County shouldnt be punished for success
Washington Countys success at attracting new jobs and industrial investment is having a peculiar effect on state officials: They are about to take away part of the incentive for local governments to encourage such growth.
In our view, the state Legislature should tread very carefully as it considers reducing the amount of money it shares with communities that defer property tax revenue in order to create much-needed jobs.
Theres debate over whether profitable corporations such as Intel and Nike should get tax breaks, but thats not the question here.
At issue is the states Gain Share program, which returns income tax dollars to Washington County and other jurisdictions that grant property tax breaks to new or expanding industries.
The rationale behind the Gain Share program is evident to anyone whos driven past Intels Ronler Acres campus in the past year. Cities, counties and special service districts bear the costs of new industrial developments in their communities. They often must make road improvements or provide greater police and fire protection to serve companies that move in or expand.
Yet they also have agreed, with this particular program, to establish Strategic Investment Zones, where a portion of a new or expanding companys property taxes can be forgiven for a period of time.
In other words, local communities see the demand for their services increase when industries arrive within Strategic Investment Zones, but they dont get the full property tax benefits for several years. The state government, however, derives immediate benefits in the form of income taxes generated by the new workers.
The Gain Share program allows the state to return half of that income tax revenue to communities. Because of the impressive expansion of Intel and other industries in Washington County, the Gain Share money would have ballooned to $56 million in Washington County for the next two-year period up from just a few million at present. But Gov. John Kitzhabers budget for the coming biennium ignores the existing program and proposes only returning $12 million to Washington County jurisdictions over the two-year period.
The governor left it up to the Legislature to figure out how to either increase that amount or fight it out with local communities.
We disagree with Kitzhabers approach, but also recognize the state has revenue needs, just as local jurisdictions do. State Sen. Ginny Burdick, who chairs the Senate Finance and Revenue Committee, also wants to see the Gain Share program scaled back, allowing the state to keep more of the new income tax revenue for priorities such as K-12 education.
Burdicks district includes portions of Washington County, so she at least has a greater awareness of local concerns. We encourage Burdick and other local legislators to work with county officials to design a compromise thats more equitable than the token amount offered by Kitzhaber.
To put this in perspective, due to the Strategic Investment Program, Intel alone saved more than $62 million in property taxes in 2012 but it also saved or created 7,701 jobs in western Washington County with a payroll approaching $1 billion.
This type of investment and these kinds of jobs are good for local communities, good for the state and essential to Oregons future economic prospects. The Legislature should be wary of any action that discourages local communities from doing all they can to attract such investments.Add a comment