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Oklahoma Governments Pay $2.19 Billion a Year to Incentivize Private Companies

Filed by KOSU News in State Impact.
December 4, 2012

Oklahoma spends at least $2.19 billion a year on economic incentive programs for private companies, according to a state-by-state analysis by the New York Times.

That’s more than one-third of Oklahoma’s state budget or roughly $584 per Oklahoman each year. Nationwide, the Times found thousands of incentives worth more than $80 billion to private companies. The paper’s Louise Story reports:

The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards.

Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.

As StateImpact Oklahoma reported last year, state officials don’t even know how many tax incentives are on the books in Oklahoma, or how much they’re worth. And recent efforts to rein in state tax credits and economic incentives — or make them more transparent, measurable and revocable — have failed.

The Times‘ total for Oklahoma includes incentives issued by towns, cities, counties and the state itself, and includes cash grants, loan guarantees and various tax credits and rebates. The Times also built a searchable database of incentives.

Texas gives out more incentives than any other state, Louise Story reports in a related Times piece.

According to the paper, the most common type of incentive in Oklahoma are refunds, exemptions or discounts on sales taxes, which amounts to about $1.86 billion per year.

The three industry sectors that receive the most economic incentives in Oklahoma are manufacturing ($1.78 billion per year); oil, gas and mining ($154 million per year); and agriculture ($67.2 million per year), the Times found.

Nationally, almost every type of business has benefitted from such incentives — “encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains” — the paper reports.

Economic incentives are often deployed in the name of job creation and to encourage corporate relocation to a particular state or community. But incentives don’t necessarily mean corporate loyalty.

Consider General Motors:

For years, mayors and governors anxious about local jobs had agreed to G.M.’s demands for cash rewards, free buildings, worker training and lucrative tax breaks. As late as 2007, the company was telling local officials that these sorts of incentives would “further G.M.’s strong relationship” with them and be a “win/win situation,” according to town council notes from one Michigan community, the Times reports.

But G.M.’s 2009 “liquidation list” included at least 50 sites in cities and states where taxpayers had offered up, collectively, billions in incentives:

Some officials, desperate to keep G.M., offered more. Ohio was proposing a $56 million deal to save its Moraine plant, and Wisconsin, fighting for its Janesville factory, offered $153 million.

But their overtures were to no avail. G.M. walked away and, thanks to a federal bailout, is once again profitable. The towns have not been so fortunate, having spent scarce funds in exchange for thousands of jobs that no longer exist, the Times reports.

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