The View from Hillsboro - Advocating for Public Schools

Intel's new Strategic Investment Program

Last Wednesday, Intel announced that it will request Washington County to discuss a new Strategic Investment Program (SIP). In 1999 the county agreed to a tax incentive specifically for Intel that would pretty much eliminate property taxes for all the equipment in the Intel manufacturing fabs in Oregon, limiting the property taxes to the land and building. On the county web site there is a page on the 1999 SIP that seems to be rather biased in Intel's favor. It shows how much more Intel would pay in property taxes on its land and buildings, but it does not mention (at least not directly) the fact that over the 10 year period of the agreement Intel would receive an estimated 70 million of tax reduction on the equipment.

The press release issued by Intel last week shows that the company only invested 7 billion of the 12.5 billion originally planned. The new program promises 25 billion in investments through the end of the next decade.

Is it worth it? If we continue with inadequate funding for education, safety, and a number of basic services, in a decade we won't have the educated workforce necessary to operate the advanced equipment in the new fabs, and people won't be interested in moving to our community to live and work here.

The city of Hillsboro will be in the red this year and next, mainly because of the limited revenue coming from the high tech companies. Oregon is already the most business-friendly of all the western states, and the percentage of state revenue coming from business has declined dramatically since measure 5. It is time for businesses to do their share.

I worked as an engineer and as a department manager in the semiconductor industry for many years. High tech companies will fight tooth and nail to get even a fraction of one percent in savings. But the truth is that the tax incentives are only a small part of the decision on where to start a new fab. A company I worked for invested hundreds of millions in a development manufacturing line in the Bay Area in the late 1990s, even though the labor costs were high, property taxes were high, and earthquake safety requirements were extremely expensive. A big reason for the choice was that there was an existing base of highly skilled workers in the area.

If we keep "bribing" companies to create jobs here, we will reach a point where they will not have a reason to invest here, regardless of the amount of the tax incentives. Let's think about it.

posted by Unknown @ 7:53 AM