.S. 2021, Section 7005, is
amended to read as follows:
Section 7005. A. The Commission may contract with a private
company, nonprofit, or academic institution to assist with
evaluation of each incentive. The Commission shall devel op a scope
of services for a request for proposals issued pursuant to The
Oklahoma Central Purchasing Act, Section 85.1 et seq. of Title 74 of
the Oklahoma Statutes, for professional services necessary to
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complete incentive evaluations pursuant to the Ince ntive Evaluation
Act. The scope of services shall include a provisio n requiring the
contractor to provide at least one draft report on each incentive
prior to the issuance of the final report ; provided, the contractor
may determine the timing and frequency of draft repor ts based on
the availability of information and the potential for draft reports
to assist the Commission in making final recommendations. The cost
of such contract shall be paid by the Off ice of Management and
Enterprise Services. No recipient or potential recip ient of an
incentive or representative of a recipient or potential recipient
shall contact the entity or ind ividual with whom the Commission
contracts pursuant to this subsection un less the entity or
individual specifically requests information or document ation for
purposes of the incentive evaluation process; provided, this shall
not be construed to prevent par ticipation in a public hearing
conducted pursuant to subsection B of this section.
B. By November 1 of each year beginning in 2016, the Commission
or the Commission's chosen contractor shall evaluate each incentive
scheduled for review that year. The Com mission or the Commission 's
chosen contractor shall conduct each incentiv e evaluation in
consultation with the Oklahoma Department of Commerce divis ion of
Research and Economic Analysis Services using criteria developed
pursuant to subsection D of this section. Between October 1 and
November 30 of each year beginning in 2017, the Commission shall
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hold at least one public meeting to review, allow for public
comment, and vote to approve , disapprove or modify each incentive
evaluation conducted that year. By December 15 of each year
beginning in 2016, the Commission shall provide the results of each
incentive evaluation in a written report to the Govern or, President
Pro Tempore of the Senate and Speaker of the House of
Representatives. If the Commission vote s to modify an incentive
evaluation as provided in this subsection, such modification and the
original evaluation shall be documented in the annual written
report. The report shall be made publicly available on the Oklahoma
Department of Commerce website, the Commission website and
documents.ok.gov.
C. Each evaluation shall i nclude the following:
1. An estimate of the economic and fiscal impact of the
incentive. This estimate shall take into account the following
considerations in addition to other rele vant factors:
a. the extent to which the incentive changes business
behavior,
b. the results of the incentive for the economy of
Oklahoma as a whole. This consideration includes both
positive direct and indirect impacts and any negative
effects on other Oklahoma businesses, and
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c. a comparison to the results of other incentive s or
other economic development strategies with similar
goals;
2. An assessment of whether adequate protections are in place
to ensure the fiscal impact of the incentive does not inc rease
substantially beyond the state 's expectations in future years;
3. An assessment of whether the incentive is being administered
effectively;
4. An assessment of whether the incentive is achieving its
goals;
5. Recommendations for how Oklahoma can m ost effectively
achieve the incentive 's goals, including recommendations on whether
the incentive should be retained, reconfigured or repealed; and
6. Recommendations for any changes to state policy, rules, or
statutes that would allow the incentive to be more easily or
conclusively evaluated in the future. These recommendati ons may
include changes to collection, reporting and sharing of data, and
revisions or clarifications to the goal of the incentive.
D. Evaluation criteria shall be developed for each incentive
evaluated by the Commission. Each incentive shall be evaluate d
using criteria specific to the individual incentive. The criteria
shall be developed by the Commission through the administrative
rulemaking process pursuant to the Administrative Procedures Act,
Section 250 et seq. of Title 75 of the Oklahoma Statutes, and
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codified in the administrative code of the Oklahoma Department of
Commerce.
E. At the request of the Incentive Evaluation Commission, and
unless prohibited by the Oklahoma Constitution, state statutes or
federal law, state agencies shall provide any records, information,
data, or data analysis necessary for the Commission o r contractors
to effectively evaluate incentives. The Commission and contractors
shall not disclose or release any data received from other state
agencies, except as permitted unde r law.
SECTION 4. It being immediately necessary for the p reservation
of the public peace, health or safety, an emergency is hereby
declared to exist, b y reason whereof this act shall take effect and
be in full force from and after its pas sage and approval.
59-1-5680 MAH 01/18/23