A measure to allow manufacturers to use
ad valorem tax revenues to pay for property improvements is being
eyed by an Oklahoma House panel as another economic development tool
for the state.
House Joint Resolution 1036, authored by State Rep. Bill
Brewster, D-Marietta, would put to voters a constitutional amendment
that would give new manufacturing businesses the option for tax
increment financing, a method supporters say has been adopted by 30
Monday was the second interim study meeting to be held on the
measure by the House Committee on Industry and Labor Relations.
New manufacturing locations are already eligible for a five-year
exemption on ad valorem, or property, taxes.
If it became law, House Joint Resolution 1036 would give them
another alternative, but a company could not use both incentives
The proposal was advanced to Brewster by developers of the $65
million Tinker Business and Industrial Park in Midwest City. But,
tax increment financing was also cited as a goal in House Bill 1444,
a massive economic development measure passed in 1987.
Under tax increment financing, capital improvements for
manufacturers in a specified geographical area are financed by bonds
issued through a city council or county commission.
The bond debt is retired from increasing ad valorem tax revenues
generated by the new development. In other words, the ad valorem
taxes paid by the manufacturer would go toward the debt and not into
the ad valorem kitty.
Ad valorem taxes go to fund school districts. Brewster said his
resolution provides for schools to be reimbursed for lost ad valorem
revenues from an account established for that purpose which is equal
to 1 percent of all state income tax collections.
Schools are currently reimbursed from the fund for the ad
valorem taxes they are losing from businesses eligible for the
Brewster said the fund is now under-utilized, so he does not
foresee it running short with the advent of tax increment financing.
However, State Rep. Cal Hobson, D-Lexington and chairman of the
House Appropriations Committee, said the reimbursement fund might
need to be increased to 2 percent of income tax collections.
Warren Thomas, managing partner of the Tinker industrial park,
said that reimbursement to school districts would be predicated on
the availability of funds, and that reimbursement would not be
Dr. John Folks, superintendent of the Mid-Del School District
where the industrial park is located, said he was initially
concerned about the loss of revenues, but that he was reassured when
he learned that the resolution calls for reimbursement to the school
district of the amount of ad valorem revenues used in the tax
Folks said he has not heard complaints from other districts on
"The theory is, if the revenues do not exist today, they are not
negatively impacting those who would receive them," said Thomas.
"But the job creation and revenue-generating potential will
create revenue to pay off the bonds" and build the community, he