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Statesman Journal

Business tax breaks total $626 million

State lacks way to verify effectiveness of foregone revenue
Tracy Loew

Oregon will provide at least $626 million in tax subsidies for corporations this biennium, but has no system set up to determine whether that foregone revenue is accomplishing its goals, a nonprofit advocacy group said Monday.

"Tax subsidies are created with particular policy goals intended, but for the most part we can't assess if those goals are being reached," said Jon Bartholomew, policy advocate for Oregon Public Interest Group, which released a report on the tax breaks.

The group also has compiled a searchable spreadsheet, available on its Web site, detailing the tax breaks. OSPIRG used data from the biennial state Tax Expenditure Report to create the site.

"It's good for taxpayers to see what value they are getting for their money from government," said Rep. Kim Thatcher, R-Keizer.

Thatcher has been an advocate of state transparency efforts.

Oregon offers tax subsidies for everything from business development to environmental cleanup to encouraging donations to the arts.

The controversial Business Energy Tax Credit is expected to create more than 1,800 direct manufacturing jobs to Oregon, including about 250 jobs at Sanyo in Salem, said Marc Zolton, spokesman for the state economic development organization Business Oregon.

The report also notes that corporate tax subsidies generally have much less transparency and accountability than other government spending. Much of the data in the state expenditure report was incomplete, OSPIRG said.

For example, most of the information relates to income-tax subsidies. Corporations also likely get hundreds of millions of dollars in property tax subsidies.

And the state does not identify the recipients of corporate tax subsidies nor the amount of tax dollars received. That information is protected by state law, said Lonn Hoklin, public affairs manager for the Department of Administrative Services.

According to the report:

-Half of corporate income-tax subsidies have no sunset date and are not otherwise subject to systematic review.

For example, a tax subsidy created in 1913 to encourage mining still is costing Oregon about $200,000 a year in lost revenues.

-Specific data on who receives the benefit of a tax subsidy and whether it is accomplishing a policy goal are, for the most part, not available.

-Tax subsidies are growing. The $626 million of corporate tax benefits projected for this biennium represents a 27.5 percent increase over the 2005-07 biennium. Of the 56 corporate income-tax subsidies created by the Oregon Legislature, 48 have been created since 1980.

State tax credits were in the spotlight last month during the Legislature's month-long special session.

Lawmakers voted to curtail the Business Energy Tax Credit saving the state an estimated $55 million.

"Had the BETC data been posted online for the public, press and legislators to analyze on a regular basis, the expanding costs of the system would have been noted sooner than they were and we could have saved taxpayers tens of millions of dollars," said Jody Wiser, chairwoman of Tax Fairness Oregon. "If that information was easily available, people would notice things and question them. There would be more watchdog eyes."

Several states, including Illinois, Oklahoma and Texas, provide more complete information about corporate tax subsidies, Bartholomew said.

In Minnesota, the state publishes the name of each subsidy recipient, type and amount of subsidies and number of jobs created, as well as the hourly wage and the cost of health insurance provided by the employer.

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