President Obama commemorating the bicentennial birthday of our 16th President reminded us of Lincoln’s view of democracy, “The legitimate object of government is to do for a community of people what needs to be done but which they cannot by individual effort do at all, or do so well, by themselves.” Lincoln graciously defines what cannot be done individually to include providing for the young, helpless and afflicted and building public roads, schools and highways and maintaining the ‘machinery of government’ itself.

In the 200 years since Lincoln’s birth government has, through the implementation of subsidies, tax cuts, enterprise zones and urban renewal districts, broadened the concept of what requires community effort. These incentives are meant to entice new business and new jobs by reducing startup costs for free enterprise. This is great if creates jobs but what is the return on investment to the taxpaying public? What is the price to the community per job?

Enterprise zones let qualifying businesses receive total exemption from the property taxes normally assessed on new plant and equipment for at least three years and possibly up to five years. In Oregon, these zones, 59 of them are primarily designated in economically depressed areas, 48 rural.

A study entitled “OREGON ENTERPRISE ZONE TAX ABATEMENT ECONOMIC DEVELOPMENT STUDY AND URBAN RENEWAL STUDY”, published by Portland State University concludes, “The cost per job created appears to be relatively high, and the comparison of reported employment growth with data from the Employment Department indicates that the reported employment growth may be overstated, which would further increase the abatement cost per job created.”

Locally, we have a prominent example of government subsidy at work in the hopes of job creation at the Bandon Dunes Golf Resort. According to Pulitzer Prize winning reporter, David Cay Johnston in his book “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and stick you with the bill)”, the world famous golf course benefits from four government subsidies that exceed payroll for 325 employees and amounts to $37,000 per full time employee.

Perhaps even more famously, at least locally, a new airport terminal was built to manage the increase from 3 executive jets per year to over 5,000 private jets ferrying golfers to the self contained resort, at a price tag of $31M, half from a ticket tax and half from the Oregon State Lottery. So far, those 325 jobs are costing Oregon taxpayers quite a bit.

One of the recommendations in the PSU study is to mandate a thorough fiscal assessment of the impact on local taxing districts for local taxing authorities and offer an opt-out provision if it isn’t paying off. In Coos County we need only look at the empirical data and rising unemployment rates to decide if our tax dollars have been wisely invested and are producing badly needed jobs.

chrome_oreOregon Resources Corporation qualifies for the enterprise zone property tax exemptions, (as does Bandon Dunes) and may soon enter into a mineral lease agreement with the County to mine or explore up to 8,000 acres of County timberlands for chromite ore. Coos County Commissioners Griffith, Whitty and Stufflebean took steps last December to further assist ORC by laying off 22 workers thereby freeing up $450K of Road Department funds to improve W Beaver Hill Road necessary for ORC mining operations.

South Coast Development Corporation formed, according to Whitty, as a liaison between government and private enterprise supports ORC and having the County pay for road improvements. Coos County funds SCDC $10,000 annually to attract business into the area and ORC promises upwards of 70 jobs if they reach full production.

Commissioner Main has called for the County to conduct some in depth due diligence before committing county road funds or entering into any leases. Considering ORC has already cost the local economy 22 jobs part of that due diligence should be to accurately determine the ROI to the citizens of Coos County for their investment.

A final note on enterprise zones – Coos County with its high unemployment and low median income clearly meets the criteria for an enterprise zone and the legislature makes no distinction about what brings a company to do business within an enterprise zone. Nevertheless, ORC or any other mining venture is only here because of the resources available and not with the direct intent of boosting local employment.

Without the chromite ore ORC would not be here zone or no zone. To further subsidize ORC by laying off workers and funding road improvements does not seem appropriate for a county in such dire economic straits that it qualifies as an enterprise zone in the first place.