After receiving its first $11.5 million in job creation funding, officials fear Legislature may balk

Washington County has finally received its first payment from the state for helping to create thousands of good-paying jobs in Hillsboro.

But now county officials have to prevent the 2013 Oregon Legislature from cutting the future payments.

The county received $11.5 million from the state in late January. It represents 50 percent of the additional Oregon income taxes generated by the new jobs created through the state's Strategic Investment Program. As part of the program, the county and a number of other local governments agreed to waive a portion of their property tax collections on investments made by Intel and Genentech.

The payments are projected to increase to $56 million over the next two years. But Oregon Gov. John Kitzhaber has only budgeted $12 million for Gain Share in his proposed budget for the next two fiscal years.

"The governor assumes the Legislature will look at capping the program because it is proving to be more expensive than estimated. That is his reccomendation. If the Legislature wants to spend more money on the program, they will have to find it," said Tim Rapheal, a spokesman for Kitzhaber.

The payments were authorized by the 2007 Oregon Legislature. They are called Gain Share to reflect the partnership between the local governments and the state.

"When you look at the total picture, the return on investment is pretty good," said Washington County Commission Chairman Andy Duyck, noting that Intel alone invested $4.4 billion in Hillsboro after the property tax waivers were approved.

But a key legislator is saying the 50 percent commitment is too high. State Sen. Ginny Burdick (D-Portland), chair of the Senate Revenue Committee, wants the Legislature to either lower the percent or cap the payment. She says the state needs the money to meets its pressing financial needs, even though it would not be available without the property tax waivers approved by the local governments.

"It's just a matter of balance. The money that goes back to the local governments is money the state can't spend on education and other services," said Burdick.

Duyck says the state should stick with the 2007 agreement, however. He argues the Gain Share payments will never fully compensate local governments for their uncollected property taxes. Duyck also insists local governments bear additional costs related to the new jobs — from transportation improvements to increased public safety demands — that are not covered by the state.

"I always thought this was a partnership. The local governments take a heavy hit to make these investments happen, and everyone in the state benefits from them," Duyck said.

Burdick is concerned that Gain Share payments are projected to increase too much in the future. Her committee staff has estimated the payment due this year will be $23 million, while the payment due next year will be $33 million. She says the 2007 Oregon Legislature only projected the payments at around $4 million a year.

"When the Legislature approved Gain Share, we didn't realize how big the payments would become. Something needs to be done," Burdick said.

Duyck says reducing the payments could backfire on the state.

"If the Legislature reduces or caps the Gain Share payments, that reduces the incentives of local governments to waive their taxes under the Strategic Investment Program. The Gain Share payments are part of our calculations," said Duyck.

In the meantime, county officials are still calculating how much of the $11.5 million goes to the other local governments that waived their taxes. They include Hillsboro and Tualatin Valley Fire & Rescue. And Duyck has only begun talking with the rest of the county commission about how to spend its portion.

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