Oregon Prosperity Council Recommendations: EDCO's Perspective

Governor Kotek’s Oregon’s Prosperity Roadmap, an initiative created to examine what Oregon needs to build a stronger, more resilient economy, provides an opportunity to move beyond just treating symptoms to addressing underlying causes that are impeding economic growth.

The formation of the Governor's Prosperity Council, led by former Senator Tim Knopp, gave EDCO some confidence that this effort could produce meaningful results. Now that the Council's recommendations have been released, we believe there is reason for cautious optimism.

The Council deserves credit for confronting issues that Oregon has too often avoided. Many of the recommendations move the conversation in the right direction. Others, however, feel like less of a solution and more of a discussion. The challenge will be turning acknowledgment into action.

One of the clearest wins in EDCO’s opinion is the recommendation related to reconnecting the Qualified Small Business Stock (QSBS) policies to the federal tax code. For Oregon's startup ecosystem and early-stage investment community, this is a significant development. Feedback from investors and entrepreneurs has been immediate and positive that the ripple effect of this change could be substantial. Access to capital remains one of the biggest hurdles for young companies, and this recommendation sends an important signal that Oregon wants to support innovation, investment and growth.

EDCO was also encouraged by the emphasis on research and development incentives. Paired with infrastructure investments, these recommendations could strengthen Oregon's economic competitiveness.

Industrial land readiness is another area where the Council got it right in our opinion. The proposed $250 million biennial investment in industrial site readiness begins to address a challenge that communities across Oregon have faced for years. Companies looking to expand need shovel-ready land (fully planned, permitted and engineered) and this will help address that.

The accompanying discussion related to land use reform is equally important. Oregon's land use is overdue for modernization, which inhibits EDCO’s ability to respond to economic opportunities.  While setting goals for improvement may not solve the problem overnight, it is a step in the right direction.

At EDCO, we have been working on this issue through a task force focused on employment land supply. One solution involves making Urban Area Reserves more flexible so communities can better prepare for future growth. We hope to be engaged in the broader conversations that will result from these recommendations because addressing Oregon's industrial land shortage will require both state and local leadership.

One notable omission from the Prosperity Council’s recommendations was bonus depreciation for manufacturing equipment purchases. For manufacturers considering significant investments in equipment, this would have provided a tool to encourage reinvestment and expansion, improving Oregon's competitiveness. EDCO was disappointed to not see this recommendation included.

Tax policy remains a mixed bag. The Council's approach to the Corporate Activity Tax (CAT) reform is one example. While any adjustment is better than maintaining the status quo, the proposed threshold of $2 million falls short of what many businesses need. We believe the threshold should be at least $10 million.

Another concern EDCO has is philosophical. At a recent press conference, the Governor referenced a “revenue-neutral approach” to tax reform, which suggests Oregon still believes prosperity can be achieved primarily through taxation. We disagree. We believe economic growth is the path to stronger public revenues.

The recommendations surrounding Oregon's estate tax are encouraging, however. For years business owners have told us stories about retirees relocating and families establishing residency elsewhere as they plan for wealth transfers and business succession. The Council's proposal to raise the exemption threshold to $3 million should help some small business owners and family enterprises. However, if the goal is to retain generational wealth and encourage reinvestment within Oregon communities, additional reforms will be necessary.

The Prosperity Council’s proposal to rebuild Business Oregon deserves close consideration. The agency's effectiveness is often constrained by the growing number of responsibilities added to its portfolio over time, stretching resources and attention and making it more difficult to focus on its core economic development mission.  More importantly, no economic development agency can overcome broad policy challenges on its own. Business Oregon cannot drive growth if policies and laws exist that counteract its efforts.

We hope the discussion related to rebuilding Business Oregon includes opportunities to further strengthen the partnerships already in place between Business Oregon and local economic development organizations. Organizations like EDCO, when paired with Business Oregon’s statewide perspective and resources, are positioned to deliver programs and services efficiently because they understand the needs of their communities and employers. This combination of local and state expertise can help create stronger outcomes for businesses and communities across Oregon.

The recommendations related to permitting and regulatory reform are also welcome. Businesses across Oregon consistently identify these issues as barriers to growth. The Prosperity Council's goal of reducing regulatory burdens by 20 percent by 2029 may not be transformational, and some may argue it’s too little too late, but it is movement in the right direction.

Sometimes progress starts by simply acknowledging there is a problem. The recommendations related to Cap and Invest will likely generate considerable discussion in the months ahead. Oregon should continue pursuing its environmental goals, but policymakers must also recognize the realities facing employers related to competitiveness. As details emerge, it will be important to ensure the program does not create unintended consequences that make it harder to attract investment, support manufacturing or create family-wage jobs.

It is hard to ignore that these recommendations already feel watered down from what many in the business community are requesting. Take the CAT tax, for example. If this is where the compromise lands before going to the Legislature, one might wonder what the final product will look like after another round of negotiations. The Council’s recommendations provide materials and a plan, but they do not equate to results. Success will ultimately depend on whether policymakers are willing to finish the job.

Taken as a whole, the Prosperity Council's recommendations represent meaningful potential. To recap, the strongest elements, in EDCO’s opinion, center on the QSBS, research and development support, industrial site readiness, infrastructure investment, and permitting reform. These are areas where Oregon can make measurable gains.

Oregon has tremendous strengths, but we cannot take them for granted. Competing states are moving aggressively to attract investment, talent and businesses. The Prosperity Council has put forward a framework that deserves serious consideration because it offers a real opportunity to strengthen the economy and create lasting prosperity for communities like ours across the state. While it is not everything we had hoped for, it is meaningful progress. If lawmakers build on these recommendations rather than dilute them, we believe Oregon can create a more resilient, competitive economy.

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