Supporters of Ore. Investment Act focus on coordination, new business

While some Oregon lawmakers said jobs would be the No. 1 priority during this month’s short legislative session, education, the budget shortfall and health-care reform have mostly dominated the headlines; however, there are bills being considered by legislators that do focus on jobs.

One of those pieces of legislation is House Bill 4040, which is also known as the Oregon Investment Act. Proponents of the bill from both sides of the political aisle say it will allow for better coordination of the state’s investments to spur economic development in the state.

According to its supporters, the bill, which got its first public hearing Monday at the Capitol, will also help entrepreneurs get access to capital for use in launching their small businesses.

"Currently we have various programs throughout the state in regards to helping businesses grow, create jobs and economic development. They're very scattered," said Sen. Chris Telfer, R-Bend. "And one of the things (the bill) does is it coordinates all these efforts."

The legislation creates the Oregon Growth Fund and the Oregon Growth Board, which will consist of seven voting members and up to three nonvoting members. Their job will be to oversee the state’s investments. The bill also abolishes what the state currently uses, the Oregon Growth Account and the Oregon Growth Account Board.

A common thread throughout people's testimonies during the hearing was a need to focus on getting capital to new businesses.

"Oregon needs to pay attention to the companies that are coming up from infancy on – emerging companies, and that is the place where in that sector they don't access traditional forms of capital," said Malia Wasson, president of US Bank in Oregon and Southwest Washington.

She acknowledged that those investments would be riskier but argued that since the state is already doing those types of investments, the bill would help it be more efficient when it invests in start-ups. That sector of the economy is "probably the place that needs the most help," she said.

For the most part, those who lined up to testify on the bill in front of the Transportation and Economic Development committee supported it. But John Charles, with the Cascade Policy Institute, said he feared that too risky of investments could be made because the people deciding where to invest taxpayer money may not have any "skin in the game."

Charles instead said he favors a business environment with fewer regulations and lower taxes.

He found troubling the idea in the bill that the board could invest in a declining business to stave off job losses.

"What would guide you to do or not do that," he said. "Who bears the risk? Who bears the reward? I mean, once you go down that road, where do you stop?"

He also referred to a report for the current Oregon Growth Account Fund, ending Jan. 31, 2011. The account is the current way the state gets capital to businesses. So far it has funded $63.7 million. But Charles pointed out that since the fund started investing in 1999 it has had a negative internal return of 7.9 percent.

Rep. Tobias Read, D-Beaverton and one of the developers of the bill, countered that that was why the state needs a more centralized investment strategy such as outlined in HB 4040.

"People have been pointing to sideboards that are too rigid. That's part of what's in this bill, too, is to break down those sideboards," he said. "In fact, the idea of having skin in the game is very much the motivation to make leverage part of the evaluation as to the decisions the board might make."

He also said it would be a private-sector board.

"This is something, I think, makes sense to us to improve what we are doing," Read said. "Philosophical arguments will remain, there's no question about that, but everyone ought to be able to agree that we want to make things as effective as we can."

The report wasn't entirely negative in its assessment of the Oregon Growth Account Fund.

"The (Oregon Growth Account Board) recognizes that the (fund) has been successful at leveraging private-sector investments into Oregon companies and serving as a catalyst for economic development efforts," the report said.

And it noted that similar investments elsewhere were also negative.

Both state Treasurer Ted Wheeler and Gov. John Kitzhaber support the bill, and the committee is expected to take it up again Wednesday morning during a work session.

Correction: The report for the current Oregon Growth Account Fund dated Jan. 31, 2011, was originally referred to as an annual report. It was, in fact, a one-time report to the Legislature required by SB 496 in 2009.