Legislature looks at enterprise zones

By Oregon Business and Industry

The Senate Committee on Finance and Revenue heard a pair of bills Feb. 6 that would keep key enterprise zone programs alive until at least 2032. Senate Bill 134 would extend the state’s primary enterprise zone program, and Senate Bill 135 would extend Oregon’s rural enterprise zone tax exemption.

Sponsored by cities, ports, counties and other local governments, enterprise zones encourage business investment by abating local property taxes for a certain number of years. Long-term rural enterprise zones allow property taxes to be abated for up to 15 years. Standard enterprise zones allow taxes to be abated for up to five years.

Enterprise zones are critical economic development tools, as Scott Bruun, OBI’s director of tax, fiscal and manufacturing policy, explained Feb. 6. By providing short-term property tax relief, enterprise zones have allowed many small businesses to gain traction and grow. Their growth has helped not only the businesses themselves, but also their employees and their communities. They’ve also helped generate plenty of tax revenue. Property tax abatement is only temporary, after all. And both the businesses and their employees pay other taxes, including income taxes.

Enterprise zones are particularly important in Oregon. The program is one of the few tools available to local governments to offset Oregon’s skyrocketing business tax burden. Since 2019, according to national accounting firm Erst & Young, Oregon has seen a 52% increase in business taxes collected; an additional 32% increase taxes for businesses in the Portland metro area; and a 29% increase in the state’s combined state and local effective business tax burden. This burden reflects business taxes as a share of total state domestic product.

Oregon competes with many other states for business investment but lacks the tax-credit programs many of them offer. These include equipment and capital expenditure tax credit programs, wage and training credit programs, research and development tax credit programs and many more. Meanwhile, few competitor states impose the regulatory and land-use burdens for which Oregon has become known.

Oregon needs to address all of these things, and to that end OBI’s Growth and Innovation Roadmap has dozens of recommendations. In the meantime, it would be a mistake to create an additional competitive disadvantage by allowing the state’s enterprise zone programs to expire.

Read Scott Bruun’s full testimony on SB 134 here and on SB 135 here.


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