Oklahoma Question 725, Rainy Day Fund (2006)
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Question 725 allows allow money to be spent from the "Rainy Day Fund." The purpose is to retain employment for state residents by helping at-risk manufacturers.
|Oklahoma State Question 725|
State Ballot Question 725 is a proposed constitutional amendment that would make up to $10 million available annually from the state’s Constitutional Reserve Fund (Rainy Day Fund) for incentive payments to help at-risk manufacturing companies that may be forced to close or move elsewhere. Payments would be made to eligible companies fulfilling various specified requirements for up to 10% of the capital costs of new retooling or modernization projects, subject to approval by the Governor, House Speaker and Senate President Pro Tem. Payments could only be made in years when the Rainy Day Fund has a balance in excess of $80 million and when state revenues for the upcoming year are projected to grow.
The Quality Investment Program is a critical and appropriate mechanism that would help Oklahoma retain existing manufacturers that have a vital economic impact on communities and employees.
The potential loss of jobs, tax dollars and general economic activity to a local community and the state that can result from a plant closing represents an “emergency” and thus falls under the provision for use of the Rainy Day Fund.
This program is subject to formal and rigorous guidelines and oversight. HB 1619 identifies clear criteria by which to evaluate whether incentive payments can be expected to be economically efficient. The requirement of a formal investment contract guarantees that companies that receive incentive payments will invest in capital assets over a five-year period and makes payments contingent on the company’s actual investments.
These kind of financial subsidies are a distortion of free market principles and amount to corporate welfare. The government should not be in the business of assisting private firms.
The Rainy Day Fund is intended to address budgetary emergencies. Dipping into the Rainy Day Fund to fund economic development programs leaves the state more vulnerable to budget downturns and creates a bad precedent that opens the door to further raids on the state’s reserves.
Because operation of the program is tied to the fluctuating balance of the Rainy Day Fund and annual revenue projections, manufacturers may find themselves ineligible for payments for one or more years, which may create uncertainty for investors.
Donors to the campaign for the measure:
- Yes On 725: $14,750
- Total: $14,750
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