Legislature to Hold Special Session to Discuss Nike

“Nike Inc. is planning a multi-billion dollar expansion in Oregon estimated to create thousands of jobs, but first the company wants more certainty the state’s tax code will not change.

Gov. John Kitzhaber called on lawmakers to return for a special session on Friday to create a new economic development tool that would persuade the global athletic shoes and apparel company to not expand elsewhere.

“The company is growing rapidly. They have to expand somewhere and they have to do it soon and the fact is that they’re being heavily courted by other states and other locations,” Kitzhaber said during a press conference Monday.

To give companies like Nike certainty the state’s tax code won’t change against their favor, Kitzhaber proposed creating an act that would allow the governor to enter into  contracts with any company committing to a minimum of 500 jobs and $150 million in capital investment over five years.

Nike’s expansion is estimated to create more than $2 billion a year and more than 12,000 jobs by 2020, according to a recent economic impact study by AECOM, a global professional services firm. Construction could generate about $440 million and more than 2,900 jobs.

Mary Remuzzi, a spokeswoman for Nike, said no decision has been made yet on where in Oregon the company plans to expand its operations.

It’s unclear what benefit the company’s expansion would bring to Marion and Polk counties and how many new facilities would be built.

“We don’t have any specifics to share at this point,” Remuzzi said.

The Legislature is already scheduled to meet on Jan. 14 for regular session, but the governor said discussions with Nike about a month and a half ago indicated the state would have to act swiftly to create a new economic development tool.

Company officials told him they were in active negotiations with a number of states and other sites, but Nike would not reveal which other states they were currently looking at as an alternative.

“I do not make this extraordinary decision lightly,” Kitzhaber said. “But Oregon has an extraordinary opportunity to boost our economy, to create family-wage jobs and to deliver on the essential pillars of the Oregon Business Plan.”

Acting on the proposal in a special session of the Legislature would mean the bill could go into effect in April, which is months earlier than if lawmakers waited until the regular session, according to the Oregon House Democrats Office. The proposal was still being finalized Monday and a draft was not available.

House and Senate leadership signaled they would be willing to meet for a special session and praised the governor’s proposal.

“Not enough has been done to create an environment for robust economic growth and job creation in Oregon,” said House Co-Speaker Bruce Hanna, R-Roseburg, in a statement. “The legislation we will move during the special session is a simple way to create enormous long-term benefit for our state, its people and its economy.”

Senate President Peter Courtney, D-Salem, said in a statement that Nike’s expansion represented a rare opportunity that the state is not going to miss.

“We’re going to use our home-field advantage to protect and grow jobs in this state,” he said.

Nike isn’t the only company that stands to gain more tax certainty under the governor’s proposal. Kitzhaber mentioned the act could attract additional investments from such companies such as Intel, Genentech and Precision Castparts Corp.

Business Oregon, the state’s economic development agency, points to several advantages in the state’s tax code that businesses have when they choose to locate in Oregon.

The state doesn’t have a sales tax, inventory tax or direct levies on intangible properties such as stocks and bonds.

Corporations such as Nike also benefit from the state’s “Single Sales Factor” tax.

Currently, Oregon businesses are taxed on a portion of their total income derived from sales within the state.

The “Single Sales Factor” tax only considers Oregon sales in calculating corporate income taxes owed to the state. Other states often include additional assets and payroll in what is known as “multi-factor” taxes.

If a company is headquartered in Oregon like Nike but sells products nationwide or globally, it only pays Oregon corporate income tax based on the amount of income coming from sales in the state.

Although business organizations applauded the governor’s proposal on Monday, at least one group has raised concern about the new act.

“It’s picking winner and losers and no matter how smart the governor is he shouldn’t be doing that,” said Steve Buckstein, senior policy analyst and founder of the libertarian think tank Cascade Policy Institute. “It should be a level playing field. If you think that tax certainty is good for business in Oregon, which I agree it is, give it to everybody.”

Businesses that create minimum-wage jobs are also important to economic growth, Buckstein said.

Lawmakers are expected to meet for a special session on Friday at 9 a.m. and it could end as early as one day, Kitzhaber said.”

qwong@statesmanjournal.com, (503) 399-6694 or follow at www.twitter.com/QWongSJ