SB 237: Ad valorem tax; exemption for manufacturing facilities; defining battery energy storage system; exemption; applications. Effective date. - Oklahoma

Floor (House) → Floor (Senate) · 5 edits

MODERATE

The bill was rewritten to shift focus from manufacturing facility tax exemptions to regulating commercial and agricultural leases on state trust land. The original version provided tax breaks for manufacturers, while the new version establishes lease terms, requires fair market value bidding, and mandates a payment-in-lieu-of-taxes for counties where the state holds significant land ownership.

Scope change

The bill's scope changed entirely from tax incentives for manufacturing facilities to the administration and financial terms of leases on state trust property.

SCOPE

Removed all provisions related to ad valorem tax exemptions for manufacturing facilities, battery energy storage systems, and research and development.

REQUIREMENT

Added requirements that commercial leases must not exceed 55 years and must be awarded via public bidding at fair market value.

Added a new requirement for the Commissioners of the Land Office to make a payment in lieu of ad valorem taxes to counties where the state holds more than 10% of the real property acreage.

TIMELINE

Changed the effective date of the act from an unspecified future date to January 1, 2026.

DEFINITION

Removed detailed definitions for 'manufacturing facilities' and revenue thresholds for out-of-state sales.

House Committee Substitute for Senate Bill → Committee Substitute · 7 edits

MODERATE

The bill completely changed its subject matter, shifting from a tax exemption for manufacturing facilities to regulations for the Oklahoma Land Office regarding commercial and agricultural leases on trust property. The original text provided a five-year tax break for new manufacturing investments, while the new text establishes lease term limits, public bidding requirements, and a new payment-in-lieu-of-tax obligation for the Land Office.

Scope change

The bill's scope changed entirely from the Department of Commerce and Tax Commission (manufacturing tax exemptions) to the Commissioners of the Land Office (land lease administration).

SCOPE

Removed all provisions related to ad valorem tax exemptions for manufacturing facilities, including definitions for manufacturing, investment thresholds, and revenue requirements.

Added new provisions authorizing the Land Office to grant commercial and agricultural leases on trust property.

REQUIREMENT

Established that commercial leases must not exceed 55 years and must be awarded through public bidding at fair market value.

Limited agricultural leases on trust property to a maximum of five years, also requiring public bidding at fair market value.

Mandated that any permanent improvements made on commercial trust property after July 1, 1989, revert to the trust when the lease ends.

FISCAL

Created a new requirement for the Land Office to make payments in lieu of ad valorem taxes to counties where they hold more than 10% of the real property acreage.

TIMELINE

Changed the effective date from January 1, 2026, to January 1, 2025, and updated the legislative session reference from the 2nd to the 1st session.

Proposed Committee Substitute (full committee) 2 → House Committee Substitute for Senate Bill · 4 edits

MODERATE

The bill was completely rewritten to replace the previous committee substitute with a new version that clarifies eligibility for manufacturing tax exemptions. The changes specifically expand the definition of qualifying capital investments to include costs for repairing or refurbishing existing machinery, provided those items are depreciable under federal tax laws. Additionally, the text introduces new criteria for distribution establishments, setting up specific industry codes and capital investment requirements.

Scope change

The bill's scope was expanded to include repair and refurbishment costs for existing equipment as eligible for tax exemption, whereas the previous version did not explicitly include these costs in the definition of qualifying investment.

ELIGIBILITY

Capital expenditures for direct replacement, refurbishment, repair, or maintenance of existing machinery are now eligible for the tax exemption if the equipment qualifies for depreciation under the Internal Revenue Code.

New provisions were added to define qualifications for establishments primarily engaged in distribution, referencing specific NAICS industry numbers and capital investment thresholds.

DEFINITION

The definition of 'investment cost' was modified to explicitly include expenditures for the repair and maintenance of existing machinery and equipment.

TECHNICAL

The header identifying the document as a 'Proposed Committee Substitute' was removed and replaced with 'Committee Substitute for Engrossed Senate Bill,' indicating a procedural update in the bill's status.

Proposed Committee Substitute (full committee) 1 → Proposed Committee Substitute (full committee) 2 · 3 edits

MINOR

The bill was completely rewritten to update the definition of 'manufacturing facilities' and expand the tax exemption. The most significant change is the addition of a new exclusion for 'battery energy storage systems,' meaning these specific assets will no longer qualify for the property tax break previously available to manufacturing facilities. The bill also clarifies that direct replacement or maintenance of existing machinery should not be counted as new investment costs for the exemption.

Scope change

The scope of the tax exemption was narrowed by explicitly excluding battery energy storage systems from the definition of qualifying manufacturing facilities.

DEFINITION

Added a specific definition excluding 'battery energy storage systems' from the tax exemption.

ELIGIBILITY

Modified the eligibility criteria to clarify that investment costs for direct replacement, refurbishment, or maintenance of existing machinery do not count toward the exemption threshold.

REQUIREMENT

Updated the list of excluded items in the investment cost calculation to include battery energy storage systems alongside maintenance and repair costs.

Enrolled (final version) → Proposed Committee Substitute (full committee) 1 · 3 edits

MINOR

The bill was completely rewritten to remove all substantive policy provisions regarding ad valorem tax exemptions for manufacturing facilities. The original text, which defined eligibility criteria, investment thresholds, and specific facility types, was entirely deleted and replaced with a placeholder indicating the bill is now empty.

Scope change

The bill's scope has been reduced to zero; it no longer contains any operative language to amend the tax code.

SCOPE

All text defining the tax exemption program, including eligibility rules and facility definitions, was deleted.

The bill's purpose statement was changed to reflect that the entire measure is being deleted and replaced with new language that currently contains no content.

TECHNICAL

New header text identifies this version as a 'Proposed Committee Substitute' and includes administrative details like the committee chair and amendment submitter.

Engrossed → Enrolled (final version) · 5 edits · May 14, 2026

MODERATE

The bill was transitioned from an 'Engrossed' draft to the final 'Enrolled' version, which includes updated sponsors and a revised summary reflecting a shift in focus from land office leases to manufacturing tax exemptions. The substantive policy content remains consistent with the previous version, defining manufacturing facilities, setting investment thresholds, and establishing tax exemption periods.

Scope change

The bill's scope was narrowed and clarified in its description to focus specifically on ad valorem tax exemptions for manufacturing facilities, replacing the previous focus on Commissioners of the Land Office lease terms and tax payments.

SCOPE

The bill title and summary were updated to reflect a focus on ad valorem tax exemptions for manufacturing facilities rather than land office leases and tax payments.

ELIGIBILITY

The list of sponsors was updated to include Hall, Pederson, Dobrinski, and Newton, indicating changes in legislative sponsorship.

TIMELINE

The effective date was changed from January 1, 2026, to a specified date in the new summary, though the specific new date is not detailed in the provided text.

DEFINITION

The definition of 'manufacturing facilities' was expanded to include specific industries like computer services and distribution, along with updated investment thresholds and wage requirements.

A new exclusion was added to the definition of investment costs, specifically excluding battery energy storage systems from qualifying for the tax exemption.

Amended And Engrossed → Engrossed · 6 edits · May 14, 2026

MODERATE

The bill was renumbered and reorganized to transition from a House amendment to a final Senate bill. Substantively, the legislation shifted focus from manufacturing facility tax exemptions to regulating leases on state trust land owned by the Commissioners of the Land Office. The new version establishes strict limits on lease terms (55 years for commercial, 5 years for agricultural), mandates public bidding at fair market value, and requires the office to make payments in lieu of property taxes to counties where they hold significant land acreage.

Scope change

The bill's scope changed from providing tax exemptions for manufacturing facilities to regulating commercial and agricultural leases on state trust land and requiring financial payments to local counties.

SCOPE

The subject matter changed from manufacturing facility tax exemptions to regulations on state trust land leases and county tax payments.

REQUIREMENT

New requirements mandate that all commercial and agricultural leases be granted through public bidding at fair market value.

The Commissioners of the Land Office must now make payments in lieu of ad valorem taxes to counties where they own more than 10% of the real property acreage.

County assessors are required to calculate and communicate average tax rates per acre to the Commissioners of the Land Office by September 1 each year.

TIMELINE

The effective date was set to January 1, 2026, replacing previous provisions related to manufacturing investment thresholds.

ENFORCEMENT

The Commissioners of the Land Office are authorized to refuse bids or leases from parties in default or lacking adequate creditworthiness.

Introduced → Amended And Engrossed · 4 edits · May 14, 2026

MODERATE

The bill was amended to replace the original Land Office lease provisions with an entirely new tax exemption for manufacturing facilities. This shifts the legislation's focus from regulating state land leases to expanding tax breaks for businesses engaged in manufacturing, research, and specific data processing activities.

Scope change

The bill's scope changed from regulating commercial and agricultural leases of state trust land to providing ad valorem tax exemptions for qualifying manufacturing concerns and facilities.

SCOPE

Removed all provisions regarding the Commissioners of the Land Office, commercial lease terms, agricultural lease limits, and payment-in-lieu-of-tax requirements for state land.

ELIGIBILITY

Added eligibility criteria for tax exemptions, including requirements for manufacturing facilities, aircraft repair, computer services, and investment thresholds.

DEFINITION

Added new definitions for 'manufacturing facilities' and specific exclusions for battery energy storage systems and maintenance costs.

TIMELINE

Changed the effective date and statutory references to align with the new manufacturing tax exemption law rather than the previous land lease regulations.

Ad valorem tax; exemption for manufacturing facilities; defining battery energy storage system; exemption; applications. Effective date.

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