By Lou Anne Wolfe
Journal Record Staff Reporter
A bill to allow local governments to designate tax increment
financing projects and grant other tax incentives for development
passed the Oklahoma Legislature Friday and was sent to the
House Bill 1525, cothored by Rep. Russ Roach and Sen. Penny
Williams, both D-Tulsa, would provide the mechanism to activate
State Question 641, approved by voters in November 1990.
The bill was approved 53-42 in the House of Representatives,
but the emergency clause failed to get the required 51 votes for
passage, so it would not go into effect until 90 days after the end
of the legislative session on Friday.
The Senate approved the bill 31-14.
In tax increment financing on a development project, the amount
of ad valorem tax income from the property prior to improvement
continues to go to the usual recipients, such as schools. The
excess tax revenue generated by developing the land is captured to
pay for needed improvements to the property, such as water and
sewer systems and utilities.
The excess captured amount is the "tax increment."
When the financing instruments for the structural improvements
on the land are paid off, the increment reverts back to the usual
recipients, for a revenue increase from an improved tax base.
House Bill 1525 also would authorize local governments to grant
tax incentives or exemptions in "reinvestment" areas, historic
preservation areas or economic growth areas. Allowable tax breaks
would be limited to the extent of the new investment made.
Roach said some 40 states, including every state surrounding
Oklahoma, have tax increment financing legislation. He said the
authors of House Bill 1525 worked closely with the Oklahoma State
School Boards Association to come up with wording that would be
acceptable to schools. School boards have been concerned that they
might lose property tax revenue under the new financing tools.
However, proponents of the bill point out that the schools
would continue to receive property tax revenues equal to what they
currently get from the unimproved property. Moreover, they said as
the project property value improved, value of surrounding
properties would follow, resulting in increased property tax
revenue from those sources.
"Education is not going to lose one red cent on this bill,"
said Rep. Gary Bastin, D-Del City. "As a matter of fact, they stand
Bastin noted that the state's Rural Economic Development Summit
made establishment of tax increment financing a top priority.
"I guarantee you, it would generate a lot of economic
development in this state," he said.
Rep. Don McCorkell, D-Tulsa, said House Bill 1525 has been
sought by developers of a potential major project in "rural"
Oklahoma, which would create about 1,500 jobs. The community under
consideration for the site lacks infrastructure to support the
project, he said.
Rep. Larry Adair, D-Stilwell, opposed the bill, saying that
it's "going to begin eroding the base of two things very important
to the people of the state of Oklahoma _ schools and county
Rep. M.C. Leist, D-Morris, also speaking against the bill, said
he's opposed to involving the ad valorem tax base in the
incentives. He recommended restricting the tax options to sales tax
and other local taxes. …