Businesses receive hundreds of millions of dollars in Oregon property tax breaks every year through incentives authorized by the state but awarded by local governments. The cost of administering the tax breaks is rising, mostly because of the complexity associated with county assessors valuing one industry — data centers — and managing those incentives.
“The administrative and fiscal impacts of administering enterprise zones have increased with no associated funding from the state,” said Kathryn Harrington, chair of the Washington County board of commissioners.
The county estimates it spends $400,000 annually to manage the local tax break program for businesses in Hillsboro.
Those costs are small compared to the $85 million in tax breaks Hillsboro gave away to data centers this year through Oregon’s standard enterprise zone program. But the county says eight employees collectively devote thousands of hours to managing the incentives every year.
Washington County says it isn’t opposed to the incentives in principle but wants the state Legislature to provide a mechanism to help cover the costs. It’s not fair, Harrington argues, that the county must pick up the tab for implementing the city’s incentives, especially as Washington County navigates a budget squeeze.
“The reality is that taxpayers are getting hit twice—first by the loss of property tax revenue and second by forcing counties across the state to use constrained general fund dollars to administer this statewide program,” Harrington said.
Gov. Tina Kotek is pushing an economic development bill before the Legislature that, among other things, would extend property tax breaks in the standard enterprise zone program from five years to as many as 10 years. The governor says she hopes House Bill 4084 will help small businesses but the enterprise zone program primarily benefits data centers. Last year, two-thirds of the giveaways went to that one industry.
Oregon counties are backing an amendment that would require cities awarding tax breaks to negotiate an agreement with counties that would cover the “reasonable cost” of administering the incentives. The Association of Oregon Counties also wants the bill amended to give counties local control over extended property tax breaks.
The association says Kotek’s office is blocking those proposals, so in a letter to lawmakers last week the counties said they will oppose HB 4084.
The governor’s office didn’t respond to a request for comment Thursday on the counties’ concerns. But Kotek said earlier this week that she wants to revisit state incentives in 2027, after a panel she appointed to study data centers’ impact has completed its work.
The value of Oregon tax breaks is soaring because of giveaways to large data centers. That industry will save more than $450 million during the current tax year, $126 million more than in 2025.
Mike Gorman is the assessor in Morrow County, which administers local tax breaks worth more than $100 million a year for Amazon’s local data centers as well as wind and solar farms. He says it’s much harder to manage tax breaks for a large, high-value project like a data center than it is to simply levy local property taxes.
“I consider it about 10 times as much work, on average,” Gorman said, a burden that is especially high in a small county like his.
Unlike Washington County, Morrow County is a sponsor of its enterprise zone incentives and could have negotiated payments from the companies to help administer the tax breaks. Gorman said the issue is that the state doesn’t require such provisions, and it puts the burden on local governments to give up tax revenue and take on the administrative costs of economic development.
“It’s overwhelming,” he said. “The state, the Legislature, wants to give economic development incentives but they make the local governments and the local communities give all the concessions.”
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