Before digging into the matter of enterprise zone tax exemptions and, more specifically, whether granting tax abatement to ORC will benefit cash strapped Coos County , take a gander at these stark facts below compiled at AlterNet.

#1 Approximately 45 million Americans were living in poverty in 2009.

#2 According to the Associated Press, experts believe that 2009 saw the largest single year increase in the U.S. poverty rate since the U.S. government began calculating poverty figures back in 1959.

#3 The U.S. poverty rate is now the third worst among the developed nations tracked by the Organization for Economic Cooperation and Development.

#4 According to the U.S. Department of Agriculture, on a year-over-year basis, household participation in the food stamp program has increased 20.28%.

#5 The number of Americans on food stamps surpassed 41 million for the first time ever in June.

#6 As of June, the number of Americans on food stamps had set a new all-time record for 19 consecutive months.

#7 One out of every six Americans is now being served by at least one government anti-poverty program.

#8 More than 50 million Americans are now on Medicaid, the U.S. government health care program designed principally to help the poor.

#9 One out of every seven mortgages in the United States was either delinquent or in foreclosure during the first quarter of 2010.

#10 Nearly 10 million Americans now receive unemployment insurance, which is almost four times as many as were receiving it in 2007.

#11 The number of Americans receiving long-term unemployment benefits has risen over 60 percent in just the past year.

#12 According to one recent survey, 28% of all U.S. households have at least one member that is looking for a full-time job.

#13 Nationwide, bankruptcy filings rose 20 percent in the 12 month period ending June 30th.

#14 More than 25 percent of all Americans now have a credit score below 599.

#15 One out of every five children in the United States is now living in poverty.

Next, take a look at this statistical analysis of just how the, so called, Bush tax cuts, impacted the economy, by David Cay Johnston.

The 2008 income tax data are now in, so we can assess the fulfillment of the Republican promise that tax cuts would produce widespread prosperity by looking at all the years of the George W. Bush presidency…
Total income was $2.74 trillion less during the eight Bush years than if incomes had stayed at 2000 levels.

That much additional income would have more than made up for the lack of demand that keeps us mired in the Great Recession. That would mean no need for a stimulus, although it would not have affected the last administration’s interfering with market capitalism by bailing out irresponsible Wall Streeters instead of letting the market determine their fortunes.

In only two years was total income up, but even when those years are combined they exceed the declines in only one of the other six years.

Obviously, less income means less spending and less spending translates into fewer jobs.

Now let’s look at wages, the source of most people’s income. In 2008 the average taxpayer made $58,000. That was $5,100 less than in 2007, a decline of 8.1 percent.

The number of taxpayers reporting any wages in 2008 was 1.26 million fewer than in 2007, a scary figure when you consider that most people do not expect to be out of work for an entire year and that the population grew by more than a percentage point. In August 42 percent of the unemployed — 6.2 million people — had been out of work for 27 weeks or more, the Bureau of Labor Statistics said. The average for all jobless workers was 33.6 weeks of unemployment, the equivalent of going from New Year’s Day through August 23 without a paycheck.

Despite the empirical evidence tax cuts do not stimulate the economy, the debate inexplicably goes on and Johnston surmises the proponents of tax cuts genuinely believe they are a benefit. The facts do not support this

The hard, empirical facts:

The tax cuts did not spur investment. Job growth in the George W. Bush years was one-seventh that of the Clinton years. Nixon and Ford did better than Bush on jobs. Wages fell during the last administration. Average incomes fell. The number of Americans in poverty, as officially measured, hit a 16-year high last year of 43.6 million, though a National Academy of Sciences study says that the real poverty figure is closer to 51 million. Food banks are swamped. Foreclosure signs are everywhere. Americans and their governments are drowning in debt…

This is economic madness. It is policy divorced from empirical evidence. It is insanity because the policies are illusory and delusional. The evidence is in, and it shows beyond a shadow of a reasonable doubt that the 2001 and 2003 tax cuts failed to achieve the promised goals.

Now, in Coos County, an area so economically distressed it is regarded as a qualifying census tract for purposes of New Markets Tax Credits, our elected officials are offering a five year extension of tax abatement to the strip mining operation, Oregon Resources Corp. Coos Bay Mayor, Jeff McKeown claims the promised jobs offset the lost tax revenue but gives no mathematical proof this is true.

Our Board of Commissioners will also vote to decide on whether to extend the free ride to ORC. Like the cities of North Bend and Coos Bay (and probably the Port by now), it is feared that two thirds of the board will agree to the extension, thereby leaving our fire departments and sheriff’s department and other underfunded public safety agencies to go begging for money and equipment.

Enterprise zones were enacted in the belief that tax abatement might encourage businesses to locate in “…areas for which geography may act as an economic hindrance.” Neither ORC, who came here specifically because of our geology, nor the Bandon Dunes who received an exemption when the Bay Area Enterprise Zone extended their boundary to include them are apt to leave because of geography.

None of our elected officials will be able to quantify how or if the abatement will benefit the area. According to a study to determine the benefits of enterprise zones and the continued expansion and addition of new zones, information is murky and contradictory.

• The program continues to suffer from insufficient data by which to conduct an
independent quantitative analysis of zone level programmatic impacts, and the reporting process offers no independent verification of investment and job creation figures;
• Within enterprise zones, the impact of the abatement on employment also seems to be limited. The cost per job created appears to be relatively high, and this cost comparison is based on the questionable assumption that none of the employment growth would have taken place without the abatements. 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;
• While we have no specific information on the resident location of the employees of enterprise zone firms, it appears they are unlikely to be residents of the zone given commuting patterns, the proximity of a number of zones to metropolitan labor markets, and the lack of a residency requirement;

There is also this little tidbit, “Comparison of growth rates between cities with and without enterprise zones finds that cities with zones grew at a slower pace than cities without such zones;”

Thankfully, some serious reporting is being done to evaluate the real benefits of enterprise zones. KATU in Portland produced a special report regarding a company approved to receive $1.9M in tax incentives.

* A loss of $790,610 for the schools in that area
* A loss of of $781,085 for the city of Milwaukie, Clackamas County and parks
* A loss of $279,791 for Clackamas Fire District #1, which is roughly the equivalent of three firefighters.
Keep in mind that the fire department has gone to Precision Castparts Corp. 99 times since March 2001 for everything from medical emergencies to fires. The training and special equipment needed to respond to such calls is all payed for by property taxes.

Enterprise zones are also ripe for exploitation by companies bent on gaming the system. One could argue the already established and hugely successful, as well as geographical bound, Bandon Dunes exploited the incentives when they applied for abatement after the boundaries were graciously extended to include them.

Bandon Dunes presently pays one of the lowest property tax rates in the County. When we see big layoffs in the sheriff’s department and schools struggling to keep teachers employed it is hard to see how giving a free ride to ORC, Bandon Dunes, or anyone else is benefiting the economy of Coos Bay.

As Johnston says, “This is economic madness. It is policy divorced from empirical evidence.”

UPDATE A copy of the Enterprise Zone guide and theORC EZ application