Are we getting our moneys worth here?
Funded primarily with lottery dollars, Oregon's Economic and Community Development Department provides grants and loans to communities and businesses. Cities and towns use the money to fund infrastructure improvements to draw businesses. And businesses Ñ everything from tanning salons and pet stores to family farms Ñ use the cash to improve their operations. The department also promotes Oregon and assists companies interested in locating here.
Many lawmakers are loath to further reduce the department's funding during a recession, fearing it could trigger more problems and contribute to Oregon's reputation for being business-unfriendly.
But critics say 'economic development' has become a catchall phrase for any project in need of cash. Don McIntire, taxpayer advocate and government critic, put it bluntly: 'If there were any utility at all in the department of economic development, we wouldn't have the crappiest economy in the country. We can do that without their help.'
Whether the department's work is a factor in the degree of economic havoc is unclear. During the recession of the early '90s, Oregon ranked between 15th and 31st in the nation for unemployment.
Department officials say if they weren't there, Oregon's economic woes would be far worse. Officials say the department was key to the creation of 2,577 jobs last year, and the retention of 5,707 more.
Included in the figure is the recruitment of American Bridge Co., which is building a $10 million fabrication plant in Reedsport that will create 120 family-wage jobs. The state spent nearly $1 million on infrastructure projects to accommodate the company's barge traffic and create better access to local highways.
In the job retention category, state officials say the department kept a troubled Freightliner LLC from leaving Oregon. In 2001, the state partnered with the city of Portland in approving $2.2 million in aid to the faltering truck-making company, believing it was planning to move its Portland operations elsewhere and take its 3,000 jobs with it. Freightliner spokesman Chris Brandt said the state's help was a factor in the company's eventual plan to remain in Portland, as well as to bring other portions of its business here.
But critics say the department's claims of success often are not supported by evidence. They point to a 2001 audit by the secretary of state that found the department exaggerated its job creation and retention claims by more than 1,500 jobs in 2000 and overstated wage amounts offered for the new positions. Of the jobs that could be verified, the state did not sufficiently prove it was instrumental in their creation, according to the audit.
Verifying the agency's current achievements, as they are described in a 2002 annual report, is complicated.
Consider: According to the report, Regence BlueCross BlueShield reaped $125,000 in agency money for expansion of its offices in Medford, a project that will mean 300 more jobs within six years. But Regence spokeswoman Stephanie Watson said the company would have gone forward with the expansion without the state's help.
'We were looking to increase our presence in the region, and we already had employees there in Medford, and there was a quality labor pool there,' Watson said.
And the agency's claim that it's responsible for recruiting ink cartridge manufacturer Imex to Salem is disputed by another agency. The Salem Economic Development Corp., which gets its funds from private corporations and from city and county grants, says it was responsible for Imex's arrival, having found buildable land and helped it navigate Oregon's environmental restrictions. Larry Glassock, spokesman for the Salem group, said it 'did the hand-holding.'
Imex officials, for their part, said it was the building site, Oregon's low electricity costs and Salem's enterprise zone tax breaks that cemented the deal.
Sherry Sheng, deputy director for the economic development department, said the state and the Salem corporation worked together to bring Imex on board. 'The company relied on us to coordinate and get the word out on what they were looking for,' Sheng said. 'It takes more than one organization to make something go.'
She said proving the department's effectiveness overall has been difficult, because there's 'no way to know' what would have happened if the state had not gotten involved.