In 2023, the Oregon Legislature directed Business Oregon, in consultation with the Legislative Revenue Office, to conduct a study of the transparency of the state’s enterprise zone programs. The study objectives were to:
- Compare actual transparency and statutorily required transparency for agreements associated with Oregon’s standard enterprise zone program (SEZ) and long-term rural enterprise zone program (LRZ); and
- Study information that should be included in public reports of tax expenditures connected to economic development to enable evaluation of outcomes.
Business Oregon contracted with Smart Incentives to conduct the study.
As background, Oregon’s Enterprise Zone programs provide a property tax abatement for qualified new business investment in the state’s 70+ enterprise zones. Enterprise zones have been operating in the state since the 1980s.
Oregon takes transparency seriously. There are many resources providing information on Oregon’s enterprise zones, including the Oregon Open Data Portal, Department of Revenue (DOR) Tax Expenditure Report, Business Oregon enterprise zone and incentive report web pages, and individual county assessor reports, among others. In practice, Business Oregon has taken the lead on enterprise zone transparency, including reporting on the Standard Enterprise Zone on the Open Data Portal. Business Oregon shares substantial information on many of its incentive programs, and its SEZ reporting is well-regarded.
The Enterprise Zone Transparency Study is primarily devoted to answering specific questions raised by Oregon legislators about the state’s program. We invite you to read the full report. In the meantime, here are a few takeaways that are relevant to incentive transparency practices across the board.
Evolving interest in agreement transparency: Since we started Smart Incentives, the discussion has moved from making approved agreements publicly available to a desire to see details of agreements prior to approval so that the public and other stakeholders have a chance to weigh in. Interest is typically strongest with major projects, and right now concerns about incentives for massive data centers are front and center. Good Jobs First added “advance notice and public participation” to its incentive transparency report cards in 2022. We expect to see ongoing conversation about who gets to know what and when regarding big project incentive deals that have significant community impact.
Need for better access to tax data: Incentive transparency requirements often fall to economic development organizations even when they do not manage all aspects of the incentive program. Too often, though, economic development groups lack access to the data needed to fulfill the mandate. For example, state tax or revenue agencies usually have pertinent data for tax credits but they are hindered by statute, practice, or lack of resources (or all of the above) from making that information available for incentive reporting. State agencies can negotiate MOUs to share data, but it often takes specific legislative language to clarify how tax data relevant to incentive use can be made available for transparency and reporting purposes. We see this as a huge gap that needs to be addressed if we are serious about incentive transparency.
Value of plain language reporting. Oregon performs quite well in state rankings on incentive transparency. Enterprise zone data is available from multiple state and local sources. Our research indicated, however, that many people are not aware of these resources. Further, state and local interviewees consistently expressed a preference for plain language resources rather than “just putting numbers out there” or “bureaucratic bundles of information.” Project-level transparency is certainly important, but stakeholders are also seeking greater understanding of program costs and benefits. Summary reports or evaluations conducted every few years might help policymakers, stakeholders, and residents better understand how well programs perform.
Transparency is not free. Transparency and reporting requirements take time, technology, and talent. Across the country, as demands for incentive transparency have increased, resources to collect, manage and report data have not. Collecting and making available high-quality, project-specific data for incentive programs remains a challenge for resource-strapped economic development organizations. Going a step further, pulling together project-level data to provide not just transparency but accountability requires additional resources to determine how well incentive programs are working. In this study we provided estimates of the resources that would be needed to implement any suggested changes or expansions to current transparency practices.
We thoroughly enjoyed working with the Oregon team on this study and are pleased to add to the conversation about how to continue to improve incentive transparency and accountability.
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