Local & Regional
Tue October 18, 2011
Oklahoma Watch: Quality Jobs Program
By Graham Lee Brewer
Oklahoma City, OK – Over the past nearly two decades the Quality Jobs Act has become the state's most touted business incentive program, paying out over $700 million to participating companies.
If a business wants to open a plant in Oklahoma, as long as you can sustain at least 2.5 million dollars in new jobs payroll for the first three years of enrollment, the state will rebate 5 percent of that cost. It's a way to entice businesses to bring jobs to Oklahoma, as opposed to other potential locations.
According to former State Sen. Ted Fisher, who created the Quality Jobs Act in 1993, before it was implemented it was difficult to effectively bring new jobs to the state.
"Up until the Quality Jobs Act there would be a hot deal hit town or hit the state, and we'd rush in and make a special incentive for it," Fisher said. "And, they may come or they may not, and when we did pay somebody we had no way to guarantee that they would perform."
Aegis Food Testing Laboratories has been utilizing the program for about a year now, since opening a facility in Oklahoma City. Aegis tests an assortment of foods and environments for businesses all over the country. Their head offices are located in North Sioux City, South Dakota.
"When we looked where to put our plant it seemed like an underserved market to us," Executive Vice President John Hayes said. "The friendly business atmosphere of Oklahoma also helped us decide to locate there."
Aegis is an example of one of the smaller employers enrolled in the Quality Jobs Act. They currently employ twelve people through the program, a number Hayes says would be closer to seven or eight without the rebate. Within the next couple of years they hope to increase that number to the 40 or 50.
Since Aegis is an internationally accredited company the cost of becoming licensed to operate can be high. They enrolled in the program not only to foster growth but also to offset some of their initial costs. Even though the Quality Jobs Act helped Aegis accomplish both, John Hayes says it wasn't the defining reason for coming to Oklahoma.
"We are employing more people because of the Quality Jobs program and the business environment in Oklahoma," Hayes said. "So, can I tell you point blank if we didn't get the Quality Jobs program we wouldn't be there? I wouldn't make that much of a claim, but I can tell you it was a significant contributor to our decision."
Some critics argue that the larger businesses enrolled take advantage of the rebates by overstating the number of jobs actually created through the program. Others say that many of those jobs would have existed otherwise. Among the businesses on the receiving end of such criticism include the Oklahoma City Thunder, which has taken nearly $7 million in rebates from the program.
Dean of the UCO Business College Mickey Hepner says the number of jobs claimed by the program differs greatly from the number created.
"I'm pretty sure the Thunder would have been here without the program," Hepner said. He's one of the critics saying many of the jobs claimed aren't actually created by the rebates. "Suppose a company was going to create 100 jobs. So, we'll lower the cost of employment by 5 percent with the rebate. You turn around and create 5 percent more jobs with that. So, the Quality Jobs Act actually created five jobs, but they get to claim 105."
Since total payroll is the key figure documented, and not the number of jobs created or sustained, it's impossible to know how many jobs the program has brought to the state. Jonna Kirschner of the Oklahoma Department of Commerce says that transparency has always been a priority.
"The Quality Jobs program has been transparent since the first payment was made," Kirschner said. "In the last three years we've actually done an actual analysis of actual companies enrolled, actual payroll created, actual payment."
Still, critics like State Rep. Eric Proctor, D - Tulsa, say that not only does the program need more accountability, it also rewards companies that send jobs out of the country.
"Since 2000 we've given $110 million through Quality Jobs of taxpayer money to companies who have outsourced jobs to other countries like India, China, and Mexico,: Proctor said. "To me that's not a very stewardship of taxpayer dollars on the part of the legislature."
In March of this year Representative Proctor introduced an amendment that would prohibit taxpayer dollars from going to companies who outsource. While it received bipartisan support, the motion was voted down. He plans to reintroduce a similar amendment. Find much more at www.Oklahomawatch.org