The Intel SIP deal is a terrible deal for taxpayers

By Jody Wiser of Portland, Oregon. Jody is an advocate for progressive tax policy at Tax Fairness Oregon.

What kind of a water cooler is Blue Oregon, that no one has brought up Intel’s SIP deal?

Intel has asked for, and may well get their second dose of 30 year “tax certainty.” Following Nike’s lead, last December Intel got their Oregon income taxes sealed at pretty much nothing for 30 years. Next they decided to out-bargain the Washington County Commissioners and the Hillsboro City Council on getting the same low property taxes they’ve had for the last 20 years….with no cost of living adjustments since 1993. And while prior Intel deals have been good for 15 years, this time they want 30 years, with certainty about taxes on up to $100 billion in investments.

Tuesday in the Washington County Commission’s and the Hillsboro City Council’s open comment periods a few of us raised concerns about the Intel SIP “deal.”

Next Tuesday evening, after but 15 days, and immediately after the mandated one public hearing, the two groups of electeds will vote. They are set to make a 30-year commitment to Intel. They’ve provided no answers to why 30 years or why $100 billion of investments? $100 billion is 4 times what they’ve invested to date.

Mind you, Intel isn’t promising to invest $100 billion and to keep at least 17,500 Oregon employees for the next 30 years, in fact they aren’t promising anything with the agreement. But were Intel making those two promises, it still wouldn’t be a fair deal.

Why? Because none of the base numbers for taxes and fees have been increased for inflation -- since 1993. Intel says they need a $100 billion deal because their equipment costs are rising.

Well, costs have and will continue to rise for public services as well.

We recommend three changes to get to a fair agreement:

1. Adjust all figures in the agreement for inflation and include annual CPI increases once signed. The amount Intel will pay will go up at least 75% from the current proposal.
2. The $100 m property tax base, when CPI adjusted from 1993 becomes $175 m today.
3. The $2 m Community Service Fee increases to $3.3 m, and rising annually
4. The $2 m cap on the Community Service fee would be increased to $3.3 m rising annually.
5. The $2.87 m Guaranteed Annual Payment adjusted from 1999 to 2014 and becomes $4.11 m.
6. Reduce the dollar value of the agreement to no more than $25 billion of investments. That effectively gives Intel $43.5 billion of additional “investment certainty,” since $18.5b of the current $25b agreement remains unused.
7. Reduce the number of years the agreement can be utilized to the next 10 years.

These are the kinds of changes we believe the Commission and City Council should be thinking about…and for more than 15 summer days.

Aug. 21, 2014 Posted in guest column.