SALEM — A top executive of Microchip Technology and a Gresham economic development official were among those who urged state lawmakers to continue local property tax breaks for business investment.

They spoke Feb. 6 as the Senate Finance and Revenue Committee considered bills to renew enterprise zones and long-term rural enterprise zones, both now set to expire in 2025. Senate Bill 134 would extend the use of enterprise zones, and Senate Bill 135 would do the same for long-term rural enterprise zones, both through 2032.

Under enterprise zones, cities and counties may exempt new or expanding businesses from property taxes for three to five years. Under the long-term zones, exemptions can last from seven to 15 years, but they are limited to counties with greater economic challenges, such as persistent unemployment.

Microchip Technology, based in Arizona, has a plant in Gresham that employs 900. Dan Malinaric, corporate vice president for operations, said the company has hired 250 in the past two years and plans to hire another 250 in the next two years. Its planned $750 million expansion will triple its current production.

“We have taken advantage of the enterprise zone program for expansion for the past 17 years,” Malinaric said at the hearing. “It is a big part of our application for funding” under a 2022 federal law (CHIPS Act) that will make available $52 billion for incentives for domestic manufacturing of semiconductors and $200 billion for advanced research in science and technology.

Retention of the tax exemption was recommended last year by a state semiconductor task force led by U.S. Sen. Ron Wyden, then-Gov. Kate Brown and Maria Pope, chief executive of Portland General Electric. The task force was formed after Intel announced a multibillion-dollar investment in a new manufacturing plant in Ohio – the California-based company already has four plants in Hillsboro and Aloha, plus its advanced D1X research and development plant in Hillsboro – and Micron make a similar announcement of investment for upstate New York.

Malinaric said that in addition to Oregon, his company is looking at potential expansion in Arizona, Colorado and New York – and the latter two states do not levy property taxes on new equipment.

“This levels the playing field so that we do not have the tax burden found in other places,” he said.

The enterprise-zone program dates back to 1985. There are 76 zones in 35 of Oregon’s 36 counties and 143 of its 241 cities. According to a 2022 study commissioned by the Oregon Business Development Department based on 287 participating businesses, such zones generated $8.5 billion in overall economic activity, 46,253 jobs, $2.5 billion in income and $685 million in personal income taxes.

Also testifying was Erika Fitzgerald, senior economic development specialist for Gresham.

She said that in addition to Microchip Technology, the city’s use of enterprise zones enabled it to obtain Lightbox Jewelry, a manufacturer of synthetic diamonds, and expansions of aircraft manufacturer Boeing and Onsemi, another semiconductor manufacturer.

“If the enterprise zone program is not extended, cities across Oregon will not have the certainty needed to continue our work toward shared prosperity through the recruitment and retention of family-wage jobs in our already limited toolbox,” she said.

“The enterprise zone program allows Gresham to compete nationally for a wide range of industries. This tool is a critical component of our strategy for greater economic activity in the region.”

Also among those testifying were Caroline Ervin, Prineville’s capital projects manager and former economic development manager for Crook County, and Jon Stark, chief executive of Economic Development for Central Oregon, a three-county regional agency. Meta, the parent company of Facebook, and Apple have data centers there.

The League of Oregon Cities has made renewal of these tax breaks one of its top legislative priorities in the 2023 session. Representatives of the league and Oregon Business & Industry also testified for the bills.

Tax Fairness Oregon, a watchdog group focused on tax breaks, took no position.

“We do not disagree; we think they are good tools,” John Calhoun of Portland said on behalf of the group.

A third bill heard by the Senate committee (SB 133) would end property tax exemptions in enterprise zones for business buildings under construction if they are not completed by 2032.

Speaking for Tax Fairness Oregon, Jody Wiser of Bethany said the exemption already costs local governments $44.8 million in lost property taxes and shifts $10.9 million in taxes for bonds and local-option levies to other property taxpayers for the current two-year period.

“When you have a budget item that big, you should look at it,” she said.

The Senate committee did not take immediate action on the bills. Chairman Mark Meek, D-Gladstone, also sits on the Legislature’s joint committee that is responsible for coming up with a state plan to tap some of the federal incentives available for domestic semiconductor manufacturing.