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ENGROSSED HOUSE
BILL NO. 3942 By: Kane and Dollens of the
House
and
Hall of the Senate
An Act relating to public finance; amending 62 O.S.
2021, Sections 7004, as amended by Section 2, Chapter
125, O.S.L. 2023, and 7005, as amended by Section 3,
Chapter 125, O.S.L. 2023 (62 O.S. Supp. 2025,
Sections 7004 and 7005), which relate to the
Incentive Evaluation Commission; requiring submission
of certain findings and recommendations to the Office
of Fiscal Transparency; modifying requirements for
incentive evaluations; providing an effective date;
and declaring an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 62 O.S. 2021, Section 7004, as
amended by Section 2, Chapter 125, O.S.L. 2023 (62 O.S. Supp. 2025,
Section 7004), is amended to read as follows:
Section 7004. A. For calendar years 2024 through 2027 and
every four (4) years thereafter, the Incentive Evaluation Commission
shall ensure that each incentive is evaluated within the four-year
evaluation period unless the Commission determines that the
incentive is exempt from evaluation. The Commission may exempt from
evaluation any incentive that it concludes has a minimal fiscal
impact. The Commission shall determine a specific threshold amount
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which shall be considered as a minimal fiscal impact for the current
evaluation cycle. The Commission may also conduct an expedited
evaluation for any incentive that has been evaluated at least two
times from calendar years 2016 through 2023 and has not had a
material change to the program since its prior evaluation. The
expedited evaluation will update the prior evaluation's financial
and economic impact and findings and recommendations.
B. 1. For calendar years 2016 through 2023, the Incentive
Evaluation Commission shall develop a four-year schedule for
evaluating incentives. The development of the schedule for
evaluating the incentives shall take into consideration fiscal
impacts to revenues of this state, including but not limited to the
General Revenue Fund, the opportunity to group incentives with
similar goals and objectives for evaluation, and the ability to
obtain sufficient data related to the incentives for evaluation.
Each schedule shall include a list of all incentives in the state,
including any it exempts from evaluation. In determining whether a
program is an incentive, the Incentive Evaluation Commission may
consider legislative intent and may also consider whether the
program is promoted as an incentive by any state agency. For each
incentive listed in the schedule, the Commission shall attempt to
identify the goal or goals of the incentive.
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2. Upon completion of the report and recommendations, the
Commission and contractor shall provide the findings and
recommendations to the Legislative Office of Fiscal Transparency.
C. Upon approval of the schedule, the Commission shall provide
the schedule to the Governor, President Pro Tempore of the Senate,
and Speaker of the House of Representatives.
SECTION 2. AMENDATORY 62 O.S. 2021, Section 7005, as
amended by Section 3, Chapter 125, O.S.L. 2023 (62 O.S. Supp. 2025,
Section 7005), is amended to read as follows:
Section 7005. A. The Commission may contract with a private
company, nonprofit, or academic institution to assist with
evaluation of each incentive. The Commission shall develop a scope
of services for a request for proposals issued pursuant to the
Oklahoma Central Purchasing Act, Section 85.1 et seq. of Title 74 of
the Oklahoma Statutes, for professional services necessary to
complete incentive evaluations pursuant to the Incentive Evaluation
Act. The scope of services shall include a provision requiring the
contractor to provide at least one draft report for each incentive
prior to the issuance of the final report; provided, the contractor
may determine the timing and frequency of draft reports based on the
availability of information and the potential for draft reports to
assist the Commission in making a final recommendation. The cost of
such contract shall be paid by the Office of Management and
Enterprise Services. No recipient or potential recipient of an
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incentive or representative of a recipient or potential recipient
shall contact the entity or individual with whom the Commission
contracts pursuant to this subsection unless the entity or
individual specifically requests information or documentation for
purposes of the incentive evaluation process; provided, this shall
not be construed to prevent participation in a public hearing
conducted pursuant to subsection B of this section.
B. By October 1 of each year beginning in calendar year 2023,
the Commission or the Commission's chosen contractor shall evaluate
each incentive scheduled for review that year. The Commission or
the Commission's chosen contractor shall conduct each incentive
evaluation in consultation with the Oklahoma Department of Commerce
division of Research and Economic Analysis Services using criteria
developed pursuant to subsection D of this section. Between October
1 and November 30 of each year beginning in 2017, the Commission
shall hold at least one public meeting to review, allow for public
comment, and vote to approve, disapprove, or modify each incentive
evaluation conducted that year. By December 15 of each year
beginning in 2016, the Commission shall provide the results of each
incentive evaluation, a review of prior Commission recommendations,
and changes to statute or incentive administration related to
incentive evaluation recommendations in a written report to the
Governor, President Pro Tempore of the Senate, and Speaker of the
House of Representatives. If the Commission votes to modify an
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incentive evaluation as provided in this subsection, such
modification and the original evaluation shall be documented in the
annual written report. The report shall be made publicly available
on the Oklahoma Department of Commerce website, the Commission
website, and documents.ok.gov.
C. Each evaluation shall include the following:
1. An estimate of the economic and fiscal impact of the
incentive. This estimate shall take into account the following
considerations in addition to other relevant factors:
a. the extent to which the incentive changes business
behavior,
b. the results of the incentive for the economy of
Oklahoma as a whole. This consideration includes both
positive direct and indirect impacts and any negative
effects on other Oklahoma businesses, and
c. a comparison to the results of other incentives or
other economic development strategies with similar
goals, both within the state and from other states;
2. An assessment of whether adequate protections are in place
to ensure the fiscal impact of the incentive does not increase
substantially beyond the state's expectations in future years;
3. An assessment of whether the incentive is being administered
effectively;
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4. An assessment of whether the incentive is achieving its
goals;
5. Recommendations for how the state can most effectively
achieve the incentive's goals, including recommendations on whether
the incentive should be retained, reconfigured, or repealed; and
6. Recommendations for any changes to state policy, rules, or
statutes that would allow the incentive to be more easily or
conclusively evaluated in the future. These recommendations may
include changes to collection, reporting, and sharing of data, and
revisions or clarifications to the goal of the incentive;
7. An assessment of whether the incentive furthers a strategic
economic goal or industry of the state; and
8. An assessment of whether the incentive creates a competitive
advantage for the state by evaluating the overall effectiveness of
the incentive within the entire economic ecosystem of the state.
D. Evaluation criteria shall be developed for each incentive
evaluated by the Commission. Each incentive shall be evaluated
using criteria specific to the individual incentive. The criteria
shall be developed by the Commission through the administrative
rulemaking process pursuant to the Administrative Procedures Act,
Section 250 et seq. of Title 75 of the Oklahoma Statutes, and
codified in the administrative code of the Oklahoma Department of
Commerce.
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E. At the request of the Incentive Evaluation Commission,
unless prohibited by the Oklahoma Constitution, Oklahoma Statutes,
or federal law, state agencies shall provide any records,
information, data, or data analysis necessary for the Commission or
contractors to effectively evaluate incentives. The Commission and
contractors shall not disclose or release any data received from
other state agencies, except as permitted under law.
SECTION 3. This act shall become effective July 1, 2026.
SECTION 4. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
Passed the House of Representatives the 11th day of March, 2026.
Presiding Officer of the House
of Representatives
Passed the Senate the ___ day of __________, 2026.
Presiding Officer of the Senate