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Oregon’s major semiconductor bill clears state Senate

A photo from November 2021 shows employees in cleanroom "bunny suits" working at Intel's D1X factory in Hillsboro, Oregon. The company's presence in the state has made semiconductors Oregon's most valuable export.
Walden Kirsch
Intel Corporation
A photo from November 2021 shows employees in cleanroom "bunny suits" working at Intel's D1X factory in Hillsboro, Oregon. The company's presence in the state has made semiconductors Oregon's most valuable export.

The proposal would grant Gov. Tina Kotek unprecedented power to alter where development is permitted around Oregon cities.

Oregon lawmakers on Wednesday continued to signal they’re willing to spend big — and temporarily upend the state’s sacrosanct land use laws — in a bid to attract major semiconductor facilities.

In a 21-8 vote, the state Senate passed Senate Bill 4 over to the House. The proposal is an opening overture in what’s expected to be a forceful press this legislative session to entice players in the semiconductor industry to expand or put down stakes in the Beaver State.

The effort is an attempt to capitalize on more than $52 billion in available federal semiconductor funding, but it comes at an interesting time in the legislative session. Lawmakers appear ready to plunk down more than $200 million to woo facilities even as the state’s finances for the next two years remain uncertain. The Legislature won’t receive a revenue forecast on which it can finalize a budget until May.

“Time is of the essence,” Senate Majority Leader Kate Lieber, D-Portland, said during debate over the bill. “This is going to be the kind of opportunity that a legislature 50 years from now looks back and says: ‘I am glad that this legislature took a bold step.’”

SB 4 contains two major provisions. It would allocate $200 million from the state’s general fund to help prepare plots of land for new facilities and another $10 million to spur tech innovations at state universities.

More controversial, the bill would grant Gov. Tina Kotek unprecedented power to alter the urban growth boundaries that dictate where development can and cannot happen in cities throughout Oregon.

The bill says Kotek can alter those lines outside of the normal process through 2024, so long as she determines it’s necessary to attract a project. A task force convened by Gov. Kate Brown last year determined that Oregon has few large plots of industrial land that could site a major semiconductor factory.

The notion of creating a special land-use process for semiconductor companies has been SB 4′s central sticking point. Conservationists argue there is available industrial land that can meet the state’s needs without altering growth boundaries. Farmers around Hillsboro, where much attention has focused, warn against throwing away prime farmlands for projects that might or might not come to pass.

Lawmakers like Sen. Daniel Bonham, R-The Dalles, have found the latter argument persuasive.

“Do we care about our farming capacity here in Oregon?” Bonham asked. “Do we really want to outsource our ability to grow our own food?”

Other Republicans argued that freeing up land for a specific industry was unfair, saying Oregon should update its land use policies to be more business friendly in general.

“If we had a land use system that actually worked, we wouldn’t need to make any adjustments today,” said Senate Minority Leader Tim Knopp, R-Bend, who spoke in favor of the bill. “The reason that adjustments are going to need to be made is because our land use system doesn’t act quickly.”

More opposition to the bill came from senators who warned that setting aside $210 million this early in the budgeting process is imprudent. The state’s top budget writers unveiled a no-frills budget framework last week that suggested Oregon will have money for few new initiatives in the next two years.

Sen. Fred Girod, R-Stayton, noted that lawmakers had already passed a major housing package with more than $200 million in spending.

“We have no idea of the exact amount of money we have to budget,” Girod said. “If we have a big cut in the May [revenue] forecast, that austere budget’s going to get really ugly.”

Sen. Jeff Golden, D-Ashland, shared the concern, though he ultimately voted in favor of the bill.

“I think we’re being asked to take a whole lot on faith,” Golden said.

The hurried timeline behind SB 4 is in part being dictated by the federal government. The CHIPS and Science Act passed by congress last year contains $52.7 billion in federal spending meant to help spur a major expansion in the domestic semiconductor industry. The application process for that money is already underway, and states are racing to show federal officials they are acting urgently to partner with tech companies.

Oregon is home to roughly 15% of the nation’s semiconductor workforce, and chips are the state’s largest export. Nonetheless, national attention regarding semiconductor investment has more recently been trained on states like Arizona, Ohio, Texas and New York.

SB 4′s proponents suggested on Wednesday that the federal government’s timing meant Oregon had to act swiftly.

State Sen. Janeen Sollman, a Hillsboro Democrat who co-chaired a legislative committee that helped form the bill, noted that a semiconductor factory on par with Intel’s major Hillsboro facility could create more than 25,000 jobs and billions in revenue over two decades.

“Committing $210 million this early in session would be extraordinary and show how urgently Oregon wants to take advantage of this opportunity,” Sollman said.

Sen. Elizabeth Steiner, the top budget writer in the Senate, spoke in favor of spending the money despite lingering uncertainty about Oregon’s budget picture.

“Are we taking a risk? Sure,” said Steiner, a Portland Democrat. “Is it a smart risk? Yes, it is. ... Do we have the capacity to do this financially as a state almost regardless of what the May forecast says? Yes, we do.”

SB 4 now moves to the House, where it is expected to pass. Once that’s done, lawmakers plan to turn their attention to a suite of other policies, including new and expanded tax breaks for research and development activity or major construction projects.

Copyright 2023 Oregon Public Broadcasting

Dirk VanderHart is JPR's Salem correspondent reporting from the Oregon State Capitol. His reporting is funded through a collaboration among public radio stations in Oregon and Washington that includes JPR.