Image provided by: University of Oregon Libraries; Eugene, OR
About The nugget. (Sisters, Or.) 1994-current | View Entire Issue (Dec. 28, 2016)
14 Wednesday, December 28, 2016 The Nugget Newspaper, Sisters, Oregon Audit tackles Oregon’s incentive programs for businesses By Saul Hubbard The Register-Guard EUGENE (AP) — Oregon should work to ensure bet- ter return on investment and transparency in the $340 mil- lion a year in tax breaks and cash incentives it provides to businesses, a new audit from the Secretary of State’s office concludes. The audit, released Monday, examines Business Oregon, the state’s economic development agency, and the incentives it provides directly to private companies. Those sweeteners — including forgivable and low-interest loans, tax credits, and direct cash assistance — total $72.5 million a year. But the review also exam- ined property tax waivers granted by local governments through state-approved enter- prise zones and the Strategic Investment Program. Those add up to $267.5 million a year in waived property taxes throughout Oregon. Technology firm Intel is the biggest recipient with $162.5 million a year in tax breaks from Washington and Multnomah counties. Lane County currently has several enterprise zones, which provide property tax waivers to a wide range of companies. Hynix, which shut its West Eugene plant in 2008, was the county’s larg- est recipient of property tax breaks: $65 million over ten years. “It is critical that Business Oregon and other state agen- cies regularly evaluate and improve their business sub- sidy programs to make the best use of limited public resources,” Secretary of State Jeanne Atkins said, in a pre- pared statement. “Taxpayers should expect nothing less.” Generally, the audit found that economic development officials, when they give a business an incentive, aren’t adequately monitoring and reporting the number of jobs the company creates or retains, the wages of those jobs, and the state’s overall return on investment. For example, analyzing 231 direct Business Oregon incentives between 2011 and 2012, the audit found that most went to firms where wages were lower, on aver- age, than those in the sur- rounding county as a whole. The audit also found that only 30 percent of Business Oregon incentives between 2006 and 2015 went to firms in rural areas, even though urban areas “already have faster employment growth.” Regarding the enterprise zones created by local gov- ernments, the audit found that the standard zones appear to be working better than the long-term rural zones, which provide a longer tax break. In 2015, each new job in a long-term rural enterprise zone cost $55,000 in waived property taxes, versus $4,200 per job in standard zones. Data storage centers, which tech giants like Apple, Facebook, and Google have built in Oregon in recent years, have been particularly costly in terms of job cre- ation, the audit found. Data centers’ combination of high investment in equipment — meaning potentially high property taxes — and few workers needed to maintain them, meant that each job they created cost $87,000 to nearly $800,000 in lost prop- erty taxes in 2015. The audit also concludes that, despite some recent improvements, there is still a lack of transparency in the different tax breaks and other incentives that the state and local governments provide. For example, some sub- sidy programs don’t pub- licly disclose what require- ments — like a set number of created jobs or investment in a facility — businesses must comply with in order to receive their incentive. Others don’t provide details on whether a recepient ulti- mately complied with those requirements or not. “Both Business Oregon and the (Oregon) Department of Revenue tend to be con- servative about releasing business information,” the audit states, because releas- ing more information “could compromise projects ... and reduce demand for the incen- tive and loan programs.” But auditors wrote that interviews with officials in other states where more disclosure is required hadn’t found that to be the case. “Transparency promotes accountability for public dol- lars by spelling out the cost and performance of indi- vidual projects and giving policymakers and the public information about how funds are being used,” auditors wrote. The audit also highlighted some issues with what is known as the Strategic Reserve Fund, a pot of money distributed as “forgivable” loans at the governor’s dis- cretion. The fund allocates roughly $7.5 million a year. All 11 projects proposed for funding received money in 2015, even though some firms offered “low projected returns” and others had received poor grades from finance staff who had exam- ined their histories, the audit found. While reviewing seven l arg e f o r g i v a b l e l o a n s between 2008 and 2015, auditors found that Business Oregon staff, when doing their cost-benefit analysis, neglected to include other Oregon tax breaks or incen- tives that the companies were also receiving. “This approach under- states the cost to Oregonians and may overstate the project’s benefit,” auditors wrote. Business Oregon Director Chris Harder wrote that his agency “generally agrees with the audit recommen- dations” for remedying the issues identified. However, Harder wrote that Business Oregon staff “disagree” the value of incentives should be “mea- sured exclusively” by how many jobs they create and how high their wages are. As to increased transpar- ency, Harder wrote that he is committed “to exploring ways to balance the public’s right to know” with busi- nesses’ right to privacy. “Businesses are often reluctant to make their finan- cial information and tax records public, fearing that it will create a competitive disadvantage for them,” he wrote. Atkins noted that Oregon’s economic develop- ment spending “is low com- pared to some other states, and competition for state dol- lars is high.” “This increases the urgency of the need to be more strategic and transpar- ent about the use of business incentives and loans,” she said. FREE T-SHIRT! With any $ 25 purchase HAND-FORGED SCREEN DOORS (Offers valid through 12-31-16) Custom-made to fi t your fi replace. Come see our fi replace showroom! Stocked with everything you need for your fi replace: Custom hand-forged screens; andirons; grates; and tools. Or visit us at www.ponderosaforge.com. 541-549-9280 • Sisters Industrial Park • CCB# 87640 541-549-2059 216 W. Cascade Ave. Jump Start New Year’s Changes Behavioral/Habits Diet • Sleep Productivity MEANINGFUL MEDICINE New Year’s Eve Dinner Come and share a delightful meal with your family, and let us do all the work! Bacon-Wrapped Shrimp and Pineapple uilet Mignon with Creamy Mushroom Pepper Sauce Smoked Gouda Macaroni and Cheese Bake Garlic and Pearl Onion Sautéed Asparagus Year-End Splurge Trifl e (peanut butt er banana pudding, bacon and waffl e cookies) Dinner will be served at 5 p.m. | $33 Kids 4 and under eat fr ee, kids 5-12 are $15. Kim Hapke, Naturopath Reservations Required by 5 p.m. December 30 971-409-0908 Call 541.516.3030 | lakecreeklodge.com Sisters Art Works Building Storewide After Christmas Sale! Now thru Monday, January 2 UP TO 60% OFF (Some restrictions apply) Common Threads • Town Square 541-549-5648