Is Oregon Open for Business or Not?

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Facebook Tax Dispute Sends a Bad Message to Business Development

med_Pamelas_Mug_copy55When Facebook decided to build a data center near Prineville they were promised a property tax break for 15 years with the creation of a long-term rural enterprise zone in Crook County.

Everyone rejoiced as the global company would bring badly needed jobs and worldwide attention to the struggling Prineville area where it still wrestles with high unemployment and a distressed economy.

Facebook’s state-of-the-art Prineville Data Center has created 55 non-seasonal, full-time jobs that are a mix of Facebook employees and others who provide on-site services including server repair, facility management, logistics and security. The addition of a second building is likely to raise that number to 65.  Since construction began in January 2010, more than 1,400 people have worked on the site and have been trained through the site safety program. The construction of expansion will also continue the influx of construction dollars to the area.

Now while in the middle of expanding the data center, the Oregon Department of Revenue, which claims the company is a utility, is considering making future and retroactive assessments, including reassessing the current year, on its data facilities based on their ‘intangible,’ worldwide value of the company.

A resolution to the issue is yet to be determined, but could have far reaching implications as other companies look to base their businesses in the area due to similar tax incentives.

At Roger Lee, executive director for EDCO, points out, “When companies look to site these data centers across the country…paying millions in property taxes impacts the bottom line in a pretty big way. That is where property tax incentives are important.”

What was the Oregon Department of Revenue thinking when they notified Facebook that they might be subject to additional taxes? Without contemplating the outcome someone at the revenue department arbitrarily decided there was potential income to be gained from Facebook. They failed to see how it could impact our ability to attract companies to Oregon. And they obviously were not savvy enough to understand that the media would make it a big deal and it would be broadcast around the world that Oregon could not be trusted to make a good deal and stick with it.

Let’s hope the governor’s office has some thoughts on how we can fix this.  pha

Notes on Economic Growth

Mark Pinkowski, senior Vice president regional sales manager for Wells Fargo, provided CBN with some recent news on the economy:

The pace of economic growth increased 2.5 percent in the third quarter of this year, supported by stronger consumer and business spending. Strong improvement in the consumption of health-care services bolstered consumer spending.
Business investment rose 13.7 percent, as firms continued to invest in equipment and new facilities. State and local government expenditures remained a drag on growth, as spending among these governments has pulled back dramatically and now more closely match the slower pace of revenue growth. Given the broad-based gains within GDP in the third quarter, we have upwardly revised our outlook.

We now expect GDP to grow 1.8 percent for the year, and the stronger end to 2011 means real GDP will likely grow 2.1 percent in 2012.

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