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State poised to pay Washington County

$37.8 million helps offset property tax breaks for Intel, Genentech


Washington County stands to gain $37.8 million from the state to offset part of the property tax breaks it granted to Intel and Genentech for investment in Hillsboro plants.

Lawmakers are poised to approve the payment, plus $300,000 to be shared by six other counties, when the Legislative Emergency Board meets in Salem this week. The 20-member board makes budget decisions when the full Legislature is not in session.

Washington County received its first payment of $11.8 million 18 months ago from the Strategic Investment Program, which enables counties to approve property tax breaks for 15 years to attract new businesses or encourage their expansion.

Although the program was created in 1993, lawmakers decided in 2007 to allow the state general fund to help counties offset part of their property tax losses. The payments are based on half the estimated income taxes generated by new employees, as calculated by the Oregon Business Development Department from information supplied by the businesses.

Washington County says it has benefited from $4.4 billion in investments by Intel and $250 million by Genentech under current agreements. Intel has had four agreements, dating back to 1994; Genentech’s dates back to 2006. The county applies the tax break to new equipment, not land or buildings. The law requires property taxes on the first $100 million of investment in most areas, and $25 million in designated “rural” areas.

“Local governments with SIP agreements elsewhere in Oregon have foregone property taxes — at a smaller scale — to successfully recruit employers in industries such as paper product manufacturing and wind power generation,” said Andy Duyck, Washington County board chairman, in a 2013 statement.

The latest request is recommended by the executive and legislative budget staffs.

But the program, particularly the state payments to counties known as Gain Share, has its critics.

“As the local government gives away the property tax break, the state loses money because it has to make it up in funding for education,” said Chuck Sheketoff, executive director of the Oregon Center for Public Policy, a think tank based in Silverton. “It wrongly assumes that but for the program, this (investment) activity would not occur in the counties. You have to look at all the other subsidies these companies get.”

Some lawmakers have suggested paring the payments, which will end in 2019.

Based on documents that the Oregon Business Development Department released in 2013 after an order by then-Deputy Attorney General Mary Williams, Intel saved an estimated $50 million in property taxes in 2011, and $63 million in 2012, based on 6,629 and 7,701 employees in those years. Genentech saved $3.8 million in property taxes in 2012, the only year it was required to report, based on 324 employees.

The documents were released after a public-records request by the Oregon State Public Interest Research Group, which said more than $1 billion has been spent on corporate tax subsidies since 2009 and another $665 million in the current two-year period.

“Regardless of whether that information may qualify as ‘trade secrets,’ we conclude that there is a strong public interest in its disclosure here,” said the Department of Justice order. “The incentives represent a sizable public investment in that outcome, and the public has a correspondingly sizable interest in ascertaining the extent to which its investment is paying off.”



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