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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
CONFERENCE COMMITTEE SUBSTITUTE
FOR ENGROSSED
SENATE BILL 604 By: Rader of the Senate
and
Fetgatter of the House
CONFERENCE COMMITTEE SUBSTITUTE
An Act relating to incentive payments; amending 68
O.S. 2021, Sections 3604 and 3606, which relate to
the Oklahoma Quality Jobs Program Act; modifying
payment period for certain industry; requiring the
extension of contracts for cer tain entities;
prohibiting the inclusion of ad ditional award with
certain contract extension; stipulating calculation
of payments for certain extended contract; updating
statutory reference; and providing an effective date .
BE IT ENACTED BY THE PE OPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 3604, is
amended to read as follows:
Section 3604. A. Except as otherwise provided in subsection I
or subsection L of this section, an establis hment 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 provisions of the
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Oklahoma Quality Jobs Program Act; pro vided, 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 thirty-year period. The amount of such payments shall
be equal to the net bene fit rate multiplied by the actual gross
payroll of new direct jobs for a calendar quarter as verified b y the
Oklahoma Employment Security Commi ssion. For an establishment
defined or classified in the NAICS Manual under U.S. Industry No.
711211 (2007 version) that entered into a contract pursuant to the
Oklahoma Quality Jobs Program Act w ith the Oklahoma Department of
Commerce before the effective date of this act:
1. The contract shall be extended from fifteen (15) years to
thirty (30) years; and
2. The extension shall not include additional money awarded but
shall allow for payments to continue for the thirty-year period, or
until the net benefit for the new direct jobs for the original
contract has been fully paid out as calculated based upon the
original application .
B. In order to receive incentive payments, an establishment
shall apply to the Oklahoma Department of Com merce. 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 qualified. An establishment may apply for an
effective date for a project, whi ch shall not be more than twenty-
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four (24) months from the date the application is submitted to the
Department.
C. Except as otherwise provide d by subsection D or E of this
section, in order to qualify to receive such payments, the
establishment applying shall be required to:
1. Be engaged in a basic industry;
2. Have an annual gross payroll for new dire ct jobs projected
by the Department to e qual or exceed Two Million Five Hundred
Thousand Dollars ($2,500,000.00) within three (3) years of the first
complete calendar quarter following the start date; and
3. Have a number of full -time-equivalent employees subject to
the tax imposed by Section 2 355 of this title and working a n annual
average of thirty (30) or more hours per week in new direct jobs
located in this state equal to or in excess of ei ghty percent (80%)
of the total number of new direct jobs.
D. In order to qualify to receive incentiv e payments as
authorized by the Oklahoma Quality Jobs Program Act, an
establishment engaged in an activity descri bed under:
1. Industry Group Nos. 3111 t hrough 3119 of the NAICS Manual
shall be required to:
a. have an annual gross payroll for new direct j obs
projected by the Department to equal or exceed One
Million Five Hundred Thousand Dollars ($1,500,000.00)
within three (3) years of the first complete calendar
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quarter following the start date and make, or which
will make within one (1) year, at least s eventy-five
percent (75%) of its total sales, as determined by the
Incentive Approval Committee 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 gove rnment,
unless the annual gross payroll e quals or exceeds Two
Million Five Hundred Thousand Dollars ($2 ,500,000.00)
in which case the requireme nts 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 thi rty (30) or more hours per
week in new direct jobs equal to or in excess of
eighty percent (80%) of th e total number of new direct
jobs; and
2. Division (4) of subparagraph a of paragraph 1 of subsection
A of Section 3603 of this title, shall be required to:
a. have an annual gross payroll for new direct jobs
projected by the Department to equal or exceed One
Million Five Hundred Thous and Dollars ($1,500,000.00)
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within three (3) years of the first 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. 1. An establishment which locates its pri ncipal 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 National 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 P riorities List, or
d. has been determined by the Department of Environm ental
Quality to be contaminated by any substance regulated
by a federal or state statute governing environmental
conditions for real property pursuant to an order of
the Department of Environmental Quality,
shall qualify for incentive payments irrespectiv e of its actual
gross payroll or the number of full -time-equivalent employees
engaged in new direct jobs.
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2. In order to qualify for the incentive payments pursuant to
this subsection, the establishment shall conduct the act ivity
resulting in at least fif ty percent (50%) of its Oklahoma taxable
income or adjusted gross income, as deter mined under Section 2358 of
this title, whether from the sale of products or services or both
products and services, at the physical location w hich has been
determined not to comply with the federal or state statutes
described in this subsection with respe ct to environmental
conditions for real p roperty. The establishment shall be subject to
all other requirements of the Oklahoma Quality Jobs Pr ogram Act
other than the exempt ions provided by this subsection.
3. In order to qualify for the incentive paymen ts pursuant to
this subsection, the entit y shall obtain from the Department of
Environmental Quality a letter of concurrence that:
a. the site designated by the entity does m eet one or
more of the requirements listed in paragraph 1 of this
subsection, and
b. the site is being or has been remediat ed 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 add itional data
and information, as necessary.
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4. If authorized by the Department of Environmental Qualit y
pursuant to paragraph 3 of t his 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 wi th the portion
of the site.
F. Except as otherwise provided by subsection G of this
section, for applications su bmitted 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 herein, 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 cou nty 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 para graph, health
care premiums paid by the applicant for individu als in new direct
jobs shall be included in the annualized wage; or
2. One hundred percent (100%) of the average county wage as
that percentage is determ ined 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 paragr aph,
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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 Twent y-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. Departmen t of Commerce.
G. 1. As used in this subsection, “opportunity zone” means one
or more census tracts in which, according t o the most recent Federal
Decennial Census, at least thirty pe rcent (30%) of the residents
have annual gross household incomes from a ll sources below the
poverty guidelines established by the U.S. Department of Healt h and
Human Services. An establishment which is otherwise qualified to
receive incentive payments and which locates its principal business
activity in an opportunity zone s hall not be subject to the
requirements of subsection F of this section.
2. As used in this subsection:
a. “negative economic event” means:
(1) a man-made disaster or natural disaster as
defined in Section 683.3 of Title 63 o f the
Oklahoma Statutes, resul ting in the loss of a
significant number of jobs within a particular
county of this state, or
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(2) an economic circumstance in which a significant
number of jobs within a particular coun ty of this
state have been lost due to an establishment
changing its structure, consolidating with
another establishment, closing or moving all or
part of its operations out of this state, and
b. “significant number of jobs ” means Local Area
Unemployment Statistics (LAUS) data, as determined by
the Bureau of Labor Statistics, for a county which are
equal to or in excess of five percent (5%) of the
total amount of Local Area Unemployment Statistic s
(LAUS) data for that county for the calendar year, or
most recent twelve-month period in which employ ment is
measured, preceding th e 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 require ments of
subsection F of this section; provided, an establishment shall not
be eligible to receive incentive payments based upon a negative
economic event with respect to jobs that are transferred from one
county of this state to another.
H. The Department shall determine if the applicant is qualified
to receive incentive payments.
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I. If the applicant is determined to be qua lified by the
Department and is not subject to the provisions of subparagraph d of
paragraph 7 of subse ction A of Section 3603 of thi s 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 wi th the first complete
calendar quarter following the start date and to estimate the amount
of gross payroll for a ten -year period beginning with the first
complete calendar quarter following the start date or for a fifteen-
year thirty-year period for an establishment defined or classified
in the NAICS Manual under U.S. Industry No. 711211 (2007 version).
In conducting such cost/benefit analysis, the Depart ment shall
consider quantitative factors, such as th e anticipated level of new
tax revenues to the sta te along with the added cost to the state of
providing services, and such other criteria as deemed appropriate by
the Department. In no event shall incen tive payments, cumulatively,
exceed the estimated ne t 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.
J. Upon approval of such an application, the Depar tment shall
notify the Tax Commission and shall prov ide 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 ad minister the
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provisions of the Oklahoma Quality Jobs Program Act. The approved
establishment shall fi le quarterly claims with the Tax Commission
and shall continue to file such quarterly claims during the ten -year
incentive period to show its continued el igibility for incentive
payments, as provided in Sec tion 3606 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 ap proved, an agreement shall
be deemed to exist betwee n 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 sect ion and Sections 3603 and 3606 of
this title and within the limitations contained in the Oklahoma
Quality Jobs Program Act, which existed at the time of su ch
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 th e
Oklahoma 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.
K. A municipality with a population of less than one hundr ed
thousand (100,000) persons in which an establishme nt eligible to
receive quarterly incentive payments pursuant to the provisions of
this section is located may file a claim with the Tax Commission for
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up to twenty-five percent (25%) of the amount of suc h payment. The
amount of such claim shall not exceed amounts paid by the
municipality for direct costs of municipal infrastructure
improvements to provid e 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 establishm ent
made pursuant to the provisions of Section 3606 of this title shall
be reduced by the amount of t he 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 mann er as warrants are
issued to qualifying establishments.
L. For any contract executed by an establish ment on or after
the effective date of this act August 2, 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 2. AMENDATORY 68 O.S. 2021, Section 3606, is
amended to read as follows:
Section 3606. A. As soon as practicable after the end of the
first complete calendar quarter followin g the start date, the
establishment shall file a claim for the payment with the Okl ahoma
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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 verif y the actual gross payroll for new
direct jobs for the establishment for such calen dar quarter. If the
Tax Commission is not able to provide such verification utilizing
all available resources, the Tax Commission may request such
additional information fr om the establishment 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 fro m 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 leas t 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
Department of Commerce, may dismiss the establishment fro m the
program, forfeiting the establi shment’s right to receive incentive
payments based on that contract.
B. 1. Except as otherwise provi ded in paragraph 2 of this
subsection, if the actual verified gross pay roll for four (4)
consecutive calendar quarter s does not equal or exceed the
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applicable total required by Section 3604 of this title within three
(3) years of the start date, or does no t equal or exceed the
applicable total required by Section 3604 of this title at any other
time during the ten-year period after the start date or during the
fifteen-year thirty-year period after the start date for
establishments defined or classified in t he NAICS Manual under U.S.
Industry No. 711211 (2007 version), the ince ntive payments shall not
be made and shall not be resumed until such time as the ac tual
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 th ree (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 which the required
gross payroll amount was not achieved.
2. Any establishment which does not meet the quarterly payroll
requirements provided pursuant to par agraph 1 of this subsection
during the time period which begins on Apri l 1, 2020, and ends on
June 30, 2021, shall co ntinue to receive incentive payments and
shall be exempt from the prescribed limitations.
C. If the average annualized wage required for a n establishment
does not equal or exceed the amount specified in paragr aph 1 or 2 of
subsection F of Section 3604 of this title during any calendar
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quarter, the incentive payments shall not be made and shall not be
resumed until such time as such requireme nts are met.
D. In no event shall incentive payments, cumulatively, ex ceed
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.
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 only, p ursuant to
Section 3604 of this title . Provided, an establishment which has
suffered an extraordinary adverse business circumstance, as
certified by the Incentive Approval Committee, may be allowed to
voluntarily withdraw from the Oklahoma Quality Jobs Pr ogram, repay
to the Tax Commission th e total amount of incentive payments
received pursuant to the provisions of this section, plus interes t
at the rate specified in Section 727.1 of Title 12 of the Oklahoma
Statutes, and reapply to the Department for a ne w incentive contract
if the establishment qualifies pursuant to the provisions of the
Oklahoma Quality Jobs Program Act. Any funds receive d by the Tax
Commission pursuant to the provisions of this subsection s hall be
apportioned in the manner that income tax revenues are apportioned.
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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 establishment ’s actual verified gross payroll
for new direct jobs equals or exceeds Two Million Five Hundred
Thousand Dollars ($2,500,000.00) during any four consecutive-
calendar-quarter period, whichever comes first. Afte r meeting the
requirements of this subsection, an establishment may apply for
additional incentive payments based upon the gross payroll
anticipated from an expansion only.
G. As soon as practicable after verification of the actual
gross payroll as requir ed 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 in the amount
of the net benefit rate multiplied by the actual gross payroll as
determined pursuant to subsection A of this section for the c alendar
quarter.
SECTION 3. This act shall become effective November 1, 2023.
59-1-2252 QD 5/26/2023 9:42:37 AM