Thanks to Rep. Jason Nelson, R-Oklahoma City, for posting an early copy of this budget agreement on his blog. The governor also put out a PDF of the agreement on her website. I’ve requested a spreadsheet from her office.
I’m still adding annotations to this, but if you have anything to add, leave a comment below.
In case you missed it, the story below appeared in Sunday’s Business section. I’ve gotten some good feedback via phone and e-mail from other people in a similar situation, so I created a form* in Google Docs to collect more stories.
If you or someone you know has dealt recently with the Oklahoma Employment Security Commission on an appeal for unemployment compensation, please fill out the form here and tell us your story.
By PAUL MONIES
pmonies (at) opubco.com
Two minutes and a computer mix up might have cost Debra Carrick $8,500 in unemployment benefits.
A late appeal after Carrick’s former employer challenged her benefits has turned into a yearlong ordeal for the Oklahoma City resident. But she said the real cost is her confidence in a longtime social safety net and the system used to administer it.
“It’s been over a year and not a penny,” Carrick said. “Lot of heartache. What seems like thousands of hours. Some days I take a break from it, but it’s always one more thing.”
Carrick’s case highlights just one of the nearly 200,000 initial unemployment claims filed in 2010, according to the Oklahoma Employment Security Commission. That number has fallen since a 10-year high of 241,000 in 2009, but remains high as the recession continues to take its toll on Oklahomans.
Carrick, 51, has taken her claim through two levels of administrative appeals and into district court in Cleveland County, where the case is pending.
“People have told me, ‘Why don’t you just give it up and put it behind you?’” Carrick said. “But it just makes me mad and want to fight it more.”
Firing facts in dispute
The facts surrounding Carrick’s last day on the job are in dispute, as they are in many appeals for unemployment claims. Carrick worked almost two years as an accounts receivable clerk for Delco Diesel Services in Oklahoma City. She claims she was fired without cause in January 2010 after an argument with her former boss, David Lanham. According to hearing transcripts, Lanham claims Carrick cursed at him and he fired her on the spot.
That incident started Carrick’s yearlong effort to claim unemployment benefits. State officials wouldn’t discuss the specifics of her case because it’s pending in court, but called it an outlier. They said federal and state benchmarks for the system try to make the process as quick as possible to help the unemployed.
“If you’re unemployed this week, that unemployment check is going to do you a lot more good in two weeks than it will in eight weeks,” said Karl Jahnke, director of appeals for the Employment Security Commission. “If you’re eligible, it’s meant to replace some lost wages. Eight weeks from now, you may have missed a car payment.”
In the unemployment compensation world, the technical term for a worker who has lost his or her job is a “separation.” The employee must file a claim for unemployment either online or by telephone. If they have worked long enough and earned a minimum amount to qualify, they are mailed a notice of eligibility. Employers then have 10 working days to challenge the circumstances of the separation.
Separations are grouped into either voluntary quits or misconduct. If they can show an employee quit in some way, employers win appeals more than 80 percent of the time. But the standard for misconduct in unemployment claims cases is higher for employers. Claimants win those misconduct cases more than 60 percent of the time, according to Employment Security Commission data.
Until the recession hit, Jahnke said more than 98 percent of the appeals filed were cleared within 45 days.
“We haven’t been able to do that since 2009,” Jahnke said. “We just got run over, and we’ve been playing catch up ever since.”
Last year, Jahnke’s division heard almost 20,000 appeals, double the number it heard in 2008. The appeals division has gone from nine full-time hearing officers in 2008 to 14 in 2010. Jahnke said an ideal staffing number for the division would be 18 hearing officers.
The administrative hearing process is a little less formal than a courtroom, Jahnke said. Hearing officers, who average about 1,000 cases a year, oftentimes have to be both hand-holder and explainer for those unfamiliar with the system.
“We try to maintain basic due process and fairness so that it runs quickly and there’s not many technical trip-ups,” Jahnke said. “It’s kind of like a little court. It is a formal proceeding. We talk to each other nicely. But this is not ‘Judge Judy.’ There’s no yelling allowed.
“There’s also simply pride involved. We as a society are kind of contentious: ‘You’re not going to tell me I’m wrong.’ People will stand on principle, too: ‘You’re telling me I can’t fire that person?’ ‘No, I’m only saying we can’t deny them benefits.’”
For Carrick, a single mother who used to run several aviation-related small businesses, filing a claim was a last resort.
“My first thought was, ‘There’s no way I’m going to file for unemployment, that’s for losers. I’m just going to get me a job,’” Carrick said. “But then I saw (national) unemployment at 10 percent and I said, ‘It probably wouldn’t hurt to go down there, even if I only use it for a couple of weeks.’ Couple of weeks. That sounds funny now.”
Carrick, who had never filed for unemployment benefits before, said the system is daunting for first-timers. Long wait times on the telephone and problems with the online system compounded her frustration. The web-based system requires Microsoft’s Internet Explorer browsers and won’t process claims filed through other browsers such as Mozilla’s Firefox or Apple’s Safari.
John Carpenter, a spokesman for the agency, said it is upgrading its online claim system to reflect the range of browser options.
The Employment Security Commission’s call center handled more than 849,000 calls in 2010. The average wait time for an initial claim was a little more than 2 minutes. But the average wait time for follow-up calls fluctuated each month from a low of 19 minutes to a high of 47 minutes.
Carrick’s initial unemployment claim was denied because Delco Diesel provided a notarized statement by an employee who said he witnessed the confrontation between Carrick and Lanham. The claims analyst said that was enough to establish misconduct.
Carrick, however, said she had never before been written up or disciplined at her job. She also said the statement was notarized by Lanham’s daughter. It’s not illegal for family members to notarize documents, but the secretary of state’s office advises against it if the documents become part of a court case. The Delco Diesel employee who witnessed the confrontation, Dwight Daniel, told The Oklahoman he stands behind his statement, but declined further comment.
Both employers and claimants have 10 days to file an appeal if they aren’t happy with the claims analyst’s decision. Carrick filed her appeal via e-mail at 12:02 a.m. March 2, 2010, two minutes after the deadline.
Carrick said a range of issues kept her from filing the appeal until the last minute. With no income, she tried to get law students at the University of Oklahoma’s law clinic to take her case. They referred her to Legal Aid, which took the case but dropped it days later because of a heavy case volume. Carrick said she also encountered delays when filing for food stamps and in arranging financial aid to take business and computer classes at Oklahoma City Community College.
To Carrick, those two minutes have loomed large in the past year. If the appeals hearing officer wasn’t so strict about that deadline, Carrick said she could have better challenged Delco Diesel’s account of the day of her firing. Carrick appealed the hearing officer’s decision to the Board of Review, a separate panel made up of three people appointed by the governor.
“Considering this and the huge obstacles and impediments that came my way the entire last week of February 2010, I believe I have shown good cause for being two minutes tardy in responding to the false and defamatory allegations of Delco Diesel Services Inc., and that I was indeed laid off,” Carrick wrote in her appeal to the Board of Review in April.
The Board of Review affirmed the hearing officer’s decision in May. Acting as her own attorney, Carrick then took her case to Cleveland County District Court. After several more months, District Judge Tom A. Lucas ruled against the Employment Security Commission and the Board of Review.
According to a transcript of the ruling, Lucas said the Board of Review took a “knee-jerk” look at Carrick’s appeal that was filed two minutes late. He said even the legal system has some leeway.
“You know, we have lawyers down here at 5 (p.m.) knocking on the door, getting the clerk to let them in,” Lucas said. “If the clerk lets them in, they get it filed; and if the clerk doesn’t let them in, they don’t get it filed, and that counts. So I don’t know.”
The Employment Security Commission’s attorney, Teresa Keller, appealed the judge’s ruling, which was limited to the timeliness issue. It was not on the facts of Carrick’s firing. The next district court hearing is set for March.
For Delco Diesel’s part, Lanham would only say: “I believe OESC is a very competent group and I think they made the right decision.” He referred other questions to his attorney, Greg James.
James said Carrick’s appeals at the administrative level and in district court have been consistently late. He said Carrick had gone through what he called “on-the-spot” counseling for her behavior previously at Delco Diesel.
“It rose that day with the insubordination in the customer areas to a firing offense,” James said. “She’s got quite a mouth on her. I’ll just leave it at that. She was well-aware of the standards expected of her in the workplace.”
Carrick countered James’ assertion that she was disciplined: “If there are disciplinary records, I want to see them. It absolutely never happened.”
Meanwhile, Carrick said her yearlong experience with the Employment Security Commission makes it hard to believe she’s fighting for just $8,500 in unemployment compensation.
“I wonder how many taxpayer dollars are being spent to fight this case?” Carrick asked.
*Hat tip to ProPublica for the idea.
Once again, tax credits will be a major focus for the 2011 Oklahoma Legislature.
In her State of the State speech, Gov. Mary Fallin said: ” … Our course of action will be simple: only tax credits that create jobs will stay. For instance, my budget begins the process of restoring the Aerospace Engineer Tax Credit, which brings good, high tech jobs to Oklahoma. But those tax credits that do not create jobs must be eliminated.”
Rep. David Dank, chairman of the House Revenue and Taxation subcommittee, held his first committee meeting Monday evening. It was delayed several hours by a contentious meeting in the House to go over new rules.
“This is a very complex area,” Dank said of tax credits. “We’ve been working on it a long time and we’ll probably be working on it for a long time to come.”
Dank had one of the state’s foremost experts on tax credits, Mark Harter, give a presentation to lawmakers setting up the landscape of tax credits. Harter is assistant chief counsel for the House. Here’s a copy of Harter’s presentation:
Dank said a recent opinion by former Attorney General Drew Edmondson’s office would help shape the subcommittee’s work on tax credits this session. The opinion called into question the constitutionality of several existing tax credits and set up a framework for evaluation. Since only the courts can strike down existing statutes as unconstitutional, the AG opinion is nonbinding.
Basically, the AG opinion sets up a three-part test for the constitutionality of tax credits or other incentives: They must have a public purpose; the state should get something in return for giving up expected revenue; and incentives must have “adequate controls and safeguards.”
Several members of the committee had questions for Harter about the possibility of filing a lawsuit that would force the state Supreme Court to rule on the constitutionality of certain tax credits. Harter said it was doubtful the subcommittee could bring an action in court, but individual lawmakers might be able to band together to bring suit in either district court or before the Oklahoma Supreme Court.
Rep. Mike Reynolds, R-Oklahoma City, asked Harter if lawmakers could bring what’s called a “qui tam” lawsuit (a type of whistleblower lawsuit) and recapture revenue from tax credit claimants that has been lost over the years. Harter said he’d have to review the law in that area. Even so, former lawmakers who passed the laws setting up various tax credits would not have any personal liability in such a lawsuit, Harter said.
Lawmakers and panels studying tax credits have always grappled with a lack of information about their true costs. That’s partly due to the confidential nature of tax filings, which ties the hands of the Tax Commission. Tony Mastin, director of the Tax Commission, said his agency is not really set up to evaluate tax incentives passed by the Legislature.
“The commission has always taken the position that it’s there to enforce the statutes,” Mastin told committee members. “They are presumed to be constitutional.”
Mastin said asking the Tax Commission to pick and choose which tax credits are constitutional “would put us in an awful position. We have a very large tax code to administer. We are set up to administer and collect taxes, not administer economic development programs. That would put extra stress on our agency.”
A few lawmakers said the process for evaluating tax incentives should be a task for the state’s Commerce Department.
Dank warned committee members to be wary of lobbyists touting their favored tax credits.
“I think it’s a runaway train,” Dank said. “I think there are good things that happen, but there’s a lot of brilliant lawyers in downtown offices coming up with these credits. There’s going to be a lot of lobbying. Every tax credit is going to be good in the eyes of those presenting them, but we’ve got to remember the taxpayers.”
Dank has several bills dealing with tax credits this session, including HB 1284 and HB 1285. The first opens up certain information about credits claimed against the insurance premium tax that’s administered by the Insurance Department. HB 1285 sets up a so-called “Blue Ribbon” task force to study tax credits. (The state’s Incentive Review Committee has been studying such incentives for the last several years.)
- Oklahoma tax credits face scrutiny amid budget crunch
- Oklahoma Quality Jobs incentive program pays out $54m during budget crunch
From Sunday’s paper:
By PAUL MONIES
pmonies (at) opubco.com
Three out of four Oklahoma counties showed increases in the last decade in the number of residents who were born outside the United States, with much of the growth coming in the Panhandle, western Oklahoma and metropolitan counties.
Nationally, Oklahoma ranked 32nd in the percentage of foreign-born residents, according to estimates from the U.S. Census Bureau’s American Community Survey from 2005-09.
About 5 percent of Oklahoma’s 3.75 million residents were born outside the United States. That compares to about 27 percent for California and almost 15 percent for Arizona. At 1.3 percent, West Virginia rounds out the bottom of the rankings.
An estimated 12.5 percent of the nation’s residents — 38.5 million people — were born in a foreign country, the Census Bureau said.
The latest estimates come amid a continuing political debate at the Capitol and across the country about immigration. The Census Bureau does not ask about the legal status of immigrants, meaning the foreign-born estimates include both documented and undocumented immigrants and naturalized citizens.
Foreign-born residents come from all over the world to Oklahoma and have a variety of skills, said Deidre Myers, director of policy, research and economic analysis with the state Commerce Department. Manufacturing, agricultural processing, technology and service industries are all attracting immigrants from foreign countries, she said.
Among Oklahoma’s estimated 190,000 residents who were born in foreign countries, 60 percent were from Latin American countries, the Census Bureau said. Another 24 percent were from Asian countries. About 8 percent hailed from Europe.
“Oklahoma is a dynamic economy, so why wouldn’t we have people from different areas looking for opportunity in Oklahoma?” Myers said.
Generally, counties west of Interstate 35 had higher rates of foreign-born residents than those in eastern Oklahoma, according to an analysis of census data by The Oklahoman. Exceptions to that were Tulsa County in the northeast and Marshall County on the state’s southern border.
“You see a lot of growth in the foreign-born population in those areas that have a very strong agricultural and manufacturing presence; of course we see this in western Oklahoma and the Panhandle,” Myers said.
“A second area that people don’t often think about is that we’ve had a lot of foreign-born growth in high-skilled research and development, biosciences, nanosciences and other kinds of very high-tech positions. We’re seeing this kind of growth in Tulsa, Oklahoma and Cleveland counties, where you have a university or a very strong knowledge-based industry cluster.”
Texas County, which held the state’s top spot in foreign-born residents in 2000, stayed at the top in the latest estimates. The foreign-born population in that Panhandle county rose to 21.3 percent from 16.9 percent in 2000. Many immigrants have been drawn to hog processor Seaboard Corp., which has more than 3,000 employees at its Guymon plant.
Remaining in second place was another Panhandle county, Cimarron County, which had 11.5 percent of its residents from foreign countries in the 2005 to 2009 Census estimates. That’s up from 10.3 percent in 2000.
Blaine County appeared to show the largest growth in foreign-born residents in the last decade. An estimated 9.5 percent of its residents were born outside the United States. That compared to 3.5 percent in 2000.
Craig Cummins, superintendent of Watonga Public Schools, said many recent immigrants have found work on oil and gas rigs. Elsewhere in the county are dog food and gypsum wallboard factories.
“Our Hispanic population is our fastest-growing ethnic group,” said Cummins, who has been Watonga superintendent for eight years. “It is a challenge sometimes for classroom teachers, but the kids are accepted and they do give back to the school system. They provide some cultural experiences and they participate in our extracurricular activities.”
Farther south, Marshall County’s percentage of foreign-born residents rose to 7.4 percent in the latest estimates, up from 5 percent in 2000.
Light manufacturing for horse trailers and agricultural equipment has been a steady part of the industrial base in Marshall County for a number of years and has attracted immigrants, said Chris Moore, a board member with the Marshall County Chamber of Commerce.
Moore, a personal banker at Landmark Bank in Madill, said several tellers speak Spanish to help customers.
“We have a large Hispanic customer base, and not having Spanish-speaking employees, we would definitely lose that,” Moore said. “It’s important to our business now.”
From today’s paper:
By PAUL MONIES
pmonies (at) opubco.com
Almost half of the 400 employees at the Oklahoma Agriculture Department received raises in November and December, even as its top appointed official prepares to leave the agency next month during a state budget crunch.
Outgoing Agriculture Secretary Terry Peach said the raises were planned for some time and went through the Office of Personnel Management for approval.
Peach said he kept 5 percent back from his state budget appropriation. He told agency division directors they could spend it on raises if state revenue looked like it might improve.
“I think we ought to be patted on the back for managing our budget, not criticized,” Peach said.
“Our agreement was if we didn’t have any budget cuts this fall, between July 1 and December, that I would give them that money back, and they would be able to give their employees equity-based raises. It was not an across-the-board raise to all of our employees.”
House Speaker-elect Kris Steele, R-Shawnee, called the timing of the raises suspect.
“While I believe in competitive wages for employees, the timing of these raises is disturbing,” Steele said in a statement. “There is an appearance that officials may be draining state coffers as they leave office and abusing the public trust. I certainly hope that is not the case, and I believe our budget hearings should carefully scrutinize these issues in the days ahead.”
The Oklahoma Policy Institute released estimates earlier this month showing the state could face a shortfall of about $400 million in the upcoming fiscal year.
The Oklahoman previously reported that 130 employees at agencies headed by statewide elected officials received raises or promotions in the last year, with several coming in the last few months. After the Republican sweep of statewide offices in November elections, those agencies will be under new leaders in January.
Almost 200 employees at the Agriculture Department received raises in either November or December, Peach said. The agency has 404 employees, although it’s authorized to have 502. Of about 120 pay raises examined by The Oklahoman, many appeared to be less than 10 percent.
Peach said when he took over the Agriculture Department, many of the employees were at the low end of a three-level pay scale.
“When I came on board eight years ago, we started hiring everybody at midpoint,” Peach said. “Over this full eight years, we were never able to have enough money to catch everybody up, but we were able to get everybody at midpoint.”
With the latest raises, Peach said classified employees will be making the same as everybody else at their job level. For example, there used to be a difference in pay between employees classified as “Forester I.” That difference will be eliminated, he said.
“We’re still way underpaid compared to a lot of other state agencies,” Peach said. “Other state agencies have been doing this thing for the last two or three years. We actually put a freeze on our budget two years ago, so we didn’t give any raises those years. That actually paid off very well for us because we had two furlough days last year, and many agencies had more than that.”
Scott Barger, deputy director of the Oklahoma Public Employees Association, said it could be risky to give raises halfway through the state’s fiscal year.
“During these times, I think most of the state agencies out there that have ‘lapsed’ personnel money are holding on to that,” Barger said. “You never know when you can utilize that money to help the budget situation and keep employees on the front lines.”
Gov.-elect Mary Fallin named Jim Reese as her agriculture secretary last month. Reese, a former state representative, served as a federal agriculture official under President George W. Bush. More recently, he was a rural policy adviser to outgoing House Speaker Chris Benge, R-Tulsa.
The Austin American-Statesman has an interesting story today about a new film from Texas director Robert Rodriguez being denied state film rebates over its content.
The newspaper reports that the denial was made over of a section of the Texas law that allows the film commission to deny a rebate application because of “inappropriate content or content that portrays Texas or Texans in a negative fashion, as determined by the office, in a moving image project.”
Texas film industry insiders said they were disappointed by the decision to deny rebates for “Machete.” They also said films could still be made with rebates from other states, including Oklahoma:
Austin screenwriter and author Si Dunn , who was one of the paid extras in “Machete,” said Wednesday, “Texas needs to do a much better job of politically supporting its movie and television industry…. The notion that state legislators somehow can protect Texas’ image from ‘negative light’ is just laughable — and sadly naive. Movies casting some aspect of Texas in a ‘negative light’ can be made with help from state incentives in Louisiana, New Mexico, Oklahoma or almost any other state and then be shown in Texas theaters.”
Earlier this year, I asked Jill Simpson, director of the Oklahoma Film and Music Office, if there were any concerns about protecting free expression in Oklahoma’s film rebate program. At the time, we were talking about some of the violent images captured in “The Killer Inside Me,” which was filmed partly in Oklahoma and received rebates.
Here’s what Simpson said in a February interview:
My job is a really interesting intersection; it’s art meets industry. My job and the film commission’s mission in statute is to administer the rebate program to develop the industry and that’s what we do. Other than making sure it’s not pornography or child pornography, according to statute — I’m not the producer, writer, director on the film — that is beyond the scope of what my job is.
I will say, in the case of “Killer,” as I’ve said before, I took the script and compared it word for word to the novel and was very happy with how closely the script mirrored the original material, which is a classic. What you can’t know is exactly how it’s going to be filmed or edited.
But with states trying to find money anywhere to close budget gaps, incentives of all types have come under fire. Texas Gov. Rick Perry has proposed $9 million in cuts to that state’s film and TV incentives for the 2011 budget, according to the Austin newspaper.
In Oklahoma, the film rebate program is capped at $5 million a year. A separate program that allowed some filmmakers to use rural and small business venture capital tax credits was suspended by lawmakers earlier this year to help balance the FY 2011 budget.
- Related post: DataWatch: Film incentives under fire fire–director’s cut edition
- Related: Film industry rallies to save Missouri tax credits
- Related: Center on Budget and Policy Priorities, State Film Subsidies: Not Much Bang for Too Many Bucks
- Related: MPAA slaps back at film tax incentive study
From Sunday’s newspaper:
By PAUL MONIES
pmonies (at) opubco.com
Thousands of state employees have gone through layoffs, furloughs or salary freezes during the budget crunch, but 130 employees at executive agencies have had raises in the last year.
Almost one-third of those raises came in the past few months at agencies whose elected heads will be leaving office in January, according to an analysis of state payroll records by The Oklahoman.
The raises range from increases of 3 percent for an audit supervisor at the Auditor and Inspector’s office to more than 40 percent for an executive assistant at the state Education Department.
Overall, 130 employees at eight elected agencies received raises from October 2009 to October 2010, the analysis found. Thirty-eight employees had raises since the beginning of the state’s fiscal year in July.
“It appears to me that the front-line employees are not the ones receiving the greater benefits on the raises,” said Sterling Zearley, executive director of the Oklahoma Public Employees Association.
“Right now is not a good time to be doing that because we’re looking at maybe additional furloughs or reductions in force in this budget cycle.”
Most of the raises came in unclassified positions. They are not subject to the same rules for salary increases as classified positions under the state’s merit protection system.
Officials at the agencies said some of the raises were promotions to the positions of departing employees.
Others said their agencies were below the number of employees authorized by the Legislature and they were being prudent with state money.
“We’re doing more with less while still addressing pay parity issues, both within our own agency and in comparison to other state agencies and the private sector,” said Trey Davis, spokesman for Steve Burrage, the outgoing Democratic state auditor. Burrage will be succeeded by Republican Gary Jones in January.
The auditor’s office employs 112 people, below the 140 positions it was authorized for this fiscal year. Last year, the agency had authorization for 169 employees, Davis said.
Pay raises went to 49 employees at the auditor’s office, according to the payroll analysis. Davis said those who received raises had more responsibilities, gained skills or tackled more challenging projects.
“This action is necessary for (state auditor and inspector) to remain functional and to maintain staffing levels,” Davis said. “Other agencies have occasion to work with our auditors and, in the past, these agencies consistently made job offers to our personnel because their salary structure for auditors was considerably higher.”
On the campaign trail, Republican Gov.-elect Mary Fallin talked about “right-sizing” state government, including looking at agency consolidation and performance. Outgoing Democratic Gov. Brad Henry set up a task force in 2007 to study state employee compensation. One of its top recommendations was an examination of classified and unclassified positions at executive agencies.
“Data collection processes are less uniform in unclassified service positions, resulting in inability to compare salary to market and inconsistent use and application of job descriptions,” the report stated.
Henry included money in his 2009 executive budget for an independent consulting firm to perform the study, but it wasn’t funded by lawmakers.
Zearley, who served on the task force along with private industry and government representatives, said the last statewide pay increase came in 2006. Employees under merit protection can get raises if they meet standardized skill requirements or market conditions.
“With the unclassified side, there’s not that good of a process in place,” said Zearley, whose group represents about 10,000 mostly classified employees. “I don’t think there’s any oversight.”
About 27 percent of the state’s work force, or 10,300 employees, are in unclassified positions, according to the latest Office of Personnel Management annual report. That’s up from about 8,000 unclassified positions in 2004.
Agency directors and appointed or elected leaders need a certain amount of flexibility in staffing their agencies, Zearley said.
High-demand jobs, like computer specialists or accountants, also are hard to fill for many agencies.
The Insurance Department, which had 23 employees receive raises in the last year, performed its own salary study in 2006, said spokesman Marc Young. The department noticed turnover in its financial division and years of experience as areas of concern. Those are among the criteria used by the National Association of Insurance Commissioners during its accreditation process, he said.
“A lot of those salaries were driven by changes we needed to make that were budgeted for over a two- or three-year period of time,” Young said. “A lot of those jobs in the financial division require a degree or professional licenses like (certified public accountant) or certified financial examiner.”
Tim Allen, spokesman for outgoing Treasurer Scott Meacham, said the agency recently advertised for a CPA. It had no applicants at the salary offered, so the agency had to find money to increase the position’s salary. Four employees at the treasurer’s office received raises in the last year. Three were CPAs, Allen said.
“When we have people leave, we look at reassigning their duties and giving people who picked up new responsibilities a minor increase in compensation,” Allen said.
Three employees at the governor’s office received raises in the last year. Spokesman Paul Sund said two were promotions. J.D. Strong, Henry’s secretary of the environment, said he received a $10,000 annual raise because he also became interim director of the Oklahoma Water Resources Board. Strong was named the board’s permanent director in October.
Some agencies, such as the state Education Department and the Labor Department, have employees who are paid either partially or entirely by federal funds. If the federal government has a pay increase or cost-of-living adjustment, it has to be implemented for those federal workers at state agencies, too.
Mannix Barnes, chief of staff for outgoing Labor Commissioner Lloyd Fields, said many of the safety inspection employees at the agency have unique skills. Most of its 87 employees are in classified positions, he said. Raises went to 18 employees in the last year.
“Our OSHA safety consultants, asbestos inspectors, boiler inspectors and amusement ride inspectors are not something you can just run an ad for in the newspaper,” Barnes said. “It takes years of training. We try to protect the investment the taxpayers made in their training and be somewhat competitive salary-wise.”
Democrat Sandy Garrett, the outgoing state schools superintendent, said agency employment has dropped to 360 from 650 when she took over in 1991. She said most of the 25 employees given raises this year were promoted into vacant positions. The agency has 50 fewer employees than its authorized level, she said.
“I’ve met with the incoming superintendent and explained this to her so she would know she has some wiggle room and some of her own people to fill in the vacancies,” said Garrett, who will be succeeded by Republican Janet Barresi in January.
The state took the top spot in GDP growth in 2009, growing at a torrid 6.6 percent clip from the previous year. That compared to a national decline of 2.1 percent. From the BEA:
In contrast to the nation and most states, several states experienced positive real GDP growth in 2009 due to real growth in agriculture, forestry, fishing, and hunting and in mining resulting from sharp declines in prices for petroleum, natural gas, and other mining products in 2009.
Oklahoma had the fastest growth in real GDP in 2009 (6.6 percent). The largest contributor to growth in Oklahoma was mining. Mining was also the leading contributor to growth in Wyoming and Louisiana. Agriculture, forestry, fishing, and hunting was the leading contributor to growth in North Dakota and Nebraska, and was the second largest contributor to growth in South Dakota.
Here’s how the latest GDP figures break down by state (click image for a larger view):
Behind the numbers, we can see that mining (most of which is energy production), accounted for the bulk of the growth in Oklahoma last year. Its growth of 7.23 percentage points from 2008 masked declines in several other sectors, including durable goods manufacturing (down 0.73 percentage points) and real estate rental and leasing (down 0.57 percentage points).
More telling is how much the mining sector (a.k.a. energy) now accounts for in Oklahoma’s economy. As you can see from the following chart, mining almost tripled its share from 4.72 percent in 1997 to 13.81 percent in 2009. Government — at the federal, state and local levels — remained fairly steady at 17 percent of the state’s economy. Manufacturing still claims a large share, although that fell to 11.3 percent in 2009, down from 14.3 percent in 1997.
Click image for a larger view.
This is a longer version of what appeared in Sunday’s paper:
- Search an online database of companies claiming Quality Jobs rebates
- View the Quality Jobs contract for the NBA’s Thunder basketball team
- View the Quality Jobs contract for Boeing Co.
By PAUL MONIES
pmonies (at) opubco.com
Oklahoma’s longtime economic development incentive for creating jobs paid $54 million in cash rebates to companies last year despite the state’s budget crunch.
But economic development officials and some economists say that was money well spent for the Quality Jobs program, which began in 1994 and has been copied in other states.
Under the program, companies can receive quarterly cash rebates of up to 6 percent of payroll after creating jobs with health care benefits and above-average wages. A sister program helps small employers.
Among the largest claimants last year were some of Oklahoma’s most high-profile employers, according to data from the state Tax Commission.
The owners of the NBA’s Thunder basketball team received $5.28 million in Quality Jobs rebates, leading all companies. Dell Inc. received almost $3.7 million, while SandRidge Energy Inc. received $3.3 million. Spirit Aerosystems Inc., with factories in Tulsa and McAlester, had $2.4 million in rebates.
An expansion of the program, called 21st Century Quality Jobs, was instrumental in landing more than 550 new jobs at Boeing Co. in Oklahoma City. Those jobs upgrading the C-130 and B-1 military aircraft are coming from Long Beach, Calif.
The 21st Century Quality Jobs program allows rebates of up to 10 percent, but the new jobs must pay at least three times the average county wage. In Oklahoma County, that’s about $94,400.
“When you compare all the things that companies compare, the incentives certainly made our business case for Oklahoma much, much stronger,” said Mike Emmelhainz, Boeing’s site director for Oklahoma City. “This has been a solid location for a very long time, but the folks have worked hard in establishing themselves as a good place for Boeing to do business and maintain the Boeing reputation.”
Emmelhainz said the incentives helped Boeing’s Oklahoma City location bid for expanded jobs within the company. That was important given the Pentagon’s emphasis on keeping older aircraft serviceable in a tough budget environment.
“Given shrinking or flat budgets, your ability to go build new platforms and products gets tougher and tougher,” he said. “You have to keep your existing inventory of platforms operational and flying. They need the people that supply them to do it in the most cost-effective manner they can.”
Boeing has been part of the older Quality Jobs program and has received rebates of $3.8 million since 2007, according to Tax Commission records. The company also is talking to Oklahoma City officials about getting local incentives for the new jobs from California. Both sides hope to finish those negotiations by the end of the year.
Program is a model
Economic development incentives of all types have drawn scrutiny as the state’s finances took a hit from the recession. Lawmakers placed a moratorium on several tax credits in the last legislative session. Although another budget hole is expected for the upcoming fiscal year, some are calling on the state to expand Quality Jobs and use it as a model for other state incentives.
Robert Dauffenbach, an economist at the University of Oklahoma, studied the effectiveness of Quality Jobs along with Larkin Warner, a retired economist from Oklahoma State University. A report they issued in 2004 found the program had benefited both employment and tax revenue in its first decade.
Both men are part of the state’s Incentive Review Committee, which is studying the Quality Jobs program this year.
“There can be a lethargy that develops once a program gets put in place,” Dauffenbach said of some incentive programs. “Some of them get grandfathered in forever and there’s no sunset provision or mechanism for evaluation.”
Dauffenbach said Quality Jobs continues to get high marks for transparency and for not issuing cash rebates until companies actually add new jobs. The analysis used by the state Commerce Department to determine the percentage of the rebate also is fairly conservative, he said.
Is it worth it?
Still, some economists wonder if the state is rewarding behavior that would have happened anyway without the incentive. Mickey Hepner, an economist and associate professor at the University of Central Oklahoma, said programs such as Quality Jobs spread the costs among the entire population but the gains go to a small group.
“A vast majority of the jobs that are claimed under the program are not actually created by the program, and they’re not created as a result of the program,” Hepner said. “A lot of those jobs would have been created anyway.”
For example, a company that planned to add 100 jobs could add another five jobs under Quality Jobs, he said. But the company would receive rebates on all 105 jobs, not just the five additional jobs that resulted from the incentives.
“We get the press releases about new jobs, but it’s tougher to get the true cost of the program,” Hepner said. “For $50 million a year, you could eliminate the franchise tax, which would be much more effective and much more equitable to all businesses in the state.”
Hepner said it’s easy for lawmakers to expand Quality Jobs because the money for it is not subject to annual appropriations. The money for the rebates comes from state income tax revenues.
When Oklahoma is competing against surrounding states for new businesses, it helps to have programs such as Quality Jobs, said Mike Southard, president and chief executive officer of the Ada Jobs Foundation. The program allowed local manufacturers to expand their operations in Ada by putting more employees on the payroll. Those employees then spend more money in the community and pay taxes to the state and local governments, he said.
“It’s not like these companies are saving that 5 percent and putting it in their pocket. They’re able to put it into capital or debt service, and that strengthens their business.”
Southard said he understands the arguments against economic development incentives. But the rhetoric used to attack them can make businesses wary of expanding.
“Elected officials have to figure out how to solve both short-term and long-term financial issues,” Southard said. “Everybody who runs talks about better employment opportunities and creating higher-paying jobs. When we’re competing with other states that are also going after those projects, you don’t want to take tools out of your toolbox.”
Below is a slightly longer version of the story on tax credits that appeared in today’s paper:
- View the latest Tax Expenditure Report
- Read a report about the Investment/New Jobs tax credit by the Incentive Review Committee
- See who has qualified for tax credits on Open Books
BY PAUL MONIES
pmonies (at) opubco.com
One of southeast Oklahoma’s largest landowners has accumulated more than $54 million in state income tax credits, even though the company has closed or sold all but one of its manufacturing plants.
Also making the list are several executives affiliated with Nebraska-based Tenaska Inc., whose subsidiary owns a power plant near Kiowa. Together, those executives qualified for more than $23 million in state income tax credits.
The tax credits have piled up because the Oklahoma Investment/New Jobs tax credit allows businesses or individuals to take up to 20 years to claim the credits. The incentive allows tax credits of between 1 and 2 percent of the cost of a new manufacturing plant or expansion.
The long timeline gives new companies time to get established and build profits, said Treasurer Scott Meacham. But it can also cause problems for state budget forecasters, who likely face another revenue shortfall next year and no federal stimulus funds to close the budget gap.
“From a state budgetary standpoint, we don’t want those multiyear incentives,” Meacham said. “We would rather them hit currently so we have more predictability of our revenue stream.”
The Oklahoma Tax Commission publishes two reports on tax credits: a tax expenditure report that lists the total amount of credits, rebates or deductions claimed by taxpayers; and a list on the state’s Open Books website of who has qualified for tax credits.
The tax expenditure report shows companies and individuals claimed $28.5 million under the Investment/New Jobs tax credit in fiscal year 2010. However, the Open Books site shows $121 million was available to be claimed under that tax credit.
The two reports are not comparable, said Paula Ross, spokeswoman for the Tax Commission. That’s because the Open Books site lists the amount that could be claimed under a type of tax credit. If it’s actually claimed depends on whether the taxpayer has a tax liability large enough to use the credit, Ross said.
Big projects, big credits
Weyerhaeuser spokesman Greg French said that’s how the timber company ended up with such a large tax credit of $54 million. The company began operating in Oklahoma in 1969.
“The amount reflected is the total amount available to us as a result of previous investments in the state over a period of several decades,” French said. “That’s a running total of the credits still available to the company.”
Weyerhaeuser sold a Valiant container board mill in 2008 and closed its Wright City sawmill last year. The company still operates a softwood lumber sawmill in Idabel and timberland offices in Broken Bow. It has 162 employees and owns or leases nearly 500,000 acres of timberland in Oklahoma.
“Even though we no longer own some of those facilities, my understanding is that the credit stays with the company,” French said. “We made the investment, and therefore earned the credit. We would have to offset the credit with tax liabilities. It’s not a refund. Our earnings capacity in the state is substantially reduced. We have a smaller footprint, based on selling of facilities and closing of Wright City.”
Weyerhaeuser had no tax liability in Oklahoma last year and could not take advantage of the credit, French said.
Economic development officials and companies using the Investment/New Jobs tax credit say it’s a valuable part of an incentive package the state can offer to new and expanding companies.
A Tenaska subsidiary, Kiowa Power Partners LLC, spent $450 million to build a natural gas-fired power plant near Kiowa that employs 35 people. The plant began operations in 2003.
“Without these tax credits, this plant probably would not be in the state of Oklahoma,” said Ron Quinn, executive vice president of Tenaska. “It’s one of the ways in which the community has offered to share in the success of that facility being in the state. It doesn’t cost the state anything in the sense that they are offsets to Oklahoma tax revenue if and when we would owe such income taxes. If the plant wasn’t there, there wouldn’t be any tax revenue anyway.”
More than a dozen executives of Tenaska have qualified for income tax credits of at least $23 million, according to the Open Books tax credit data. Quinn said the structure of Kiowa Power Partners means those individuals are responsible for the income taxes on that project.
“It is our hope that we will be able to utilize every dollar of those credits that are available, because that is a good thing for us and a good thing for the state of Oklahoma,” Quinn said.
Tax credits face scrutiny
Tax credits of all types have come under scrutiny as the state faces budget shortfalls and evidence arose of misuse among some types of venture capital tax credits. Lawmakers passed a moratorium on several income tax credits earlier this year, including a two-year moratorium on the Investment/New Jobs tax credit.
The suspension of the tax credits is expected to bring in an extra $55 million in the current fiscal year, according to the latest state Board of Equalization estimates.
Tax credits also have become part of the campaign over State Question 744, which would raise common education per-pupil funding to at least the regional average. It’s estimated the state would need to find between $830 million and $1.7 billion a year to get to that level.
Backers of SQ 744 said the additional money could come from ending some state tax credits. But detractors said passage of the measure could mean cuts to all other state services and possible tax increases.
“There’s an attitude out there now that all tax credits are bad, and I don’t believe that,” said Meacham, who opposes SQ 744. “We need tax credits as a tool to stimulate economic development and job creation in our state.”
Still, part of the idea of the moratorium on some tax credits was to give officials time to study their effectiveness, he said.
“A lot of these credits really need revisiting to make sure the way they work makes sense for the state,” Meacham said. “What happened over time is that different entities would come to the Capitol and lobbyists would come to try to get deals made for their clients. Our tax code got riddled with all these different sorts of credits.”
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