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Editorial: State shouldn't punish success

Washington County’s 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.

At issue is the state’s 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 quite logical: 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 new companies. Yet, they also have agreed, with this particular program, to establish Strategic Investment Zones where a portion of a new or expanding company’s 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 don’t 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 Kitzhaber’s 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 Kitzhaber’s 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 things such as K-12 education.

Burdick’s district includes portions of Washington County, so she at least has a greater awareness of local concerns. We encourage her and other legislators to work with county officials to design a compromise that’s 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 near Hillsboro 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 Oregon’s future economic prospects. The Legislature should be wary of any action that discourages local communities from doing all they can to attract such investments.




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