There was unanimous approval in the House for Senate Bill 4, which provides substantial funding for the sector and expands the governor’s authority over land use. Next, legislators will look at providing tax benefits to the semiconductor industry.
On Wednesday (April 5, 2023), prominent politicians from Oregon tried to convince a senior member of the Biden administration that Oregon is a national leader in the semiconductor business. Politicians have now passed a measure they believe would facilitate the injection of steroids.
Senate Bill 4 received final approval from the House on Thursday(April 6, 2023, marking Oregon’s first significant effort to leverage over $200 million in state expenditures into considerably more money from the federal government.
The House of Representatives adopted the measure on a vote of 44 to 10, with backing from both parties, and it will now be signed into law by Governor Tina Kotek.
“We knew we would need to rise to the occasion, and today we’re doing that,” said state Rep. Janelle Bynum, a Happy Valley Democrat who co-chaired the special committee that developed the proposal over eight weeks. “We’re delivering on that goal and seizing that opportunity.”
S.B. 4 is a two-part bill to lure semiconductor manufacturers into establishing or expanding operations in Oregon. One section of the measure allocates $210 million for grants and loans to advanced manufacturing and semiconductor businesses for land acquisition, development, and research.
Companies interested in receiving these grants are also expected to seek funding from the $52 billion federal government proposing via the 2022 CHIPS and Science Act to improve domestic semiconductor production. According to a spokesman for Kotek on Thursday, the governor’s office has received one formal expression of interest for the money, and more are anticipated shortly.
The second, more contentious part, gives Kotek extraordinary power to alter urban growth limits that limit where development may occur around Oregon cities. Legislators included the clause because of concern that Oregon does not have sufficient quantities of suitable industrial land to lure a significant semiconductor facility, such as a new plant.
If Kotek judges that changing the growth boundaries is necessary for a semiconductor project to proceed ahead, she will have that ability under the law until 2024. She can modify up to eight sites, six of which must be under 500 acres and two of which may be whatever size she chooses.
There has been pushback against the land-use provision in S.B. 4 from farmers, environmental organizations, and Republican senators concerned that giving Kotek such authority could lead to the loss of prime agricultural property. Protected farmland around Hillsboro, Oregon’s semiconductor industrial hub, has been a focal point of this debate.
“I cannot in good conscience give the governor super-siting authority to take lands and bring them into the urban growth boundary,” state Rep. Ed Diehl, R-Scio, said during a debate on Thursday. “That is not the Oregon way.”
The commitment of more than $200 million from Oregon’s meager budget has been criticized by some state representatives, who are still uncertain how much money they will have to spend in the biennial budget starting in July. No approximations of such numbers will be available until May.
Farrah Chaichi, a Democrat from Beaverton, cast the lone no vote on the measure because she was concerned about the wasteful use of scarce resources by semiconductor manufacturers. Notwithstanding these concerns, Bill 4 has widespread bipartisan support because its proponents see it as a once-in-a-generation opportunity to strengthen the state’s economy for the long term.
Since the 1970s, Oregon has been a significant participant in the United States semiconductor sector. As a result of its importance in chip development, it now employs over 15% of the nation’s semiconductor workforce. Many of these positions are located in the Hillsboro of Intel’s main campus.
Yet, Oregon has lately fallen behind other states in the race to win the race to recruit significant new facilities, despite its rich history in this regard. Successful conditions securing such contracts include Ohio, Texas, Arizona, and New York, which are anticipated to compete vigorously for federal CHIPS Act funding.
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Oregon’s congressional representatives recognized this need and sent an invitation to U.S. Commerce Secretary Gina Raimondo on Wednesday. U.S. Senator Ron Wyden, U.S. Representative Suzanne Bonamici, Kotek, Bynum, and others who believe Oregon should get substantial federal funding, met with Governor Kate Raimondo.
“If I do say so myself, we rocked it,” Bynum said on Thursday. “She was impressed.” Now that S.B. 4 has been enacted, legislators may focus on tax credits to help Oregon attract more semiconductor manufacturing. As a previous tax break expired in 2017, one key priority is reinstating a tax credit for research and development.
Lawmakers on a Joint Semiconductor Committee saw a sample of what such a credit may look like on Wednesday night. State Senator Mark Meek (D-Oregon City) and Representative Nancy Nathanson (D-Eugene) have proposed a plan to provide tax incentives of up to $10 million to businesses that invest in R&D in Oregon.
Nathanson and Meek emphasized that the idea is more liberal than credit programs given by other states also vying for semiconductor investment.
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