OKPOLICY.ORG
Oklahoma is doing a better job of providing public disclosure of economic development subsidies being paid out to companies but still has considerable room for improvement, according to a new report from Good Jobs First.
The report, titled Show Us the Subsidies: An Evaluation of State Government Online Disclosure of Economic Development Subsidies, evaluates the performance of all 50 states in making available online information on companies receiving state and local tax breaks, cash payments, and other subsidies. In the press release accompanying the report, Good Jobs First Executive Director Greg LeRoy points out that the state fiscal crisis has provided an impetus for increased disclosure of subsidy programs in many states:
With states being forced to make painful budget decisions, taxpayers expect economic development spending to be fair and transparent… Claims that sunshine would hurt a state’s business climate have been discredited, trumped by people’s rising expectations about government information being online.
In addition to giving states overall grades, the study rates the reporting practices of 245 key economic development subsidy programs from around the country based on the online disclosure of information such as company‐specific dollar amounts, job‐creation and wage‐rate numbers, and the geographic location of subsidized facilities. Programs are also evaluated in terms of how easy it is to find and use the online data. Across the nation, nineteen subsidy programs received total scores above 75 out of 100. Nine of the top 13 rated programs are in Illinois, North Carolina and Connecticut.
Oklahoma was evaluated on five subsidy programs, the most important of which are the Quality Jobs Program and the Investment/New Jobs Credit. The results were mixed:
- The Quality Jobs Program provides quarterly cash rebates funded by personal income tax withholding for firms which meet job creation, wage and benefit requirements. The program paid out $60.6 million in 2009 (it has since paid out $54.6 million in 2010). Quality Jobs received a score of 59/100, equaling the average score of all programs providing online disclosure. Quality Jobs earned most of its points for disclosing the subsidy value and the location of subsidized companies. Annual reports on the program are available on the Oklahoma Tax Commission website.
- The Investment/New Jobs Tax Credit provides tax credits for businesses which meet job creation, wage, and investment criteria. The credit cost $118.7 million in 2008. Investment/New Jobs credit received a score of 49/100, earning full points for disclosing the value of the subsidy in a clear and searchable disclosure site. Information on recipients for 2007 through 2009 is available from the Open Books website.
Both programs lost points for failing to disclose information on jobs/training outcomes and wage rate/payroll outcomes. In addition, the absence of information on the location of subsidized companies claiming Investment/New Jobs credits and the absence of a separate, searchable database for Quality Jobs recipients were among the variables leading to lower scores for those programs.
Oklahoma’s other three programs – 21st Century Quality Jobs, which became effective November 2009; the Opportunity Fund, created in 2006 but currently on hold; and Training for Industry, a program that reimburses companies for providing customized workforce training – have no online disclosure and consequently received 0 points. By adding and averaging the scores for all five programs, Oklahoma received an average score of 22, which earned it a grade of “D” in the report for its online disclosure performance (Click here for detailed information on how Oklahoma’s programs were scored).
Overall, this new report confirms that Oklahoma has made strides in increasing the public’s access to information on which companies are receiving economic development subsidies, especially with the launch of the OpenBooks website. However, the state is clearly doing less well in gathering and making available information on the effectiveness of these subsidies in promoting economic development through job creation and investment. As the ongoing state budget crisis keeps a light trained on subsidies, we believe the following recommendations proposed by OK Policy in our February report on tax expenditures remain more relevant than ever:
- Strengthen ongoing monitoring and evaluation of existing tax credits;
- Develop a unified economic development budget that compiles information on all forms of development spending, including direct expenditures and tax incentives;
- Establish formal eligibility processes for new and existing incentive programs;
- Promote accountability by creating and enforcing standards for companies receiving incentives;
- Limit the cost impact of existing and future tax incentives through caps on overall amounts.
Those interested in learning more about state economic development subsidies can explore two new online tools released by Good Jobs First: Subsidy Tracker, a searchable database that brings together subsidy recipient information from numerous state governments; and Accountable USA, a set of webpages on each of the 50 states and the District of Columbia summarizing their track record on subsidies (Oklahoma’s page).
