Business Tax Credit Incentives

"What does it cost us to buy a green job?"
[Op-Ed from Tax Fairness Oregon appearing in the Oregonian, July 17, 2008]

The Oregonian's front page story that Gov. Ted Kulongoski is proposing a range of activities to keep the state's economy moving and green was welcome news ("Kulongoski sees jobs in 'green,'" July 8). Government has a responsibility to respond to social and economic needs, and we're all hoping for a convergence of the two with "green jobs."

But the term "green jobs" is being bandied about without any clear definition of what a good green job is, how long it will last and how much taxpayers should kick in to bring such jobs to Oregon. Tax credits without performance criteria might end up costing us an exorbitant amount per job.

Look, for example, at Oregon's generous business energy tax credit. It will pay for 50 percent of the cost of a new facility, with a cap of $22 million per facility. But that doesn't mean a business will get no more than $22 million. A single business can build any number of facilities. And there is no minimum number of jobs that must be delivered for each $22 million. Should it be five, 50 or 500 jobs per $22 million?

As the story noted, Oregon's tax credits for renewable energy are the most generous in the country. Here's an example: If a company installs a $22 million wind farm in eastern Oregon, we taxpayers will generously give the company $11 million. And what will taxpayers get for that investment? Will the state own half the facility? No. Will we get a price break on its wind-generated electricity? No. Will we get taxes from the business? Maybe, but not if it sells all of its energy out of state because Oregon taxes only the profits made from in-state sales.

So what are we getting for our $11 million? We can proudly say we're attracting wind energy to Oregon, and that's symbolic. And we'll get some jobs. But how many jobs and with what pay and benefits? Currently, there are no requirements. We get what the company delivers. Neither the governor nor the Legislature seems to be asking if taxpayers are paying $20,000, $200,000 or $1 million or more per job.

Illinois has begun requiring disclosure of what jobs are created for the dollars invested in economic development. By studying its Web site (www.corpacctportal.illinois.gov/) we learn that the state gave Del Monte Corp. $2 million. Del Monte delivered 14 new jobs paying $38,000 a year, and retained the employees it already had. But $2 million for 14 jobs means the state paid the total salaries for those new employees for more than three and a half years. Is that a good investment? Just how much should the state pay to bring in a new job? With disclosure, Illinois' citizens and Legislature will have the evidence they need to evaluate if they want to continue making such investments.

Oregon needs to follow suit and require disclosure of what our tax expenditures and other subsidies create in the way of jobs and benefits. In 2007 state Sen. Vicki Walker, D-Eugene, introduced legislation modeled on the Illinois law. Unfortunately, economic development interests and others who like the current unaccountable system worked to water it down and the bill died in the Ways & Means Committee. The 2009 Legislature should take up the issue again.

We need to answer for ourselves how much per job we're willing to invest and to question if green automatically means good.