⭐ State Question 844: The Ad Valorem Tax Break Stays—But Local Communities Could Get the Bill
Oklahoma is debating who should pay the subsidy without proving the subsidy was even necessary.
On August 25, Oklahoma voters will be asked to decide State Question 844. The ballot language sounds like a technical change in government accounting. In reality, it could determine whether schools, counties and other local services are protected when the state gives major industrial projects a five-year property-tax exemption.
“Ad valorem” simply means a tax based on the value of property. These taxes help support public schools, county government, CareerTech districts, libraries, health departments, emergency medical services and other local responsibilities.
Under Oklahoma’s current system, qualifying businesses receive a five-year exemption from ad valorem taxes on eligible new, acquired or expanded manufacturing property. Because the state created the exemption, the state reimburses the local taxing jurisdictions for the revenue they lose.
State Question 844 would leave the corporate exemption in place. What it would change is the protection for the communities that lose the property-tax revenue.
The tax break stays. The uncertainty is over who eventually gets the bill.
What the proposed constitutional language actually says
State Question 844 would amend Article 10, Section 6B of the Oklahoma Constitution. The five-year exemption itself would remain unchanged.
The important new language says the Legislature would enact laws establishing the “levels and methodologies of reimbursement” for revenue lost by schools, counties, cities, CareerTech districts, emergency medical services, junior colleges, county health departments and libraries.
It also says those reimbursement laws should ensure that no individual county receives an amount that results in a “detriment to the other counties of the state.”
Neither phrase is clearly defined.
What reimbursement “level” would be guaranteed? Would communities receive 100% of the property-tax revenue they lost? Eighty percent? Fifty percent? Nothing during a severe budget crisis?
What would constitute a “detriment” to other counties? Would a county be penalized simply because it successfully attracted a large project with an enormous taxable value?
The proposal establishes no minimum reimbursement, no guaranteed percentage and no formula voters can examine before casting their ballots.
The Oklahoma Tax Commission’s official revenue-impact statement confirms that uncertainty. It says the effect on the Ad Valorem Reimbursement Fund is unknown, that local taxing jurisdictions could be directly affected and that state school funding could be affected indirectly through the school-finance formula. The final result would depend on reimbursement levels and methodologies adopted in future legislation.
Oklahomans are being asked to surrender the current constitutional protection before lawmakers tell them what will replace it.
Google and Mayes County show how the system works
The Google data center in Mayes County provides the clearest current example.
Oklahoma’s latest annual report shows that the state owed approximately $88.6 million in total reimbursements for the five-year exemption. Google LLC–Myall LLC alone accounted for approximately $34.2 million—more than one-third of the statewide total. (Welcome to Oklahoma’s Official Web Site)
That does not mean Mayes County received an undeserved windfall.
Mayes County did not independently decide that Google should avoid paying the full property taxes otherwise owed on eligible property. The State of Oklahoma created that economic-development incentive. The reimbursement compensates the schools and local services for revenue they would have collected if the state had not granted the exemption.
Reducing the reimbursement would not make Google’s exemption smaller.
It would change who pays for it.
Google would continue receiving the tax benefit. The state would spend less. Mayes County schools and local services would absorb more of the loss.
That is the central issue behind State Question 844:
The subsidy doesn’t shrink. The bill just moves.
The effects may not stop at the county line. Some property-rich school districts currently receive little or no state aid because their local property-tax base supplies enough revenue. If reduced reimbursements cause those districts to become eligible for more state aid, they could draw money from the same statewide school formula supporting districts in counties that never hosted an exempt facility. (The Washington Post)
The proposal is therefore not simply a dispute between Mayes County and everyone else. Weakening the reimbursement could eventually affect schools across Oklahoma.
Is a five-year exemption really limited to five years?
The exemption for any particular group of qualifying property is generally limited to five consecutive years.
But that does not necessarily mean a company receives only one five-year benefit.
New construction, expansions and newly acquired eligible property can qualify separately. A business that continually expands or purchases new equipment may have several groups of property moving through different five-year exemption periods simultaneously.
The latest Google report demonstrates that pattern. Google property appears in the first, second, third, fourth and fifth years of exemption at the same time. (Welcome to Oklahoma’s Official Web Site)
That is not technically an extension of the exemption on the same property. It is a series of new five-year exemptions covering different eligible investments.
Google also received special grandfathering when Oklahoma ended eligibility for most new data centers in 2021. A qualifying establishment that had received an exemption before November 2021 may continue seeking exemptions for eligible personal property placed in service at previously exempt facilities through December 31, 2036. Each qualifying group of new property can then receive its own five-year exemption. (Legal Information Institute)
The Legislature acted because data centers had become an increasingly expensive part of the program. But rather than ending the benefit immediately, lawmakers preserved a long runway for an existing recipient.
So “five years” tells only part of the story.
The exemption on one group of servers may last five years. The company’s ability to place new groups of equipment into fresh five-year periods can continue much longer.
Before deciding who pays, apply the “but-for” test
Before Oklahoma decides whether state taxpayers or local communities should absorb this cost, lawmakers should answer a more fundamental question:
But for the ad valorem exemption, would the company have located or expanded in Oklahoma?
That is the “but-for” test.
If the company would not have invested here without the tax exemption, the incentive may have purchased economic activity Oklahoma otherwise would not have received.
But if the company selected Oklahoma because of inexpensive land, access to electricity, fiber connections, water, transportation, proximity to customers or other business advantages, the exemption may merely reward an investment that was already going to happen.
Oklahoma’s own Incentive Evaluation Commission examined that question in 2024. The evaluation was prepared for the Commission by its contracted consultant, PFM Group Consulting LLC.
The evaluator recommended retaining the program with modifications and calculated potential positive economic returns. That part of its analysis deserves acknowledgment.
But the same evaluation found that the program has no annual spending cap and “may not perform well” on the but-for test.
It also found that the Oklahoma Tax Commission does not collect the number of jobs associated with each exemption application. PFM was not allowed to review certain individual project-level payroll information because of taxpayer-confidentiality restrictions, limiting its analysis largely to industrywide aggregates.
The evaluation could measure investment and payroll associated with companies receiving the exemption. It could not establish with confidence how much of that activity occurred because of the exemption.
That distinction matters.
A billion-dollar investment does not prove that a subsidy caused a billion-dollar investment. One hundred jobs at a subsidized facility do not prove those jobs would have gone to another state without the tax break.
Oklahoma can calculate what the program cost. Even its own evaluator could not determine with confidence what taxpayers actually purchased.
That does not prove the exemption never works. It proves that Oklahoma is asking taxpayers to finance it without collecting enough information to demonstrate when it works.
Oklahoma keeps trying to compete by being cheap
The ad valorem exemption is part of Oklahoma’s broader economic-development strategy: attract businesses by making the state cheaper.
Cheap land. Cheap electricity. Lower wages. Lower taxes. Another exemption.
Being affordable can be an advantage. But being cheap is not the same as being competitive.
A strong economy also depends on educated workers, reliable infrastructure, good public schools, workforce training, accessible health care and communities where skilled employees want to live and raise their families.
Oklahoma too often uses tax incentives to compensate for weaknesses in those areas. That creates a cycle that is difficult to escape.
The state says it needs tax breaks because its workforce and public services are not competitive enough. It then diverts money that could strengthen education, health care and infrastructure into more tax breaks.
Oklahoma remains dependent on being cheap because it keeps spending money that could help it become better.
The reimbursement system makes that tradeoff difficult to see. The host community appears protected because the state replaces the local revenue. But the subsidy has not disappeared. It has merely been moved into the state budget.
The dedicated Ad Valorem Reimbursement Fund receives an amount equal to 1% of state income-tax collections, but that source has repeatedly fallen far short. From fiscal years 2019 through 2024, it covered an average of only about 30.5% of reimbursements, requiring additional legislative appropriations every year.
That money cannot be spent twice.
A dollar used to reimburse property taxes a corporation did not pay is a dollar unavailable for public education, SoonerCare, rural hospitals, roads, public safety, workforce development or other state priorities.
The community may appear insulated from the exemption today. Oklahomans pay for it later through the General Revenue Fund.
Oklahoma already recognized the cost-shifting danger with data centers
In May, Oklahoma enacted House Bill 2992, the Data Center Customer Ratepayer Protection Act of 2026.
The law requires special electric-rate terms and financial protections for exceptionally large electric customers so ordinary families and businesses are not left paying for power plants, transmission facilities or other infrastructure built to serve a data center that later reduces its operations or abandons the project. (Oklahoma Legislature)
The Legislature adopted an important principle:
The customer creating an extraordinary cost should bear that cost rather than quietly transferring it to everyone else.
That principle should not end at the electric meter.
If data centers should pay the electric-system costs they create, Oklahoma should also examine whether they are paying an appropriate share of property taxes, roads, water systems and other public costs.
State Question 844 moves in the opposite direction. It preserves the company’s exemption while giving future lawmakers greater freedom to move its cost onto local communities.
The next community may not be Mayes County
Google is the largest recognizable example, but State Question 844 would apply statewide.
An aluminum smelter or other capital-intensive manufacturing project could place hundreds of millions—or billions—of dollars of property within a county. That property would ordinarily generate substantial revenue for schools and local services.
The precise treatment of nuclear projects requires some care. A manufacturing facility producing nuclear components could potentially qualify as manufacturing. A nuclear electric-generating plant itself would be treated differently under current law because new electric-power-generation facilities stopped qualifying for this exemption after 2017.
But the broader concern remains. The Legislature has repeatedly changed the statutory definition of qualifying manufacturing facilities, at different times extending eligibility to data processing, distribution, warehousing and electric generation. The proposed constitutional language would continue giving lawmakers substantial control over both eligibility definitions and reimbursement rules.
A future community might be asked to welcome a large industrial project requiring new roads, utilities, water systems, emergency services and school capacity.
Local leaders may be assured that the state will replace the property-tax revenue lost through the exemption.
State Question 844 would make that promise less reliable.
The corporation negotiates its incentives before deciding where to invest. The community cannot renegotiate its obligations after the project arrives.
The company gets certainty. The community gets risk.
What happens when the state budget gets tight?
State Question 844 may sound like a technical change in how Oklahoma calculates reimbursements. But the change becomes much more important when the state faces its next budget shortfall.
Oklahoma is required to balance its budget. Unlike the federal government, it cannot routinely borrow money to cover an annual operating deficit. State appropriations are generally limited to no more than 95% of certified revenue estimates, so when tax collections fall, lawmakers must reduce spending, use available reserve funds or find additional revenue. (Welcome to Oklahoma’s Official Web Site)
Finding additional revenue is politically and constitutionally difficult. A revenue-raising measure generally requires approval from three-fourths of both the Oklahoma House and Senate unless lawmakers refer it to voters. Cutting or delaying an expenditure is much easier. (OK Policy Institute)
Under the current ad valorem exemption system, qualifying companies can avoid paying property taxes on eligible new investment for five years. The state then reimburses the affected schools, counties, CareerTech districts, libraries, health departments and other local entities for the revenue lost because of the state-created exemption.
That reimbursement makes the host community appear insulated from the tax break, but the subsidy is not free. The money comes from state revenue that could otherwise support public schools, SoonerCare, rural hospitals, roads, public safety and other statewide needs.
State Question 844 would give future Legislatures greater authority to determine the “levels and methodologies” of those reimbursements. It does not tell voters what percentage would be paid, establish a guaranteed minimum or require the Legislature to replace every dollar of lost local revenue.
That may not seem dangerous while state revenue is growing. The risk becomes much greater during a recession, another energy-price collapse or a state-budget crisis.
Oklahoma’s budget is already being narrowed by hundreds of millions of dollars in business incentives and tax credits. Lawmakers have also approved a $275 million cap for the private-school tax-credit program for the 2026–27 school year. (Welcome to Oklahoma’s Official Web Site)
The Republican federal reconciliation law enacted in 2025 adds another source of pressure. The Congressional Budget Office estimates that it will reduce federal Medicaid spending substantially and increase the share of SNAP costs paid by states. CBO expects states to respond to the additional SNAP obligations by reducing spending elsewhere, raising revenue or some combination of both. (Congressional Budget Office)
Local reimbursements would then compete against schools, health care, nutrition assistance, roads and every other state obligation.
Lawmakers might face three politically difficult choices: reduce major public services, raise revenue with a three-fourths legislative vote, or reduce reimbursements that most voters barely know exist.
When revenue falls, Oklahoma cannot routinely borrow to cover the deficit, and raising taxes requires a three-fourths legislative vote. State Question 844 would give lawmakers another option: keep the corporate exemption and stop fully reimbursing the community.
The company would retain its five-year tax break. The state would improve its own budget balance. But the school district, county and other local services surrounding the project could be left with the bill.
Vote No on State Question 844
State Question 844 poses too much financial risk to the communities Oklahoma asks to host major industrial projects.
The proposal would preserve the company’s five-year ad valorem tax exemption while allowing future Legislatures to establish reimbursement levels after voters have surrendered the current protection.
That creates a one-sided arrangement.
The company would know its exemption is protected. The community would not know whether the state will continue replacing all the revenue the exemption takes away.
The greatest danger may not appear immediately. It will come during the next recession, energy-price collapse or state-budget crisis, when lawmakers must balance the budget and every state expenditure is competing against education, SoonerCare, nutrition assistance, roads and public safety.
At that point, reducing an obscure reimbursement program may be politically easier than raising revenue or making more visible cuts elsewhere.
A No vote would not repeal the five-year ad valorem exemption. It would preserve the state’s existing reimbursement responsibility while lawmakers determine whether the incentive passes the but-for test and whether recipients are producing enough permanent jobs and public value to justify its cost.
If the program has become too expensive, Oklahoma should review the exemption—not protect the corporate benefit while weakening the protection for communities.
Until lawmakers disclose a replacement formula, guarantee that local services will be protected and demonstrate that the tax break is actually causing investments that would not otherwise occur, Oklahoma voters should reject State Question 844.
Vote No on State Question 844. Review the tax break before shifting its cost to local communities.
👉 Follow the money at wlangdon.substack.com
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Sources
Oklahoma State Election Board — State Question 844 Final Ballot Title. Official description of the proposed constitutional amendment and its effect on future reimbursement levels and methodologies.
Oklahoma Legislature — House Joint Resolution 1087, Enrolled Version. Full legislative language submitting State Question 844 to voters and amending Article 10, Section 6B of the Oklahoma Constitution.
Oklahoma Tax Commission — Revenue Impact Statement for HJR 1087. Explains that the financial effect of State Question 844 cannot be determined until future Legislatures establish the reimbursement formula and notes possible effects on local taxing jurisdictions and the state school-funding formula.
Oklahoma Tax Commission — 2026 Exempt Manufacturing Reimbursements Annual Report. Provides the latest statewide reimbursement totals, county distributions and individual recipient amounts, including approximately $34.2 million associated with Google LLC–Myall LLC.
Oklahoma Incentive Evaluation Commission — Five-Year Ad Valorem Exemption Evaluation, prepared by PFM Group Consulting LLC, 2024. Reviews the program’s costs and economic effects and identifies weaknesses in Oklahoma’s ability to apply the “but-for” test, track job creation and determine how much investment was caused by the exemption.
Oklahoma Administrative Code, Title 710 — Ad Valorem Exemption Rules. Explains eligibility requirements, five-year exemption periods and grandfathering provisions for qualifying data-processing facilities.
Oklahoma Legislature — House Bill 2992, Data Center Customer Ratepayer Protection Act of 2026.Establishes protections intended to prevent extraordinary data-center electric-system costs from being transferred to ordinary utility customers.
Oklahoma Constitution, Article 10. Establishes Oklahoma’s balanced-budget and revenue-raising requirements, including the three-fourths legislative threshold generally required for revenue bills not submitted to voters.
Congressional Budget Office — Federal Reconciliation Legislation Analyses. Estimates the effects of federal Medicaid and SNAP changes on federal spending, state responsibilities and the fiscal choices states may face.
Oklahoma Tax Commission — Parental Choice Tax Credit Program Information. Documents the program’s authorized funding level, including the $275 million cap for the 2026–27 school year.
The Frontier — Reporting on Oklahoma’s Data-Center Ad Valorem Exemption. Provides background on the Legislature’s 2021 changes to data-center eligibility and the grandfathering provisions affecting Google’s Mayes County facility.
Oklahoma Policy Institute — Research on the Five-Year Ad Valorem Manufacturing Exemption. Provides historical background on the reimbursement system, its funding mechanism and its effects