Proposal in the works to replace expiring tax breaks.

Byline: The Register-Guard

SALEM - Oregon corporations will no longer be getting tax breaks to help them meet legal requirements to keep pollution out of Oregon's air, land and water.

But what about tax breaks for when they go above and beyond what the regulators require?

An effort to replace Oregon's soon-to-expire pollution control tax credit with something new called an "environmental enhancement" credit could lead to just such a system.

Advocates say it's an idea they'd like the Legislature to consider when it returns to Salem in February, or in the next regular session in 2009.

The first thing chief advocate and business lobbyist Lynn Lundquist wants to make clear is that the environmental enhancement is not a rehashed version of the pollution control tax credit.

"We say, the other program, it goes away. This is a new program with a different design," said Lundquist, a former House speaker and now the president of the Oregon Business Association.

The plan has two major components:

A 35 percent credit against the cost of pollution controls that meet state environmental standards but exceed what the federal government requires.

A 50 percent tax credit against the cost of equipment and facilities that limit the discharge or emission of pollution above and beyond what either Oregon or federal laws mandate.

The state would budget $10 million a year in "environmental enhancement" tax credits. If more claims are submitted than dollars available, the "above and beyond" projects would get priority over those that meet state standards but exceed federal requirements, Lundquist said.

The proposal is hardly a shoo-in; it failed to pass the House and reach the Senate last session. Rep. Phil Barnhart, a Eugene Democrat and chairman of the Revenue Committee, where it was scrutinized, said backers failed to make their case to skeptical lawmakers, including himself.

"I'd want to know a lot more than I do now and we didn't have time to study it," Barnhart said. He said concerns included whether such a tax break would benefit the economy as much as eliminating it would. Such a move, Barnhart reasoned, would give the state more revenue, which it could spend on education, job training or other programs to attract employers and ensure a skilled

workforce.

After years of listening to businesses sell the Legislature on tax breaks to boost job creation, Barnhart said, he was ready to see if corporations really do take a pass on investing in anti-pollution equipment and facilities because the government isn't waiving some of their tax debt.

"We need to operate for several years and see what the effect is," he said.

And if it does have a negative effect?

"Then we have something else to discuss, don't we?"

- David Steves