Kitzhaber defends his decision to rush Nike bill

By Jonathan J. Cooper, Associated Press Published: Dec 13, 2012 at 3:25 PM PDT Last Updated: Dec 13, 2012 at 9:28 PM PDT
Kitzhaber defends his decision to rush Nike bill
Gov. John Kitzhaber testifies in front of lawmakers on Thursday morning.

SALEM, Ore. (AP) - Critics of apparel giant Nike Inc.'s request for emergency legislation protecting it from changes to the state tax code on Thursday questioned the need for the legislation and urged Oregon lawmakers to delay a decision.

Lawmakers are scheduled to meet in special session Friday to vote on Nike's request for an agreement freezing in place the current method for calculating the company's Oregon tax bill.

Draft legislation would authorize the governor to make such an agreement with Nike or any other company that agrees to invest $150 million and create $500 new jobs.

In the first of two public hearings the bill will get, legislators overseeing tax policy wrestled with a number of questions Thursday: How long should the deal last? Should companies other than Nike be eligible for similar agreements? Should the new jobs be required to have high wages or specific benefits?

"This is about prudent governance. The elected members of the Legislature should have adequate time before casting a final vote on this bill," said John Calhoun of Equity Alliance Oregon, a left-leaning business group. He suggested delaying a decision until January.

Nike took one potential change off the table. The company opposes being required to retain the 500 jobs it's promising to create in exchange for the tax guarantee, said Bill Gary, a lawyer and lobbyist for the company. He didn't say why.

Gov. John Kitzhaber stunned lawmakers on Monday when he announced that he was calling them into session. The session is expected to cost about $13,000 a day, Legislative Administrator Kevin Hayden said.

Responding to criticism, Kitzhaber acknowledged that the decision for an abrupt session was unorthodox, but he said it's worth the challenge to guarantee that Nike won't make a major expansion in another state.

"I've never had the occasion to call the Legislature into session at a time when probably 80 of them didn't know why they were coming in," Kitzhaber said. "It's an extraordinarily awkward process, not my first choice."

A Nike spokeswoman, Mary Remuzzi, refused to say how many other states are courting the company.

"We are at capacity," said Julie Brim-Edwards, Nike's senior director of government and public affairs. "Nike is a growth company. We need to move ahead with our expansion plans."

Nike, which has its headquarters in Beaverton, says it will expand in Oregon if the state agrees to allow it to continue using the so-called "single sales factor" to calculate its tax bill. The method benefits companies that have most of their sales in other states.

Before 2005, Oregon also included a company's in-state payroll and property in corporate tax calculations — a method that resulted in higher tax bills for companies like Nike that have significant assets and payroll costs in Oregon.

The governor and Nike officials say the legislation would not lower Nike's tax bill or prohibit the Legislature from adjusting tax rates in the future. Rather, they say, it merely gives the company the certainty it needs to make a large investment.

Critics of the plan questioned the need for it, noting that there's been no serious consideration of eliminating the single sales factor.

"Intel made a decision to build a far, far more significant facility in Oregon, and they didn't ask for this," said Jody Wiser of Tax Fairness Oregon, a liberal tax group.

Legislators are considering what changes to make to the bill. The first public draft would allow a tax guarantee to remain in effect for up to 40 years, but several critics said the time period should be lower.

Remuzzi, the Nike spokeswoman, refused to say whether Nike would accept a shorter time frame.

Copyright 2012 The Associated Press.