Economic Impact Study Launches SAO Legislative Agenda

By Jack Isselmann, SAO lobbyist

On February 8, 2007, the SAO released the findings of a study by the ECONorthwest consulting firm on the scope and nature of Oregon’s software industry at a press conference held in the state Capitol in Salem. The study shows Oregon’s software industry experienced employment gains of more than 11 percent in the two-year period ended in 2005 and is positioned for even greater job growth over the next decade. SAO is using the study to underscore the vitality and importance of our industry as the association launches its first-ever legislative agenda in Salem.

Software industry has a strong impact on the Oregon economy
The economic impact analysis is the most accessible and relevant compendium of data on the software and technology industry and its relationship to the Oregon economy that is currently available. Central among the findings of this report are these facts:

• In 2005 the software industry generated over 51,700 jobs in Oregon. These jobs produced a direct economic impact of $9.2 billion to Oregon’s economy, including $3.2 billion in personal income, and generated more than $834 million in state and local tax revenues.

• Employment in the ten software and computer-related professions profiled in the study is expected to grow by approximately 18.7 percent through 2014, faster than the overall employment growth rate projected for Oregon across all occupations in the same time period. Importantly, only software- and computer-related professions and healthcare-related professions are expected to have growth openings that exceed the number of replacement openings over the next decade.

• Improved or very improved business conditions were reported by 62 percent of SAO members who were surveyed for the study, and 44 percent of respondents expect to see stronger or much stronger hiring in the next year.

Findings support SAO policy positions
Led by President Harvey Mathews, SAO has delivered the findings to the Legislative Assembly to support the policy positions of the association. The first position articulated by SAO in the 2007 session is support of the Legislature’s effort to repeal the corporate kicker and divert proceeds of Oregon’s current corporate kicker, valued at nearly $275 million, into a rainy day reserve fund. When asked, SAO members overwhelmingly supported the creation of this reserve fund, with the important caveat that access to the fund occur under only the emergency circumstances described in the proposed law, such as sequential state revenue declines and increases in state unemployment figures. A survey of senior management in SAO member companies this week indicated that more than 72 percent of respondents support the redirection of 2007’s corporate kicker payout into a rainy day fund.

Beyond the SAO’s support of a rainy day fund, the association is lobbying for two pieces of legislation in the current session:

• Senate Bill 150 creates a $1 million pilot loan program for small businesses that have sales but do not possess sufficient traditional commercial collateral such as real property or capital equipment.
• A payroll-based tax credit that would act as a partial rebate of certain payroll costs of certified businesses that have human resources as primary assets of their operation and for which other tax abatement programs offer little employment expansion incentive, such as tax relief on plant facilities or capital equipment acquisition.

Impact of software-related industries carries weight
The Economic Impact Study confirms that software-related industries are the fastest growing traded-sector industries in Oregon. Moreover, software-related jobs contribute to broad economic impact throughout the state. For every ten jobs in the industry more than 13.4 jobs are created outside the industry. This leverages an additional $6 billion in economic activity. The study is unique in its scope as it goes beyond the companies that actually produce and sell software and measures the impact of software, IT and technology professionals throughout the value chain of Oregon’s traded-sector economy. The SAO intends to provide annual updates to the study. The results of the study can be viewed at http://www.sao.org/files/PDF/Oregon_Software_Industry_
Economic_Impact_Study_2-2007-1.pdf.

Watch the SAO newsletter and visit the SAO website to receive regular updates on the work of our Advocacy Committee and the progress of SAO advocacy agenda. If you would like to learn more, or better yet, to join our advocacy efforts please contact me. We welcome your input.

About the Author
Jack Isselmann is an attorney practicing in the Government Relations and Public Policy group at Tonkon Torp. After serving in executive management positions in technology companies and for the State of Oregon, Jack now represents technology companies like Electro Scientific Industries before state and local governments in Oregon. For more information on Tonkon Torp go to www.tonkon.com. Jack can be reached at jack@sao.org.