At left, QTS Data Centers in Hillsboro on Oct. 11, 2024. (Photo by Rian Dundon/Oregon Capital Chronicle). At right, kids at Jackson Elementary in Hillsboro in 2024. (Photo courtesy of Hillsboro School District)
Meta, the parent company of Facebook, has donated more than $2 million to Central Oregon’s Crook County School District during the last decade as the company built one of its largest complexes of data centers in Prineville.
But during that time, state and local governments have relieved the nearly $2 trillion company of paying millions of dollars each year in property taxes to support area schools, and schools across Oregon, under generous tax exemptions meant to attract businesses and boost employment. Crook County Schools in 2019 gave up $10 million in local revenue to property tax exemptions to corporations. By 2024, as more data centers came online, that had nearly tripled to $29 million.
The losses in Crook County are among a growing number of property tax dollar losses charted in a new report by Good Jobs First, a Washington D.C.-based nonprofit economic subsidy watchdog group.
Researchers for the group, using tax data reported by Oregon schools in annual financial Reports submitted to the Oregon Secretary of State, found that 191 school districts and education service districts in Oregon collectively lost $275 million to property tax abatements in 2024. That’s more than double the $125 million that districts lost to these abatements in 2019, the year most districts began reporting the tax losses to the state under a 2017 law.
About one-third of the state school fund comes from local revenue, such as local property tax revenue. Because the Oregon Department of Education balances funding to districts with state and local revenues, Crook County would not solely reap the benefits of the millions it lost to tax abatements. That local money goes into the state’s pot to lift all boats, meaning property tax breaks in one part of the state can end up costing all schools.
The biggest losses to Oregon schools were from property tax breaks under the state’s Strategic Investment Program and the Long-Term Rural Enterprise Zone program. The investment program requires businesses to invest at least $500 million and, in return, pay either 25% of the abated tax they would owe each year or a $2.5 million “community investment fee” that can go to schools or other public services that miss out on the property tax money.
The enterprise zone program, which exempts businesses in rural parts of Oregon from paying property taxes on new investments for 15 years, has been most lucrative for new data centers, the researchers found.
A 2023 analysis by The Oregonian/Oregon Live found major tech companies in the state collectively saved more than $150 million per year from the state’s enterprise zone program alone. Among all enterprise zone property tax breaks applied statewide, three-quarters of savings went to tech companies for data centers.
The Good Jobs First group found that between 2019 and 2024, tax savings for businesses benefiting from the enterprise zones increased by $60 million, or 185%. Greg LeRoy, the group’s executive director, said that in most states, sales and use tax exemptions lure big businesses and data centers.
“Since Oregon has no sales tax, it is property taxes there that are the big dollars,” he said.
A ‘complex’ issue
Some property tax losses could be made up by the corporate activity tax the Legislature approved in 2019. The tax, which critics say functions as a hidden sales tax, charges companies with more than $1 million of commercial activity in Oregon $250 plus 0.57% of their commercial activity above the $1 million mark.
It generates about $1 billion for schools each year. But there’s no publicly available data about which companies are subject to the tax and how much they pay, so it’s difficult to know how much companies like Intel or Apple, which deal in international markets, ultimately pay.
Many of the school districts where data centers for Amazon, Apple, Google, Microsoft and Meta have sprouted up fastest in the last decade have experienced the most property tax losses. They include Crook County, Morrow County and Hermiston schools.
Hermiston School District Superintendent Tricia Mooney said districts would benefit if companies weren’t exempt from property taxes when schools seek bonds to pay for critical infrastructure investments and improvements.
The district lost out on more than $16 million in local property tax revenue from tax abatements in 2024, according to the study — up from $111,500 in 2019. More than 10 data centers have come online in Hermiston since 2017, and she said the district has not seen a big influx in students due to any major job creation in the area from them.
Anna Logan, chief financial officer of the Crook County School District, said costs and benefits of the tax abatements are complex.
“We do not have the expertise to quantify all of the various advantages and disadvantages of those tax abatements,” she said in an email, but added that they have seen more enrollment due to new data center construction and operation jobs attracting families to the area. “The tax abatements create missed revenue, but not a reduction in revenue.”
Daniel Hauser, deputy director of the left-leaning nonprofit think tank Oregon Center for Public Policy, said the state continues to offer incredibly generous tax breaks to corporations without really understanding if they are responsible for luring new business or boosting employment and income taxes.
Businesses also choose Oregon because they need cheaper electricity, or abundant water, or proximity to the right workers and markets, he said. When the state gives up property tax revenue that could go to schools while those schools suffer budget constraints, it creates “a painful juxtaposition.”
“We have this cap on special education funding and special needs funding for districts. And I remember the price tag on that being somewhere in the couple-hundred-million-dollar range,” he said.
A proposal to lift the cap, which requires that the state provide extra funding for just 11% of a school’s student body with disabilities, did not pass in the most recent legislative session. It would have required about $750 million more for schools each year.
“We could actually adequately fund services for kids with IEPs (Individualized Education Plans) and special needs, or we can give billions or hundreds of millions of dollars in tax breaks to these corporations and we have no idea if it’s actually incentivizing any behavior, and many of these businesses are reporting enormous profits to their shareholders,” he said.
The Hillsboro School District gives up the most property tax revenue: more than $143 million in 2024. The strategic investment program, which offers property tax breaks to companies making big investments in the area, is most responsible for the losses. Intel, the area’s largest company and employer, got a 30-year, estimated $2 billion tax break under the strategic investment program in 2014 for investing $100 billion in manufacturing equipment.
Scott Harison, chief financial officer for the Hillsboro School District, also described tax abatements as complex. Cities, counties, tribes and ports award tax incentives, and schools don’t get to play a role in negotiations though they arguably lose the most revenue from them. Schools need the income tax revenue from employment, but it’s unclear how much corporate investment and employment is driven by those property tax incentives.
“There is certainly a benefit to the local economy when these abatements serve as an incentive for employers to make investments they might not have otherwise made,” Harison said in an email. “We do think it would be beneficial for school districts to have more of a voice in abatement negotiations. After all, these companies rely on school districts to prepare their future employees, and the best outcome is for us to succeed together.”
Liz Merah, spokesperson for the Oregon Department of Education, said that school finance staff and the Legislature are aware of the issues related to property tax abatements and school funding, and they understand the impacts.
“At this time we are not aware of any proposed changes to current practices with regard to tax abatement,” she said in an email.
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