All Right! Corporate Kicker Reform Pays Off

As much as $43 million possibly headed to schools due to Measure 85

When it comes to protecting our schools, it’s clear that elections matter.

In 2012, a large coalition of organizations came together to reform the corporate kicker tax law. The coalition gathered signatures to put Measure 85 on the ballot, which changed the law so that when the corporate kicker refund was triggered, the money would go to our K-12 classrooms, rather than the out-of-state corporations who got most of the kicker refund.

Bring Back P.E.Education advocates and other backers—including Our Oregon—argued that it was a bad idea to send tax revenues to profitable corporations while our schools were still suffering due to a lack of funding.

Oregon voters agreed: Measure 85 passed by a wide margin of 60% to 40%.

Well, yesterday, state economists released their latest Revenue Forecast, projecting that the corporate kicker could very well kick to the tune of $43 million.

Prior to Measure 85, those tens of millions of dollars would have largely gone to the out-of-state headquarters of some very large corporations. But under Measure 85, if there is in fact a corporate kicker triggered, that $43 million will go to Oregon’s K-12 schools instead.

That will come as wonderful news to parents, teachers, and students, who are still facing overcrowded classrooms and one of the shortest school years in the country.

Supporters of the Corporate Kicker for K-12 campaign should take a moment to celebrate. Our victory is a clear example of the power of grassroots campaigns to make Oregon a better place to live.

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Let’s Fix the Way We Give Away Tax Breaks to Big Corporations

Tuesday night, the Washington County Commission and the Hillsboro City Council approved a 30-year, $2 billion tax break for Intel in exchange for the company agreeing to bring $100 billion in new investment to the state.

Intel Tax Break HearingIt was the largest deal of its kind in Oregon history, and it hopefully means keeping thousands of Intel jobs here for years to come.

But the deal could’ve been better for our community, and there still are things we can and should do to make this deal and others like it better for our schools and for the working families who will hopefully get these jobs in the future.

Here are four simple things we should do right away to improve the process going forward:

1. Make the whole process more transparent and give the community a greater role.

In general, the public should have a greater opportunity to participate in these discussions. Tuesday night’s public hearing was important to have, but the deal was done and no testimony had a chance to really change that. When something like a $100 billion agreement is happening to a community, we deserve the chance to really participate and shape the bargain to make sure it meets the needs of the community.

The goal should always be to make our community stronger at the end of the deal than when we started. We can meet that goal, but only if the whole community is involved.

2. Clarify the Strategic Investment Program language so that deals can only be for one investment for no more than 15 years.

The Intel deal was the first of its kind to involve multiple SIP investments in one bargain. This locks in all of the agreements for 30 years even though it will involve multiple different SIPs. This is clearly allowable under state law, but it’s not advisable. These tax breaks are massive, and the community deserves a chance to review each one to make sure that the deals are right for our community.

3. Put school money in a lock box.

This Intel SIP bargain leaves school kids empty handed. The way the deal is structured takes millions each year away from schools. If the deal treated schools fairly, classrooms would receive $4 million more per year from taxes and an additional $14-15 million more in income taxes. Instead, the bargain cuts out nearly $20 million from schools annually. Ask any parent: Our schools need those resources. We should change the rules to make sure that school kids are getting their fair share when any tax deal is struck.

4. End Gain Share.

Tuesday night’s testimony reminded me that one thing is definitely true: It’s time to end the controversial Gain Share program. Gain Share takes income dollars from the state budget and gives them to local governments that sign tax break deals. The idea is to replace dollars at the local level for needed infrastructure, but there often is no need. At the hearing Tuesday night, a number of commissioners made it clear that because this Intel agreement promises no new jobs, there were no new infrastructure needs. That’s why, they argued, schools were cut out.

If there’s no new infrastructure, then there should be no need for Gain Share. This program cost school kids, public safety, and health care services nearly $40 million in 2013-14, and the costs with this new deal are only going up.

The good news is that even though this deal is done, we can change the tax break laws we have now so the impact of this deal and others are muted right away. Gain Share isn’t a permanent program; the Legislature can change it. We can pass a law to protect school dollars right away, and it will be effective immediately, even on this Intel deal. We can add in more community involvement in the decision-making right now, and it will also apply for the investments Intel plans to make in the future.

This Intel SIP bargain is a good wake up call: We need to act now to build our community for the future.

2 Responses to “Let’s Fix the Way We Give Away Tax Breaks to Big Corporations”

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ACTION ALERT: Make the Intel Deal Work for the Entire Community

This Tuesday, the Washington County Commission and the Hillsboro City Council will vote on a 30-year tax break deal for Intel. It’s a big commitment for a lot of jobs for our community for a long time; it’s also a $2 billion tax break on a $100 billion investment. This is a massive arrangement that demands scrutiny to make sure it meets a basic standard—that it leaves Oregon stronger in 30 years than we are today.

Intel’s agreement requires it to pay taxes and fees on all of its property and buildings. That should be good news for our community and especially our schools. But, because of the way the deal was made, Intel pays fees and taxes but schools get less than their fair share. Each year under this deal, our schools lose $4.2 million more a year than they can afford. What’s worse, because this deal includes a controversial state program called Gain Share, the costs to kids go up another $14-$15 million.

If we simply changed the way this deal is structured, Intel could pay the same amount but we could get almost $19 million a year to classrooms around the state.

[Email the commission now and ask for a better deal for schools]

The true test of a good deal is whether both sides—the company and the community—are better after the deal than before it. If we keep cutting school kids out, Oregon can’t benefit the way we should.

Improving schools is one part of the challenge, but there are some long-term changes that need to happen to the way tax deals get made.

First, this deal is for 30 years. That’s a long time, especially in the high tech industry. Originally, there was a cap on these sorts of deals of 15 years—the Commission and the Council should restore that cap so each tax break agreement has the public scrutiny it deserves.

Moreover, we deserve more time. The details of this deal were largely hammered out without any input from the public. Worse, a vote on this massive tax break is scheduled to happen as early as this Tuesday, before the public has had a chance to examine and evaluate its impacts on the county and our schools.

Oregon already has the third largest class sizes in the country and Washington County schools are struggling more than most. A tax break of this size must be written in a way that protects our schools and our communities from further harm.

A lot of work needs to be done to make sure that this new $2 billion tax break doesn’t harm our schools even further. Please take a minute to email the Washington County Commissioners and urge them to:

• Give the community more time and more transparency to examine this tax deal. Commissioners and councilors should postpone their vote until we’ve had a chance to examine all the facts. There’s no need to rush into this.

Cut the length of the tax break to 15 years. Three decades is an unreasonable length of time for a tax break this large. We should be able to reevaluate it after 15 years.

Ensure that schools get a fair deal. Without the right safeguards in place, local schools could lose out on millions of dollars in critical funding.

Go here now to send the commission an email and ask for a deal that works for everyone.

7 Responses to “ACTION ALERT: Make the Intel Deal Work for the Entire Community”

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