OKLAHOMA CITY — State and local efforts to attract new companies to Oklahoma are hampered by lack of adequate infrastructure and an educated, trained labor force, research has shown.
Although a state’s tax burden “is certainly a consideration in a company’s decision to relocate or expand,” the Legislative Office of Fiscal Transparency “learned from stakeholder engagements that workforce and infrastructure are the greatest impediments to Oklahoma’s business recruitment efforts.”
A poll by the State Chamber of Oklahoma found that just 13% of business owners said taxes were “their most important priority.”
Surveys by the State Chamber and the Oklahoma Department of Commerce showed that business owners are more concerned about infrastructure and an educated, skilled workforce that has” a good quality of life” than they are about their tax burden.
“Instead of focusing on tax cuts (which would reduce the state’s tax base and future revenue),” LOFT suggested that state legislators “should consider tax incentives targeted toward specific industries that could stimulate the economy, and raise revenues elsewhere.”
Oklahoma has significantly reduced its tax rates over the past 30 years, LOFT pointed out. In 1992, the state’s individual income tax rate was 7% and the corporate income tax rate was 6%. Today, the top personal income tax rate is 4.75% and the corporate income tax rate is 4%.
Many businesses are eyeing Oklahoma
Commerce Department business development efforts last year were impressive.
Jennifer Springer, the agency’s business development director, said 64 companies assisted by the Commerce Department established new operations in Oklahoma or expanded existing facilities last year. Those projects constituted $3.78 billion in new investment and created 7,086 jobs with an average annual wage of $55,406, she said.
A little over half of those projects were in rural areas (all counties except for Oklahoma, Tulsa, Cleveland and Comanche), Springer said.
More than 325 companies and site selectors contacted the Commerce Department last year while looking for new locations in the U.S., she said. In each instance. the agency assembled a “response incentive packet” and aided in their site search.
“We’ve never had that many come through the door,” Springer said.
The number of potential new economic development projects in which the Commerce Department has provided some degree of assistance nearly doubled over the past five years, from 171 in 2018 to 327 in 2022.
The agency has seen an uptick in aerospace, automotive and manufacturing projects, Springer said. The increased demand has been caused by “saturation of the manufacturing workforce in the southeastern United States and global companies re-evaluating their supply chain strategies,” she said.
Oklahoma’s bottlenecks in its economic development efforts are lack of suitable sites and a dearth of skilled employees, Springer said.
Oklahoma is experiencing “a workforce shortage in skilled labor that is reflective in the types of projects looking to expand and locate” in this state, she said.
Talent recruitment is “necessary to fill open jobs in Oklahoma.” And in view of the Commerce Department’s open pipeline of projects, Springer said, an estimated 65,000 jobs are under consideration for location in Oklahoma.
Brent Kisling, director of the Commerce Department, mentioned Senate Bill 621, filed this year by Sen. Adam Pugh, R-Edmond. It would create a Workforce Commission to coordinate “development of the workforce needed to grow Oklahoma’s economy…” The panel would consist of nine members who are representative of private-sector companies that do business in this state.
More companies
prefer rural sites
Turning to infrastructure needs, Springer said more companies are seeking rural locations, “which are limited.”
Last year, 29 companies that were eyeing Oklahoma required sites of 100 to 500 acres, but “we have only a handful of those,” Springer said. Those types of companies would include plastics, bioscience, agribusiness, general manufacturing and small automotive operations, she said.
Eight other companies needed more than 500 acres; those types of companies typically include food, plastic, agribusiness and advanced manufacturing, while large automotive and aerospace companies typically require a “megasite” of 1,000 or more acres, she said.
“We have a lot of land,” Springer noted, “but an acceptable site has to have utilities – water and sewer lines, electric and natural gas lines, and fiber – and good roads. That’s the challenge.” Depending on “the sector and size of parcel” that a company needs, “it’s very expensive to install the necessary utilities.”
Oklahoma “really doesn’t have any megasites left that don’t need significant infrastructure improvements,” Springer said, although “that’s not specific to Oklahoma, by any means,” she added.
The state Legislature has earmarked $780.85 million for infrastructure improvements, Kisling said. That included:
• $530.85 million from American Rescue Plan Act funds to strengthen site infrastructure. The Commerce Department is collaborating with the Oklahoma Water Resources Board, the state Aeronautics Commission, the Department of Environmental Quality and the Oklahoma Space Industry Development Authority to manage infrastructure projects, Kisling said.
• $250 million in state funds for the Progressive Rural Economic Development Prosperity program, a development tool intended to help build industrial sites and megasites in rural areas of Oklahoma.
The Commerce Department launched its SITES (Supporting Industrial Transformation and Economic Success) program Feb. 1.
Applications for $60 million in ARPA funds and $46.2 million in PREP funds open Feb. 20. Reviews will start April 1, and projects are expected to begin in May.
Applications from communities applying for $29.5 million available for development assistance with industrial sites will open March 20. Reviews start June 1, and projects will begin in late July, records reflect.