The Journal Record
Court throws kink into Opportunity Fund plan: Board has no constitutional authority to approve expenditures, state Supreme Court rules
by Janice Francis-Smith

5/2/2007 OKLAHOMA CITY – The Oklahoma Supreme Court on Tuesday struck down the mechanism for using Oklahoma’s newest economic development tool: the Opportunity Fund. Current law requires expenditures from the fund be approved unanimously by the governor and two legislative leaders who serve on the Contingency Review Board. The arrangement violates the constitutional separation of powers between branches of government, the court ruled.

The Oklahoma Legislature created the Opportunity Fund in 2006, in response to a request from Gov. Brad Henry. Modeled after Texas’ “Deal Closing Fund,” the Opportunity Fund is used to offer financial incentives to big companies seeking to relocate or expand in Oklahoma. The fund allows the state to access millions of dollars within a few hours, which can be critical when competing with other states for businesses, said Henry.

Just weeks after the Opportunity Fund was created with a $45 million appropriation from the Legislature, the fund was used to help the state secure a new MG Motors plant for the city of Ardmore. Henry, Senate President Pro Tempore Mike Morgan, D-Stillwater, and then-Speaker of the state House of Representatives Todd Hiett, R-Kellyville, as the three voting members of the Contingency Review Board, approved $20 million in expenditures from the fund for the MG project.

The Ardmore Development Authority was awarded $15 million from the fund to augment money the city of Ardmore, the authority and the Federal Aviation Administration were spending on improvements to the Ardmore Municipal Airport. The Opportunity Fund also provided a $5 million startup loan to MG Motors, organized under the name Oklahoma Global Motors LLC. That loan has since been repaid, said Leslie Blair, public information officer for the state Department of Commerce.

As required by law, the expenditure from the Opportunity Fund was recommended by the state Department of Commerce, which estimated the MG Motors project would create 575 jobs, and hundreds of more jobs indirectly.

Retired Oklahoma City attorney Jerry R. Fent challenged the arrangement in court, asking the Oklahoma Supreme Court to decide if the Contingency Review Board’s expenditures from the Opportunity Fund meet constitutional muster. Fent has made similar challenges in the past, often regarding certain state bond issues, with a measure of success.

“I’m old and retired and I’ve got a lot of time on my hands,” Fent said with a laugh on Tuesday. But as a taxpayer, Fent says he takes special interest in the way the Legislature chooses to spend taxpayer dollars.

The state Supreme Court, assuming original jurisdiction in the case, agreed with Fent that the arrangement is unconstitutional. The Contingency Review Board’s duties relating to the Opportunity Fund are far removed from the purpose for which the board was originally created – to deal with personnel issues and emergency expenditures when the Legislature is not in session – and extend beyond the board’s rightful authority, the court found.

The Legislature’s control over appropriations of state funds ends at the time appropriations bills reach the governor’s desk, the court found. Only the executive branch has the authority to actually spend the funds appropriated.

“The extra-constitutional method by which the Legislature extends its tentacles of control over an appropriation measure beyond the time when the measure stands transformed into enacted law offends the constitutional concept of separated powers and becomes a usurpation of power,” the court ruled.

The $20 million already paid out of the Opportunity Fund will remain unharmed by the court’s ruling Tuesday, which will apply only to future expenditures from the fund. Wes Stucky, president of the Ardmore Development Authority, said plans are moving forward on improvements to the airport in anticipation of constructing an MG plant in the area. Construction contracts have gone out for bid, and if the bids come back for more than the authority has allocated for the project, “we’ll just find another way to pay for it,” said Stucky.

The difficulties with the Opportunity Fund expenditures likely will not jeopardize the project, despite a recent uproar over comments made by an MG official on National Public Radio, indicating that the plan could be derailed.

Fent said in light of the potential difficulties with the project as a whole, he would just wait and see what happens next. The legislative session for this year still has several weeks to go, and the Legislature has time to come up with a way to fix the statute, he said.

Spokesman for Henry, the Department of Commerce and legislative leaders declined to comment on the ruling Tuesday afternoon, until they had time to more thoroughly review it.

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