A Critical Tool in Building our Future
by E. Walter Van Valkenburg and Nancy Floyd, Guest opinion
Originally Published in The Oregonian, January 13, 2009
What does it take for Oregon to attract and retain family-wage jobs in today's economy? The answer is that it takes a combination of skilled workers, sound infrastructure and a tax and regulatory environment that allows Oregon to compete with other states and countries in recruiting the companies that offer those jobs.
A recent news story in The Oregonian missed that last point. The story purported to examine Oregon's business energy tax credit program -- BETC (pronounced like Betsy) -- which provides tax credits to companies that invest in energy conservation, recycling, renewable energy resources and less-polluting fuels. The story left the impression that the program is a waste of tax dollars, granting tax benefits to companies that produce no benefit for Oregonians.
Those who are on the front lines of recruiting companies to locate and expand in Oregon beg to differ. In the past several years, BETC incentives have been a crucial tool for enabling Oregon to attract companies in the burgeoning renewable energy sector. In solar energy alone, more than half a dozen companies have invested an estimated $1.745 billion in Oregon manufacturing facilities. These companies in turn are projected to employ 2,275 by 2011 at wages well above the state's median.
If you ask these companies why they chose Oregon over the many other states that recruited them, they'll tell you that BETC, in addition to our work force and our green culture, is critical in making Oregon competitive with larger states offering even more generous incentives.
Incentives such as BETC are a form of investment in Oregon's future. Like any investment, there's potential risk and reward. Although we can't know with certainty what return we'll achieve with each investment, the early returns are encouraging. A 2006 study by ECONorthwest, an independent economics firm, reported that $60.8 million in BETC credits resulted in a net economic impact of $72.5 million and 670 new jobs in just one year.
Indeed, the greatest danger we face in a smaller state such as Oregon is hiding our heads in the sand and ignoring what the competition is doing. For example, notwithstanding our BETC program, a solar manufacturer recently bypassed Oregon to invest $500 million and create an estimated 1,500 jobs in New Mexico. In its exit interview with state officials, the company praised our work force and quality of life, but chose New Mexico based on lower land costs, 15-year property tax abatements and $4 million in tax credits.
It's naive to assume that companies will locate in Oregon simply because we have a well-educated work force and a beautiful environment.
Attracting and retaining such employers is crucial to Oregon's future. The jobs they create generate tax revenues to fund crucial services, including health care, education and public safety. They also provide Oregonians with quality jobs and benefits that lessen the social and economic strains created by unemployment and underemployment.
Oregon has positioned itself as a national leader in promoting sustainable industries and a sustainable economy. It's an area in which Oregon has a competitive advantage, and the business energy tax credit program is a significant component of that advantage. At a time when the economy is under siege and many Oregonians are in need of jobs, we can't afford to lose any part of that competitive edge.
E. Walter Van Valkenburg is managing partner of Stoel Rives' Portland office and chairman of the Oregon Economic and Community Development Commission. Nancy Floyd is president of the venture capital firm Nth Power and a member of the commission.
Link to article on OregonLive.com