Two States Woo Steel Firm Legislators Push Tax Incentives, But Critics Say It’s Not Worth It
A bidding war could develop as Washington and Oregon try to land a $360 million steel mill that Nucor Corp. wants to build in the Northwest.
The North Carolina-based steel giant, which had revenues of nearly $4.2 billion last year, has narrowed its list of possible sites to Longview, Wash., and Coos Bay, Ore.
Some Washington lawmakers want to attract Nucor with hefty property tax breaks and other incentives.
Supporters argue that the House and Senate legislation would bring jobs to areas with high unemployment and help Washington compete with Oregon, which approved new tax breaks for manufacturers last year.
Critics, however, say the proposed deal would take away too much money from schools and other agencies that depend on property taxes.
The two bills - HB2619 and SB6460 - are expected to face revisions and may not be passed this year.
As written, they would give qualifying companies a 15-year waiver on the state sales tax, a 15-year property tax exemption and tax credits based on the number of workers hired.
The property tax exemption is “the thing that draws the most fire” and presents the biggest obstacle to getting legislation passed, said House Finance Committee chairman Rep. Brian Thomas, R-Renton.
In the future, companies could demand even larger tax breaks - creating an endless struggle for states to attract companies that can afford to wait for the best deal, he said.
“I do not want to get into a bidding war for businesses, no matter what kind,” Thomas said Monday. “It’s a lose-lose situation for everybody except businesses, and they’ll play one state off another - forever.”
Even a lawmaker from the Longview area, House Speaker Pro Tem John Pennington, said he’s not willing to play the tax-incentive game to attract manufacturers.
“I think it’s a horrible precedent for us to set as a state to follow Oregon’s lead on this,” said Pennington, R-Kelso.
The Washington bills would allow counties and cities to decide whether they want to approve the tax credits.
Pennington said he fears that would cause bidding wars between neighboring counties, but other lawmakers say the provision would protect local choice.
“If they think it’s worthwhile to bring in Nucor or another plant, that would be their right,” said Sen. Sid Snyder, D-Long Beach. “If they don’t want to, they don’t have to.”
In data supplied to Oregon, Nucor estimated it would hire 250 workers and post gross annual sales of $300 million to $350 million. Some estimate that workers would earn upward of $60,000 a year.
If Nucor built a $350 million plant in Washington and hired 250 workers, the tax package would be worth about $100 million to the company over 15 years, said Dick Gebhart, of the state Department of Revenue.