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Business-Related Legislation
Issue Background
Oklahoma's manufacturing, business services, and general employment
growth over the last five years exceeded the national rate of growth,
according to the Oklahoma Department
of Commerce. Manufacturing jobs, key to Oklahoma's increasingly
diversified economy, grew at a rate of 15.2% during this five-year
period, compared to a national growth rate of 5.7%. As illustrated
by the graphs below, Oklahoma's per capita income, although still
below the national average, climbed steadily during this period, and
Oklahoma's total employment rose notably as well. Small businesses
(less than 100 employees) accounted for most of Oklahoma's net new
job growth in the early to mid 1990s (see Oklahoma
Small Business State Profile, 1998).
Another measure of Oklahoma's
economic growth, gross state product (GSP), consistently climbed during
the 1990s. As predicted by OSU's
economic forecast, in 1999 Oklahoma's nominal GSP will grow at
a rate of 6.3%, exceeding the U.S. growth rate of 3.7%, with output
reaching $86.6 billion in current dollars. When 1999 dollars are recalculated
to 1992 dollars, Oklahoma's real GSP will be $76.1 billion which compares
favorably to a 1992 GSP of approximately $61 billion and the 1982
boom-year high of $70 billion.
Although Oklahoma has benefited
from a strong national economy, this factor alone does not explain
Oklahoma's economic growth during the 1990s. Credit must also go to
Oklahoma's Quality Jobs Program Act and other pro-business legislation
which have created a climate conducive to strong business development.
The Oklahoma Legislature continued its support of business growth
and development with legislation enacted in 1999. This brief provides
an overview of business-related legislation enacted during the 1999
session.
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INSURANCE/BENEFITS COST REDUCTION
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SB 259 (Fisher/Roach): Unemployment
compensation
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Extends for another two years the temporary
employer tax rate reduction, which the Legislature granted in 1997 and
deepened in 1998. The reduction will expire December 31, 2001. Effective
7-1-99.
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SB 680 (Henry/Ervin): Workers'
compensation
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Requires the State Insurance Fund to declare
a dividend to policyholders if the surplus as regards policyholders is
above a certain level. Dividends to state agencies would be deposited
to the Special Indemnity Fund, which is renamed the Multiple Injury Trust
Fund (MITF), for use in paying the $29.5 million owed to injured persons
having claims against the MITF. The bill also allows state agencies to
purchase workers' compensation insurance from private carriers if certain
procedures and requirements are met. Permanent partial disability awards
would no longer be compensable by the MITF. SB 680 also cuts the assessment
on workers' compensation awards by $20 which results in a 20% reduction
in the assessment paid by employers and a 1% increase in benefits for
injured workers. Finally, effective immediately, the bill creates a joint
committee to investigate the financial condition of the State Insurance
Fund to ensure that the required dividend and reduction in assessment
will not damage the Fund. Effective 11-1-99
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SB 467 (Fisher/Ervin): Ad valorem
tax exemption/Quality Jobs Program changes
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Changes the date by which construction must
be commenced for distribution facilities to qualify for the five-year
manufacturer's ad valorem tax exemption from October 1, 1993, to December
31, 1999. Grocery wholesale distribution facilities and insurance claims
processors are added to the list of basic industries for purposes of the
Oklahoma Quality Jobs Program Act. Effective 4-28-99
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SB 523 (Fisher/Roach): Tax credit
for investment in new airline company
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Provides an income tax or insurance premium
tax credit for investors in certain airlines. The credit applies to investments
made between 1/1/99 and 12/31/00 and is transferable. The qualifying establishment
must be headquartered in this state, have equity capitalization of not
less than $10 million and demonstrate commitments from at least 20 state
companies with at least 2,000 employees to use the establishment to provide
nonstop air transportation from Oklahoma to the east or west coast. The
maximum investment amount against which credits may be claimed is $30
million and the credits are redeemable over a five year period at the
rate of 10% (plus a 6% inflater) each year. The establishment in which
investments are made may not receive payments under the Quality Jobs Program
Act until the state is repaid the entire amount of the credit. If such
payments are not sufficient for repayment, the Tax Commission must withhold
certain motor fuel tax revenues to account for 2/3 of the deficit, and
a local governmental entity must pay the other 1/3. An establishment may
elect to participate in the Quality Jobs Program Act in lieu of its investors
taking the tax credit. Effective 6-9-99
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SB 573 (Robinson/Ervin): Tax
exemptions for lease of rail cars
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Provides sales and use tax exemptions for
leases of rail transportation cars to haul coal to coal-fired electric
generating plants, effective 1/1/91. Effective 5-17-99
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SB 719 (Capps/Bonny): Income
tax credit for space industry investment
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Provides a corporate income tax credit for
investment made after July 1, 1999, in a new or expanding facility, or
combination of two facilities, which creates at least 100 new jobs in
the state and is engaged in an industry that the Oklahoma Space Industry
Development Authority is authorized to promote. The credit is 5% of eligible
capital costs of a qualifying project, is granted only against taxes to
be paid on income generated by the qualifying project, and cannot exceed
the following percentages of this liability:
- 100% of the liability if the cumulative
capital investment is more than $100 M
- 75% of the liability if the cumulative
capital investment is more than $50 M but not exceeding $100M
- 50% of the liability if the cumulative
capital investment is $25 M or more but not exceeding $50 M
- 0% of the liability if the cumulative
capital investment is less than $25 M.
The tax credit is not transferable but
can be carried over for four years. A project receiving incentive payments
under the Quality Jobs Program Act is not eligible to also receive payments
under this Act. Effective 7-1-99
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SB 720 (Taylor/Benson): Commercial
spaceport development and related tax incentives
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Creates the Oklahoma Space Industry Development
Authority as an agency of the state, authorizes the Authority to develop
a spaceport for commercial space launches, grants the Authority certain
powers and duties pertaining to spaceport construction, operation, safety,
and funding, and specifies an area in Washita County within which the
spaceport will be established. The Authority will be activated upon agreement
of designated officials that appropriate action has occurred to necessitate
creation of a spaceport. The bill exempts from taxation the sales of goods,
including motor fuel, to the Authority and spaceport users, and the sales
of space facilities, parts, vehicles and related equipment and property,
and from documentary stamp taxes any deeds or other instrument to which
the Authority or a spaceport user is a party. Effective 7-1-99
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HB1003X (Rice/Easley): Oil production
tax rate changes
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Changes the state's 7% gross production tax
rate on oil production to a rate based upon the price of oil. If the price
of oil equals or exceeds $17 per barrel, the rate remains at 7%. If the
price per barrel is $14 or more but less than $17, the rate will be 4%,
and if the price is less than $14 per barrel, the rate will be 1%. The
tax on gas production remains at 7%. The per-barrel price is determined
monthly by the Tax Commission, based upon data submitted by the three
largest oil purchasers. HB1003X also advances the date of the gross production
tax refund for "at risk" oil leases for production in calendar year 1998
from July 1, 1999, to April 1, 1999. The bill earmarks funds into which
the first $100 million of tax revenues, collected when oil prices reach
$14 a barrel, is deposited and apportioned as follows: 30% for higher
education capital needs, 30% for tuition assistance, 30% for common education
classroom technology, 5% for county road and bridge improvements, and
5% for REAP. Effective 2-5-99
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HB 1230 (Rice/Easley): Quality
Jobs Program changes/Coal tax credit
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Extends the expiration date for income tax
credits for the use of Oklahoma coal from 12/31/99 to 12/31/02. The bill
also provides that the term "new direct job" for purposes of the Quality
Jobs Program Act includes employment of employees leased or otherwise
provided to a qualified establishment, if the employment did not exist
in Oklahoma prior to the establishment's application. Effective 7-1-99
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HB 1294 (Settle/Fisher): Sales
tax exemption for aircraft repair parts
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Exempts from sales tax sales of aircraft engine
repairs, modification, and replacement parts, sales of aircraft frame
repairs and modification, aircraft interior modification, and paint, and
sales of services employed in the repair, modification and replacement
of parts of aircraft engines, aircraft frame and interior repair and modification,
and paint. The exemption is limited to aircraft repairs, modification,
and replacement parts for aircraft weighing more than 12,500 pounds and
less than 100,000 pounds and which are brought into this state exclusively
for such repairs or modification and is limited to repairs or modifications
made by a new or expanded aircraft repair facility. A new or expanded
aircraft repair facility is required to have an investment of more than
$4 million and construction must have commenced or was in progress on
or after 1/1/99. Effective 11-1-99
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HB 1770 (Ervin/Fisher): Manufacturing
ad valorem tax exemption changes
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Changes the requirement of 15 new jobs to
qualify for a five-year manufacturing ad valorem exemption to a net increase
of $200,000 or more in payroll or $500,000 or more in capital improvements
while maintaining or increasing payroll. Effective 1-1-00
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SMALL EMPLOYER PROVISIONS
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SB 121 (Section 13) and SB 122
(Haney/Settle): Small business revolving loan funds
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Allocates money to the Oklahoma Department
of Commerce to match federal funds made available for revolving loans
to Oklahoma small businesses. (The revolving loan funds are administered
by Rural Enterprises of Oklahoma, Inc., a private, nonprofit organization
created to assist rural businesses and communities.) Effective 9-1-99
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SB 315 (Fisher/Ervin): Small
Employer Quality Jobs Act revisions
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Modifies the Small Employer Quality Jobs Act
with the intent of making the Act more user friendly and clarifying some
provisions. Replaces the requirement that applicants approved for incentive
payments report their eligibility to the Tax Commission quarterly with
a requirement for annual reporting. Eliminates some of the requirements
a business must meet in order to continue to receive incentive payments,
but requires the business to continue to meet job creation and wage requirements.
Effective 4-7-99
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SB 340 (Helton/Braddock): Dealership
transfers
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Prohibits vehicle manufacturers and distributors
from unreasonably withholding approval of transfer of a franchise when
a dealership is sold, transferred, or assigned. Effective 4-27-99
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HB 1254 (Bonny/Maddox): SBA guaranty
fees tax credit
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Allows a credit against the tax paid by financial
institutions for amounts paid for Small
Business Administration guaranty fees paid on or after 1/1/00. The
credit may be carried forward for up to 5 years. Effective 1-1-00
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HB 1468 (Corn/Robinson): Property
transfer
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Provides a documentary stamp tax exemption
for transfer of property from a person to their family-owned corporation,
partnership, or limited liability company. Effective 7-1-99
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SB 291 (Weedn/Mitchell): Industrial
park development
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Directs the Department of Transportation to
transfer certain federal funds to the Oklahoma Department of Commerce
which will provide oversight administration of the funds. The funds are
allocated for use by the Continental Gateway Authority for the completion
of feasibility studies for, and the development of, a trade center and
industrial park. The bill sets out procedures and requirements for selecting
and negotiating with a consultant to conduct the studies required. Effective
7-1-99
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SB 589 (Smith/Askins): Trademark
protection
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Creates the "Trademark Anti-Counterfeiting
Act" to prohibit the distributing, displaying, or selling of items bearing
a counterfeit mark. A first offense is a misdemeanor with one-year county
jail and a one thousand-dollar fine. Any person manufacturing any item
bearing a counterfeit mark is guilty of a felony. Law enforcement may
seize and forfeit any items bearing a counterfeit mark. Effective 7-1-99
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HB 1325 (Weaver/Morgan): Y2K
protection
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Creates the Y2K Protection Act to limit the
liability of, and actions which may be brought against, individuals and
business who have made reasonable efforts to protect against damages from
a year-2000 computer date failure. Effective 7-1-99
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HB 1411 (Perry/Robinson): Electronic
commerce
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To further the study of electronic commerce
issues, extends the life of the Electronic Commerce Pilot Program Steering
Committee until December 15, 1999, and creates a new 38-member Task Force
on Electronic Commerce through May 31, 2000, to review the technology
of, and applications for, electronic commerce. Effective 5-24-99
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Contact For More Information:
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Prepared By:
The Oklahoma State Senate, Senate Staff
Senator Stratton Taylor, President Pro Tempore
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