Voters will decide Tuesday whether lawmakers should set how much schools and other local governments are repaid for a manufacturing tax break.
OKLAHOMA CITY — When Oklahomans cast ballots Tuesday, State Question 844 will ask them to give future legislators more control over payments to schools and other local governments affected by a manufacturing property-tax exemption.
The question does not ask voters whether to keep the state’s five-year exemption. That would remain in place.
The question is how much the state should repay schools, counties and other local governments for the tax revenue they lose — and who gets to decide.
A “yes” vote would amend the Oklahoma Constitution to require the Legislature to establish reimbursement levels and formulas in state law. SQ 844 does not provide either one.
What would change
The Constitution gives qualifying manufacturing facilities a five-year exemption from local property taxes and requires the state to reimburse affected local governments.
SQ 844 would retain both the exemption and a reimbursement requirement. But where the Constitution now requires reimbursement for the revenue lost, the amendment would direct lawmakers to decide the level and method of payment.
Lawmakers also would be directed to balance the payments so one county’s reimbursement does not come at the expense of others. The amount of exempt property counted toward local debt limits would depend on the reimbursement level.
No payments would change immediately. Lawmakers would have to pass legislation before schools, counties or other local entities received more or less money.
Flexibility or uncertainty
House Speaker Kyle Hilbert, an author of the proposal, has argued that the existing system asks taxpayers in all 77 counties to write what amounts to a “blank check” without consistent standards for determining reimbursements.
In an opinion column published by The Oklahoman, Hilbert said the measure would preserve the manufacturing incentive while giving lawmakers a way to balance local needs against the cost to taxpayers statewide.
Opponents see the flexibility differently. They warn that future legislatures could reduce payments without seeking another statewide vote, leaving schools and other local governments to absorb part of the cost of a tax exemption created by the state.
The Oklahoma Policy Institute urged voters to reject the measure, arguing that it removes constitutional protections without telling voters what reimbursement formula would replace them.
Lower reimbursements also could affect local bonding capacity because SQ 844 connects reimbursement levels to how exempt property is counted when debt limits are calculated.
Costs have been falling
The size of the program has declined substantially in recent years.
According to the Oklahoma Tax Commission’s latest annual report, manufacturing and research-and-development reimbursements totaled $88.6 million this year. That is down from a peak of $161.2 million in 2020.
The annual cost has fallen for six consecutive years, a decline of about 45%.
Voters will not decide the next reimbursement amount Tuesday. They will decide whether future lawmakers should have greater control over setting it.
Early voting begins Thursday. Election Day is Aug. 25.
