We don’t know if the Quality Jobs Program is paying off (Guest post: Mark Lash)

Photo by flickr user Images_of_Money used under a Creative Commons license.
Photo by flickr user Images_of_Money used under a Creative Commons license.

Mark Lash is a retired federal employee who follows Oklahoma policymaking, tries to understand it, and sometime even writes about it. See Mark’s previous post about the Quality Jobs Program here.

Oklahoma’s Quality Jobs Program began in 1993 and has paid “incentives” of over $877 million to a variety of companies since that time. In FY 2013 alone, it paid out $78.9 million.

The law requires the Oklahoma Department of Commerce to evaluate whether the benefits of the Quality Jobs payments outweigh this cost. As reported by the Oklahoman, they claim the program has resulted in a net benefit of $24 million to the state over three years.

I was interested to know how they determined that net benefit, so I contacted the Commerce Department. After the exchange of a number of emails, the department’s Public Information Officer Donald Hackler provided me with his final answer:

I made the decision to keep the information confidential as both Public Records Officer and General Counsel of the Oklahoma Department of Commerce, as work product of the Oklahoma Department of Commerce.  Appeal of this decision is to the District Court of Oklahoma County.

I have to admit I was surprised that the Commerce Department would not provide their analysis supporting the claim of a $24 million net benefit for 2008-2010. If they are so confident of the benefits of the Quality Jobs Program, why will they not release the economic analysis that substantiates their claim?

Economists that have released their methodology came to very different conclusions about this program. A recent paper by researchers at Oklahoma State University looked at whether the program has had a positive impact on community-level growth. (This is a working version of the paper as it has not been through the full peer-review process.) The researchers compared economic growth in communities with companies that received Quality Jobs payments to similar communities that did not. They concluded that “the provision of quality job program funding to a business within a particular community has limited long-term impacts on income, population, house value, or manufacturing growth.”

The authors discussed how the consensus regarding the effectiveness of these types of programs has changed over time. Although studies during the 1990s reported incentives programs do promote growth, more recent research has found little to no impact. They go on to say, “Currently, studies have found no real consensus between economic development incentives and economic growth.”

Since research economists differ on this issue, we should not take the Commerce Department’s claims at face value, especially when they do not explain how they reached their conclusions. Independent economists should be able look at the Department’s methodology and evaluate the merits of their claims.

This secrecy contributes to Oklahoma’s lack of oversight over tax incentives. A 2012 report by the Pew Center on the States looked at how well the state evaluates the many tax incentives in place. (While the Quality Jobs Program does not provide tax incentives per se, the cash payments made to companies has the same effect of reducing available revenues to the state.) Overall, the report found that 13 states are “leading the way” in this area, with 12 showing “mixed results” and 26 “trailing behind.” Oklahoma was in the group that was trailing behind.

The Pew report listed a number of best practices used in other states. These include having an expiration date for programs that force the legislature to review them periodically and having a permanent, non-partisan staff in place to review them. They also suggest a “winners/losers” analysis that looks at the impact of providing funding for these types of programs versus spending it on core state services like schools.

For the Commerce Department to tell a citizen to go to court just to see how they support their claims is not the way our state government should do business. The Quality Jobs Program has spent nearly $900 million since its inception and $78 million in the last fiscal year alone. The taxpayers of this state deserve a better assessment of how their money is being spent.

The opinions stated above are not necessarily those of OK Policy, its staff, or its board. This blog is a venue to help promote the discussion of ideas from various points of view and we invite your comments and contributions. To see our guidelines for blog submissions, click here.

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2 thoughts on “We don’t know if the Quality Jobs Program is paying off (Guest post: Mark Lash)

  1. What is the citation for the “work product” exemption to Oklahoma’s Open Records Act that would support Mr. Hackler’s refusal to release the information?

  2. How convenient for the OK Commerce Department to claim that information which should be made readily available for the public’s consumption is “work product,” thus shielding it from being scrutinized!

    With no access to those “public records,” how are OK taxpayers supposed to determine if the millions that are being funneled out to these businesses is paying off, or if its just another big corporate Welfare Program giving taxpayers no rteturn on their investment?

    The General Counsel of the OK Department of Commerce, has every right to keep any legitimate privileged “work product” information confidential. However, “PUBLIC RECORDS” are by their very nature–records that are intended to be made available for THE PUBLIC’S consumption–hence the name: “Public Records.”

    The control and over-seeing of “Public Records, ” and the control and over-seeing of privileged “work product” information–that results from the attorney-client relationship–are mutually exclusive. Thus, both cannot reasonably be done by the same person. (It’s also very likely that both functions cannot LEGALLY be done by the same person!) Here’s hoping that an appeal has already been filed in the OK County District Court to settle this question!

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