New Report Highlights Importance of Ad Valorem Tax Exemption Program

Study finds reimbursement program more than pays for itself

Oklahoma City (February 9, 2015) –  A study commissioned by the State Chamber Research Foundation finds that the Oklahoma Manufacturers Ad Valorem Tax Exemption program has been a very effective economic development tool since Oklahoma voters approved its creation in 1986. The study by Oklahoma City-based economic research firm RegionTrack, Inc., states that every dollar in ad valorem tax exemption supports an average of 225-dollars in new output in the state’s economy.

The ad valorem exemption is especially helpful for rural counties. Pittsburg, Kay and Roger Mills counties, for example, each received between 4.5% and 5.5% of the total exemptions granted in the past decade even though they account for around one percent or less of the state’s population and personal income.

Best of all, the report finds that even though the state pays money to counties to reimburse them for the exemption they are giving to manufacturers, the program is a net positive.  RegionTrack economists Mark C. Snead, Ph.D. and Amy A. Jones, M.A. write that “the results suggest that the economic activity generated by the exemption produces a range of significant direct and spillover economic benefits to the state and that these benefits far outweigh any potential direct costs of the exemption.”

“Having an economic development program that encourages capital investment is clearly contributing to the resurgence of the manufacturing sector in Oklahoma,” said State Chamber Research Foundation Executive Director Mike Seney. “The study clearly shows that the original intent of the program to make Oklahoma attractive to capital investment is working and the state is seeing significant benefits as a result.”

###