Inhabitants of rural Washington County are raising hell about Mayor Rob Drake's plan to absorb their neighborhoods into a bigger, better Beaverton.

The grumbling of discontented rustics probably won't halt Beaverton's land grab. But now Mayor Drake has aroused a sleeping colossus: the state's largest homegrown company, Nike.

Annexation is controversial for a simple reason: It hikes property taxes.

In the annexation process, cities engulf unincorporated areas and force land owners to pay for services such as police and sewers. State law currently permits annexation even if property owners object.

Drake has pledged not to annex the Nike campus, which is located in unincorporated Washington County. But the sneaker giant isn't taking any chances—and has launched an aggressive counterattack.

Ironically, two of the key commanders in Nike's battle to squelch annexation are elected officials who have been strong advocates for schools, which count on property taxes for funding.

The first is Julia Brim-Edwards, a member and past chairwoman of the Portland School Board. Nike hired her last year as a lobbyist. Last week, she warned the Beaverton City Council that its approach to annexation "raised issues related to trust and the long-term business climate in the region."

Just in case the Beav didn't get the message, Nike asked state Sen. Charlie Ringo (D-Beaverton) to carry its water in the Legislature.

Ringo introduced a bill that would exempt from annexation any Washington County property owned by any company with at least 5,000 employees, $12 billion in annual revenue and 35 years of Oregon operation. Only one company fills the bill, of course.

Ringo, a school-funding advocate and strident critic of corporate tax breaks, admits that singling Nike out for favorable treatment raises questions of fairness. After all, most homeowners facing annexation can't draft legislation or hire lobbyists. "We can't be in the business of taking care of Nike and ignoring the needs of regular citizens," Ringo says, while acknowledging his bill would do just that.

Ringo hopes to tweak the bill to broaden its impact. He says annexation should require the consent of those affected and entail more public process than it does now.

But the lawmaker is unapologetic about paying close attention to Nike's needs. "There's no doubt that Oregon needs to bend over backwards for our only Fortune 500 company," he says.

Nike is certainly bending over backwards to appeal to Oregon's politicians. On Sunday, the company hosted two busloads of legislators and a passel of other pols including Gov. Ted Kulongoski, Attorney General Hardy Myers, Secretary of State Bill Bradbury and U.S. Reps Earl Blumenauer and Darlene Hooley.

Ostensibly Sunday's bash was held to roll out a report detailing Nike's contribution to the state's economy. But attendance was strictly monitored, and reporters were barred.

When the legislators arrived for a steak and salmon dinner at Nike's sprawling campus, they were greeted by Washington County Sheriff's squad cars with their lights flashing—a not-so-subtle reminder that Nike doesn't need the protection from Beaverton police that annexation would buy.

The message Nike chairman Phil Knight delivered, along with goodie bags containing Nike watches and yellow Lance Armstrong bracelets, was even less subtle, according to two guests who spoke on background. After giving a brief history of the company he founded, Knight served up some food for thought, saying that if the company's headquarters were annexed, it might have to relocate 100 designers to Tokyo and move a call center to Canada. "Don't make us choose between our shareholders and our state," he told the crowd.

The Washington County assessor's office estimates that annexation could cost Nike an additional $900,000 annually in taxes, an increase of about 17 percent. Last year, the company posted revenue of $12.3 billion and profits of just under $1 billion.

Chuck Sheketoff of the Oregon Center for Public Policy says the Legislature has already bent so far backward for Nike that lawmakers are practically supine.

In the past two legislative sessions, Sheketoff notes, lawmakers gave Nike and other companies with big operations in Oregon a massive break by juggling the formula that determines their state income taxes.

"In order to get tax breaks, whether it's income tax or property tax, employers ought to be able to show the breaks will create new jobs," Sheketoff says. "Unless that happens, there's no accountability and we're just giving revenue away."

Nike's Brim-Edwards says such criticism is misguided. "This is not an issue fundamentally about taxes," she says. "It's about certainty in planning for future growth and the business climate. We do not use City of Beaverton services, thus subsidizing such services does not seem appropriate."

Mayor Drake can't offer legislators branded baubles, but he could offer a tour of his city's library and 911 call center—which, Beaverton says, provide free service to unincorporated Washington County.