A bill that would turn a portion of Port Orchard into a business-friendly “empowerment zone” took the first step toward legislative approval when it was approved by the Senate Economic Development, Trade and Innovation Committee on Monday.

“We’ve seen how community empowerment zones add an incentive that encourages businesses to locate in certain areas,” said Sen Derek Kilmer (D-Gig Harbor). “Passing this bill will help to strengthen economic development by stimulating job creation.”

Senate Bill 6595 will provide tax incentives and credits to businesses within the zone’s boundaries. This includes deferment or forgiveness of sales taxes required for new construction. Such breaks will be available for new businesses seeking to relocate within the zone, but will also apply to companies already there.

“Another intent of the bill is to prevent those companies that are now in Port Orchard from being recruited by another community,” said Kitsap Economic Development Alliance Executive Director Bill Stewart. “This is one way that local governments can offset the advantages that may be available in other areas.”

For instance, any company starting up in Oregon will be attracted by that state’s absence of a sales tax, which can cut construction costs considerably.

Creation of the zones will decrease a certain amount of taxes collected by the state but will be offset by the benefits of business development, according to Stewart.

“Businesses in the empowerment zones still pay B&O tax and property tax,” Stewart said. “Their employees still pay local sales tax. So this is a good investment for the state.”

Stewart and Port Orchard Mayor Lary Coppola addressed the committee on Jan. 28 to speak in favor of the bill.

Coppola said he did not know of any specific companies that were making a decision whether to locate to Port Orchard based on the bill’s outcome.

“This is just another tool in the toolbox that we can use in order to attract businesses to Port Orchard,” Coppola said.

While the bill’s impetus was to benefit Port Orchard it will have a statewide effect. Currently, Community Empowerment Zones are limited to six areas across the state. The bill would extend this benefit to any part counties that already host such a zone, as well as rural areas.

Additionally, the bill would have a beneficial local impact, with the ability to expand Bremerton’s existing zone.

“Bremerton’s zone is way too small,” Stewart said. “It will help to have their boundaries expanded. After that, we can benefit from a whole range of employment opportunities.”

The exact disposition of the bill is yet to be determined, but it will need full Senate support before it is sent to the House of Representatives for approval.