Governor Kitzhaber Rushes Legislature to Secure Nike’s Oregon Expansion

Governor John Kitzhaber called a special session of the legislature Friday to woo Nike into expanding in Oregon. The special session was called to consider Bill HB 4200A, which gives the governor authority to enter into special tax agreements with companies planning major investments in the state. It passed 22-6 in the Senate and 50-5 in the House.

Julia Brim-Edwards, Sr. Director for Government and Public Affairs at Nike, testified that Nike would commit to a minimum $150 million investment plus creation of 500 jobs in Oregon if the state would pledge to keep its current tax structure. The investment would support Nike’s, “on-going headquarters expansion needs.” The passage of the bill allows the governor to do just that.

Under the new bill, the governor may guarantee the continuation of a favorable tax policy: single sales factor. Single sales factor means that businesses in Oregon are only charged tax on income from sales in the state. The governor can make this agreement with businesses committing to investments of at least $150 million and the creation of 500 new jobs.

Although the bill offers no new concessions to Nike or any other business contemplating expanding in Oregon, the necessity of catering to large businesses is not clear in this case. Would Nike really expand its headquarters elsewhere without this guarantee, and will the job creation and investment numbers really meet expectations in the end? The Legislature’s own research released this month on Taxation and Oregon’s Interstate Competitiveness found that “labor cost and quality are generally a more important factor than tax differentials.”

by Lana Jones