The Scarlet Letter
‘A’ is for accountability
BY SEN. VICKI WALKER
Imagine being handed a check from the state of Oregon for hundreds of thousands of dollars that provides tax incentives to your business to either locate here or expand your current operations. Imagine further that the money comes with relatively few strings attached: If you’re in an enterprise zone, you only have to increase employment by 10 percent and invest $50,000 in buildings or equipment; if you’re in the free-for-all-world of economic development, your check is a ticket to unfettered, unencumbered spending that promises little in the way of jobs or economic development. And if you’re wondering who pays for it all, take a look in the mirror.
The Oregon Legislature long ago bought into the theory that tax breaks — or tax expenditures as they’re known in the tax code — are good for the economy. According to the 2005-2007 State of Oregon Tax Expenditure Report, the most recent count lists 352 tax breaks: 120 relate to property taxes, 195 to personal and corporate income taxes and 37 to other state tax programs. Many of these are benefits provided to the less fortunate among us or are opportunities for citizens to do good things and benefit society as a whole. We have tax credits for alternative energy production, energy efficient appliances, hybrid automobiles, health care expenses, child care and dependent care expenses and affordable housing, to name just a few.
These types of credits are easy to track and to hold people and business entities accountable for. Where we get into trouble is when we write checks to large corporations and businesses under the guise of economic development, holding press conferences about all the great jobs we’re providing to the state and then not following through on ensuring they have met their commitments.
According to the Oregon Revenue Coalition, a broad-based group of organizations concerned about such things, Oregon now gives away more in tax breaks than we collect in taxes. In fact, tax breaks are actually growing faster than revenues, a trend the 2007 Legislature is on track to continue. There seems to be no consistent policy analysis that is used to assess these “great and wonderful” giveaways of your tax dollars, particularly as they relate to corporate interests — until now.
Enter SB 518, a bill I modeled after the Illinois Corporate Accountability in Tax Expenditures Act that Gov. Rod Blagojevich happily signed into law in 2003. The bill will provide an annual unified development report listing all state aid, tax expenditures and giveaways under our development assistance programs. All state subsidized corporations must file a report, and all the detailed information about salary levels, number of jobs provided, health care benefits and other information is available to you, the taxpayer, on the Internet.
The pinnacle of the bill, however, is this: Corporations that default or fail to meet their job projections must repay all state subsidies received during the year of the default. You might not be surprised to learn that many of the promised jobs were low-wage jobs without benefits or that companies would promise jobs at one wage level and then cut salaries at another.
And you might not be surprised to learn that the business community is all-atwitter about SB 518. According to a Portland Business Journal story Feb. 9, Senate Republican leader Ted Ferrioli went so far as to call my bill passive-aggressive behavior, saying it would cause “the beneficiary of the tax benefit to wear a scarlet letter that brands themselves as guilty.”
Maybe so, Sen. Ferrioli, but quite frankly, I don’t give a damn. If a business takes our money — whether it be in taxes or lottery dollars — that business should be accountable for how they spend it, because in my book “A” is for Accountability.
It’s time that Oregon join at least 10 other states with similar laws that ask business to show us the money. And if they’re worried about SB 518, what will they think of SB 783, my bill that brings accountability and responsibility to state enterprise zones? Quick, grab the defibrillator — I think their hearts have gone atwitter again. Until then, I’ll see you on the front lines — I’m having too much fun!
Vicki L. Walker of Eugene is a state senator representing District 7.