Business Oregon is using its recent Strategic Assessment of Incentives (SAI) in considering how to advance the state’s economic objectives and get ahead of the incentive policy curve.

Smart Incentives worked with Business Oregon to evaluate an existing set of incentive programs primarily in relation to five priorities in the current strategic plan. The property tax exemptions, income tax reduction, and forgivable loan programs under consideration were designed during different economic eras, prompting questions about their fit with objectives to: 

  1. Innovate Oregon’s economy
  2. Grow small and middle-market companies
  3. Cultivate rural economic stability
  4. Advance economic opportunity for underrepresented people
  5. Ensure and inclusive, transparent and fiscally healthy agency

The analysis indicated that many of the state’s business development incentives either do or have the practical potential to support Oregon’s present-day economic development priorities. For example, the state’s enterprise zone property tax exemptions support efforts to grow Oregon’s homegrown and small and medium-sized companies. And the analysis confirmed that nearly all the incentive programs are intended to facilitate investment in rural Oregon, with features that favor rural areas. 

In some cases, additional data is needed to better understand linkages between programs and priorities. For example, all the incentive programs have the potential to advance economic opportunity for underrepresented people, but it is virtually unknown whether they are doing so. The SAI identified multiple options for collecting and analyzing quality data to help determine the extent to which incentivized projects are advancing opportunity equitably. 

Despite these findings, interviews revealed that the incentives are still perceived by stakeholders as a poor match with priorities. As such, the recommendations propose several options to demonstrate how the incentives are used strategically to benefit Oregon businesses, residents and communities. When asked what information they would most like to have about incentive programs that is not currently available, stakeholders frequently responded that they would like to see more long-term metrics or insights of how incentive programs have helped Oregon and affected its residents and communities over time. Internal and external stakeholders also expressed interest in developing a stronger understanding of how the incentives can be used both generally and individually to advance state or local economic development. The SAI offers new approaches to communication with both businesses and economic development partners.

Interviews and other research found that Business Oregon had accomplished a great deal in making transactional data accurate and available for basic transparency, but that such efforts needed to be consolidated as part of more permanent systems.

The SAI findings also indicated that the state should prepare to adapt its incentives toolkit to a changing economic and competitive environment. While Oregon’s business development incentives have largely stayed the same in recent years, other states have been regularly revising their incentive program offerings. Since many states target the same industries as Oregon, the state may wish to adapt its incentive toolkit to recognize the new setting in which its economic development activities are taking place. 

The research and findings from the SAI are expected to be a critical input as the agency embarks on development of its next phase of strategic planning. 

Business Oregon’s Strategic Assessment of Incentives represents an industry best practice. Using incentives judiciously to support well-defined economic development objectives is a fundamental Smart Incentives principle. A strategic review of the incentive portfolio provides a valuable opportunity to align programs with priorities and identify options for improving outcomes. 

For more information, please see:

Business Oregon

Business Oregon funding and incentive programs

Business Oregon Strategic Assessment of Incentives