Gov. Kevin Stitt has significantly increased the pace of spending on new business incentives issued through a special account under his control, including million-dollar payments to multiple companies in recent months.
Designed as a final sweetener for businesses considering a move to Oklahoma or expanding their current operations, the Quick Action Closing Fund is under sole gubernatorial control and can be used to assist with development and infrastructure costs.
From its creation in 2011 until 2018, under former Gov. Mary Fallin, the fund paid out $14 million in incentives to seven companies, according to a Department of Commerce analysis of the fund.
Over the past three years under Stitt, the fund has already paid out nearly $6.8 million to more than 40 companies, according to records obtained by The Oklahoman. At the urging of Stitt, the state Legislature added another $20 million to the fund this fiscal year.
His aggressive use of the fund aligns with Stitt's campaign promises to be a pro-business governor and attract more commerce to the state. But the fund has also drawn criticism for putting so much money in the control of one person with little oversight.
“The governor’s Quick Action Closing Fund has led to the creation of thousands of Oklahoma jobs and hundreds of millions of dollars of investment in our economy while protecting Oklahoma taxpayers by containing performance conditions and requiring repayment with interest if those conditions are not met,” said Charlie Hannema, a spokesperson for Stitt.
Most of the payments range from $50,000 to $150,000, and were part of an effort last year to boost manufacturing during the height of the COVID pandemic.
Earlier this year Stitt issued $1.2 million to Limco Airepair Inc., with another $1.5 million pledged to help modernize and expand its Tulsa facility, according to a copy of the contract obtained by The Oklahoman.
The project is required to create at least 200 new jobs with an average annual salary of $71,600, by 2028, according to the contract.
This year, Stitt also issued a combined $750,000 to Prairie Surf Media to use for converting an old convention center into a studio in downtown Oklahoma City, according to a copy of its contract with the state. The studio pledged to create at least 10 jobs with an average annual salary of at least $100,000.
While the Limco Airepair Inc. and Prairie Surf Media deals involve the creation of high-wage tech and studio jobs, some recipients include retail companies creating lower wage positions.
This year Stitt awarded $1 million to Costco Wholesale Corp., with another $1 million possible, to establish an Oklahoma City facility. The contract states Costco will create at least 1,044 new jobs with an average annual salary of $44,000, according to a copy of the contract.
The fund flows through the Department of Commerce, which experienced the largest funding boost of any state agency this fiscal year in part because of the $20 million added to the Quick Action Closing Fund.
“I think there could be an argument to be made that if you really want to be competitive in this space you should significantly increase the fund," said Chad Warmington, president of the State Chamber, who added that many neighboring states have similar funds with more money.
Celebrated by many business leaders, critics of the Quick Action Closing Fund consider it a sort of slush fund to help companies that may have chosen Oklahoma anyway.
“I have always felt it was a little more squishy and I don’t like squishy, I like something that is very definitive,” Rep. Meloyde Blancett, D-Tulsa, said about the Quick Action Closing Fund.
Blancett, a former employee of the Department of Commerce who worked on several business incentive projects, said her concern with the Quick Action Closing fund is that it’s controlled by one person and sometimes lacks specifics.
“I think the Commerce Department does a pretty solid job .... ensuring that the return on investment is pretty great but I haven't seen a detailed annual report on the use of the closing fund for some time,” Blancett said.
The fund does have some parameters, including that the new business pays a higher average wage than what currently exists in the county where they are located.
Each contract spells out the wage and other requirements that if not met could mean the business must repay the money, according to the Department of Commerce.
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This article originally appeared on Oklahoman: Gov. Stitt increases incentives to draw companies to Oklahoma