PORTLAND, Ore. - What if you could convince the government to let you pay less than everyone else and never have to pay it back?

That's the world of enterprise zones. Supporters say they're a must to create badly needed jobs and keep our economy competitive with the rest of the country.

But a KATU On Your Side investigation reveals that wealthy corporations are getting big tax breaks with no definitive proof that the tax breaks help the local economy.  Meanwhile, taxpayers are picking up the bill.

One of those companies in line for a $1.9 million tax break is Precision Castparts Corp., which Clackamas County officials approved for the incentive to expand its operations.

The incentive meant:

• 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.

"With the tax deferment," said Chief Ed Kirchhofer with Clackamas Fire District #1, pictured at right, "we get no additional revenue to meet the additional service demand."

That reality is tough for Kirchhofer to swallow considering Precision's profits jumped nearly 59 percent from a year ago - $368.8 million in one quarter alone - according to a recent earnings report.

The CEO of Precision, Mark Donegan, is also one of the highest paid in the region, and his company declined to talk to us about this story.

But a man who is talking is Jim Kight. He's a Troutdale city councilman who was out-voted when his city decided to give Federal Express a $4 million tax break for building a new distribution center on the site of the old ALCOA aluminum property.

"It doesn't make a lot of sense," said Kight, pictured at left.

The Troutdale property is one of Oregon's newest enterprise zones. Kight wonders why his city would give such a huge tax break when FedEx has given every indication it plans to build on the spot anyway.

"They're expected to break ground and have the building up and running by January of 2009," said Kight, who thinks the tax break is a type of insurance policy to make sure FedEx comes to Troutdale. "Why would you give away and discount the largest piece of industrial property in east Multnomah County?" Kight asked.

Kirchhofer takes it one step further.

"It's frustrating that we're abating taxes with no evidence that it's being successful," he said.

Kirchhofer is talking about a study on the long-term effectiveness of enterprise zones. It was commissioned by the Special Districts Association of Oregon, which represents hundreds of government organizations across the state that rely on property taxes.

The report states: " ... while this analysis is certainly not definitive, it does not support the contention that enterprise zones are a significant spur to economic activity, and there appears to be no overall effect on economic growth."

In a rebuttal criticizing the quality of the study, the agency that oversees enterprise zones, the Oregon Economic and Community Development Department (OECDD), acknowledged a lack of study on the issue.

"There is really no satisfactorily conclusive way to quantitatively prove or disprove critical policy questions or assumptions related to enterprise zones and tax incentives," the rebuttal states.

In June, the agency admitted to lawmakers who were debating whether to extend the enterprise zone program that long-term numbers don't exist.

"It would be nice to get some really good people in to do some heavy duty work on that and talk to some companies and do a lot of stuff," said Arthur Fish, of the OECDD.

Companies in enterprise zones do have to submit a large amount of data to show they are meeting short-term criteria to qualify for a tax break.

That criteria includes serving a distressed area with high unemployment or low income or with high levels of unused industrial/commercial property.

"I think anecdotally, at this point in time, we can say they're successful," said Bob Repine, who heads the OECDD.

The latest state numbers show:

• 5,884 jobs have been created in enterprise zones, offering average compensation of $35,695 per year.
• The average tax break lasts 4.42 years, and over that time period each job costs government $14,486 in lost tax revenue.

"We've created thousands of high-paying jobs," said Repine. "We've had businesses come and redevelop in communities where maybe they might have said, 'Well, I can go somewhere else and do this.' "

Enterprise zones were originally set up by the 1985 Oregon Legislature as one of several tools, including a sales tax, that were hotly debated to pull Oregon out of a deep recession and stabilize the tax base.

The zones were meant for rural places like Malheur and Harney counties that were distressed economically.

In the last 22 years, enterprise zones have popped up all over. Currently there are 56.

Many are in urban areas such as Hillsboro, which set up three enterprise zones in 2006. One is in the shadow of Intel and other large corporations - an area that is difficult to argue is distressed. But Hillsboro used the low-income levels of residents that live across town to qualify.

Hillsboro is requiring corporations that use the enterprise zone to pay for a job training program aimed at benefiting those low-income people.

"You try to bring them to the next level where there's some basic employment skills, and you go back to the companies and say, 'Help us design a program that can reach those people and make them employable in your particular areas," said Hillsboro Mayor Tom Hughes.

Meanwhile, the enterprise zone enables Hillsboro to keep companies like TriQuint Semiconductor, which Hughes said was debating expanding, somewhere else.

"The taxpayer's don't lose anything," he said. "If (a company makes) the investment in Texas instead of here, they're not going to pay taxes up here on it anyway."

And in Troutdale, Councilman Kight concedes FedEx employees and the money they spend will be good for his local economy.

"There could be a trickle-down effect, and I'm sure there will be," Kight said. "I'm not against FedEx locating here, I just want them to pay the same property tax every other commercial industrial developer has paid."

That brings the conversation back to Precision Castparts in Milwaukie. In exchange for its tax break, the company pledged to create 400 new jobs that pay an average of $54,000 per year, including benefits.

It is hard to argue that an additional $21.6 million payroll is bad for the local economy.

"Where would Oregon have been all these years if we hadn't had the enterprise zones?" asked the OECDD's Repine, pictured at left.

But questions still linger for people like Kirchhofer.

"What frustrates us," he said, "is it's my thought that if the business is successful they would add the jobs without a tax abatement."