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Counties get less, education programs more, from income taxes generated by investment.



Proposed changes would give Washington County less — and state education programs more — from the income taxes generated by large-scale investments such as Intel and Genentech in Hillsboro.

But supporters, including key lawmakers, say that the Legislature should extend the Gain Share program that allows the state budget to offset property tax breaks granted by counties for multimillion-dollar projects.

“Gain Share was a clear recognition of the role local governments play in the economic development of our state,” Sen. Richard Devlin, D-Tualatin, said Wednesday. “They should somewhat share in the revenue that comes from that economic development.”

Devlin led a group of five lawmakers who presented a negotiated proposal to the Senate Finance and Revenue Committee, which last week heard three bills to scale back direct payments to Washington County. Chairman Mark Hass, D-Beaverton, says his plan is to advance a reworked version of Senate Bill 129 to the Legislature’s joint budget committee — of which Devlin is the Senate co-chairman.

The proposal would extend Gain Share 10 years beyond its scheduled end in 2019.

But instead of the current 50-50 split between the state general fund and Washington County of income taxes generated by the new jobs from such investments, the proposal would result in an 80-20 split.

The state general fund would keep its current share, estimated at $95 million in the next two-year budget cycle.

But of the other half, part would go into the state school fund, and smaller but equal shares into state grants for career and technical education programs at middle and high schools, and statewide services provided through Oregon State University. They are the Extension Service, which reaches into every county; agricultural experiment stations and the Forest Research Laboratory.

The rest would go to Washington County, which would share its amount with schools and other local governments.

Under the new split, Washington County and local governments within it would share $38 million; the state school fund, $28.5 million; OSU services and career education, $14.25 million each.

The changes are in response to Washington County receiving 99 percent of the nearly $75 million paid out during the first three years of Gain Share.

If lawmakers do not act, Washington County stands to get $94.2 million of the $94.9 million in state funds in the next two-year budget cycle. The rest would be split among Clatsop County — which has the Wauna paper mill operated by Georgia-Pacific — and five Eastern Oregon counties with wind farms.

Some lawmakers have talked about taking part or all of the projected $95 million for the state school fund.

“This may have reached a reasonable compromise,” says Jim McCauley, who spoke for Washington County. “But it is still an incredibly difficult sell with my own commissioners.”

McCauley, however, says that Gain Share is a defensible program. The 2007 law builds on an earlier program that lawmakers created in 1993 to allow counties to approve property tax breaks for 15 years for minimum investments of $100 million in urban counties and $25 million in rural counties.

“The result of these investments pays off when you have an anchor such as Intel and are able to attract Genentech to the economic growth of our county,” McCauley says.

“These do benefit our county directly, but there also is an indirect benefit to the rest of the state.”

Intel, which makes semiconductors, signed its fifth investment agreement with the county last summer. Biotechnology company Genentech just announced a major expansion.

The proposal won support from Mark Clemons, Hillsboro’s economic development director, who says communities like his take risks in the public works investment required to attract investment on the scale of Intel and Genentech.

Of the five lawmakers who devised the negotiated proposal, four represent districts that take in parts of Washington County.

In addition to Devlin, they are Sen. Elizabeth Steiner Hayward, D-Beaverton, and Reps. John Davis, R-Wilsonville, and Joe Gallegos, D-Hillsboro. The fifth member was Sen. Bill Hansell, R-Athena, whose district includes five Eastern Oregon counties that get small payments from Gain Share.

Although groups that would benefit from more state funding for OSU and career education programs praised the negotiated proposal, it was opposed by the Oregon Education Association, the state’s largest teachers’ union.

Lobbyist Laurie Wimmer says that while OEA commends the attempts to direct more money to the state school fund and other education programs, “our members prefer that you end this failed experiment, rather than amend it.”

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