Legislators to study privatization of Commerce Department (Journal Record)

By Dale Denwalt

OKLAHOMA CITY – Business recruitment might be more efficient if the state privatizes all or part of the Department of Commerce, a lawmaker said.

State Rep. Leslie Osborn has looked at the model adopted by Arizona, which began privatizing its economic development agency in 2011. Arizona has been more successful than in the past at recruiting businesses, she said.

“They went to a (private sector) consortium that did the same function but in a more efficient and effective manner,” said Osborn, R-Mustang.

She will get a chance to review the issue more in-depth later this year when she joins state Sen. Ron Justice in a joint House-Senate interim study.

Several other states have handed over business recruitment to privately run boards. Greg LeRoy, executive director of the Washington, D.C.-based think tank Good Jobs First, said his group lost confidence in the idea quickly.

The entities created that way follow a predictable blueprint for corruption and loss of accountability, he said. In 2011, the group examined proposals of privatized agencies and came up with a list of things states could do to avoid those problems.

In another study two years later, Good Jobs First realized that allowing businesses to run an economic development agency is inherently corrupting, LeRoy said.

“We just don’t see how you do it without creating problems,” he said.

He cited examples where commerce entities no longer have the same level of audit or legislative oversight. Some executives were paid more than the governor of the state, and some companies with representatives on the agency’s board were receiving incentives from the state.

“All the things any reasonable taxpayer would want to get out of an agency doing deals is lost, or is lost in part, depending on the structure of the privatization,” LeRoy said.

Osborn said she doesn’t have any legislation in mind yet and is on a fact-finding mission. She said she’s aware of the accountability issues and doesn’t want to take anything off the public books.

“You could probably write something in legislation where the board would have to report back yearly, where you had to look at the results versus the past,” Osborn said. “Obviously, if something like this was ever enacted, it’s not something you’d do overnight.”

Justice said the request for a study isn’t a witch hunt aimed at the Department of Commerce. It’s also not a criticism of work done by other groups in the state that work to lure business here.

“This is not to say that any of those private groups are not doing a great job,” said Justice, R-Chickasha. “It’s not to say the state’s not doing a great job. It would be to simply say is there a way that we could do a better job than what we’re doing.”

Leslie Blair, spokeswoman at the Department of Commerce, said the agency would not comment on the prospect of losing its status as a state agency.

“It’s not within our scope to discuss if we favor or oppose privatization,” she said. “We report directly to the governor, and we’re going to follow the governor’s lead on this issue.”

Oklahoma Policy Institute Policy Director Gene Perry said privatization sometimes makes sense, like when a company can perform a task that the government cannot. Not so for business recruitment and subsidy distribution, he said.

“I don’t think you can point to anything the private sector does that’s anything like that,” Perry said. “But you can find plenty of reasons why the private sector would have more of a conflict of interest if they’re deciding who wins these subsidies.”



Carly Putnam joined OK Policy in 2013. As Policy Director, she supervises policy research and strategy. She previously worked as an OK Policy intern, and she was OK Policy's health care policy analyst through July 2020. She graduated from the University of Tulsa in 2013. As a student, she was a participant in the National Education for Women (N.E.W.) Leadership Institute and interned with Planned Parenthood. Carly is a graduate of the Oklahoma Center for Nonprofits Nonprofit Management Certification; the Oklahoma Developmental Disabilities Council’s Partners in Policymaking; The Mine, a social entrepreneurship fellowship in Tulsa; and Leadership Tulsa Class 62. She currently serves on the boards of Restore Hope Ministries and The Arc of Oklahoma. In her free time, she enjoys reading, cooking, and doing battle with her hundred year-old house.

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