Governor Fallin today signed legislation that will require all business tax incentives to be objectively evaluated at least once every four years and require future incentives to include measurable goals.
Fallin dedicated Senate Bill 806 and House Bill 2182, which she proposed in her State of the State message earlier this year, to Rep. David Dank, who died earlier this month. Dank was a longtime advocate for tax credit reform in the Legislature.
“These are the tools Oklahoma has needed to sort out effective incentives from ineffective ones so our state can continue to support economic growth in a fiscally responsible manner,” said Fallin.
Tax credits, rebates and other economic incentives total hundreds of millions of dollars annually, but the state has no formal evaluation mechanism to determine their effectiveness.
“We need to ensure the money we are investing in economic incentives and business-related tax credits is paying off and helping to create good jobs,” Fallin said. “I’ve always said that the state should keep incentives that work and phase out those that don’t.”
HB 2182 requires tax incentives offered to businesses to be evaluated at least once every four years. A citizen oversight panel, the Incentive Evaluation Commission, will develop evaluation criteria for each individual incentive that will be used by an independent third party to conduct incentive evaluations. The evaluations will then be used by policymakers to help determine whether incentives should be retained, reformed or repealed. It takes effect November 1.
SB 806 requires all future business tax incentives to have a measurable goal or goals. It takes effect January 1, 2016.
House Speaker Jeff Hickman and Senate President Pro Tem Brian Bingman were original authors of HB 2182 and SB 806. As a tribute to Dank, Hickman signed his authorship of both measures over to Dank.
The bills were developed through Oklahoma’s participation in the Business Incentives Initiative, a multistate partnership with the Pew Charitable Trusts and the Center for Regional Economic Competitiveness (CREC). The Business Incentives Initiative was launched to identify ways to manage and assess state economic development incentive policies and practices, improve data collection and reporting on incentive investments, and develop standards and best practices states can use to successfully gather and report data on economic development incentives.
“We are very pleased Pew, CREC and dozens of stakeholders in Oklahoma, including the business community, were able to successfully collaborate to make these bills a reality,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger. “I can think of no more fitting tribute to David Dank than signing tax credit reform into law.”
