Month: May 2012

Kathryn Hickok talks with John Kuzmanich about the U.S. exit tax

KUIK radio talk show host John Kuzmanich interviewed Cascade Publications Director, Kathryn Hickok, about her latest piece, Divorcing Lady Liberty, which discusses ex patriots renouncing their U.S. citizenship because of U.S. taxes.

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American Nightmare: How Government Undermines The Dream of Homeownership

Why did the American Dream turn into a nightmare when the housing bubble burst? Who should we blame: Greedy bankers? Corrupt politicians? Ignorant homeowners? In his latest book, American Nightmare: How Government Undermines the Dream of Homeownership, Oregon native Randal O’Toole explores the forces at play in the housing market and shows how we can restore high rates of homeownership by eliminating federal, state, and local policies that distort the free market for housing.

O’Toole says that Metro, the Portland area’s regional government, is aiming to reduce single-family home ownership from 65 percent down to 41 percent; which is nothing short of a war on homeownership.

O’Toole contends that we could boost home ownership rates to nearly 75 percent by eliminating land use-regulations and subsidies.

You can meet this provocative author and hear him expound on his home ownership theories at next week’s Executive Club dinner; Wednesday, June 6th at the Portland Airport Shilo Inn.

Come for the $20 buffet dinner beginning at 6pm, or skip dinner and arrive by 6:45pm for the meeting. O’Toole, Senior Fellow at the Cato Institute, will have copies of his book for sale before and after his keynote address. There is no charge for this important event, unless you choose to buy dinner or a book. We hope to see you there.

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U- Choose Education Forum: Business and Government

Meeting the challenges of running a business in Oregon

Join the U-Choose Education Forum addressing government’s escalating attacks on business.  Tuesday June 19, 6:30- 9:00PM, West End Building, 4101 Kruse Way, Lake Oswego, OR 97035

Oregon is a beautiful place to live, but, unless you are in one of the government favored industries, it is perceived to be one of the less business friendly states.  Over the last decade the economy of this state has been in steady decline.

Are taxes, regulations, and mandates strangling the economy of this state?  Can businesses survive and thrive in Oregon? How can our elected officials, at every level of government in Oregon, work to make Oregon more business friendly?

These questions will be addressed by speakers who operate businesses in this state and who are, or have been, candidates for public office.

Moderator:

Karen Bowerman- Dean Emeritus, College of Business and Public Administration, California State University San Bernardino and primary candidate CD5.

Speakers:

Lew Barnes: Founder and president of Summit Manufacturing, former Vietnam Marine, and candidate for State Representative District 31.
Gary Coe: Founder and leader of seven successful businesses which have employed hundreds of Oregonians including Speed’s Towing and Pacific Cascade Towncar.  He is a candidate for State Senator District 14.
Representative Matt Wingard: Oregon House of Representatives, R-Wilsonville, District 26.
Councilor Mike Kehoe: Lake Oswego City Council and recent founder of four new companies.

Are you running a business in Oregon? Come share your own views and experiences during U-Talk.

Children, teens, adults welcome.

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Oregon’s Budget Transformation

Governor John Kitzhaber has called for transforming state government, in part by proposing a new ten-year budget process that he says “is necessary to change a decade of declining employment and wages.” The Governor hired former Metro Chief Operating Officer Michael Jordan to implement this transformation, while leading and supervising all aspects of the state’s day-to-day operations as its first COO. Jordan’s charge includes reviewing outdated state systems, streamlining departments, and creating efficiencies and cost savings.

The transformation process includes a set of Guiding Principles and Outcome-Based Budgeting Principles that sound good but so far fail to address adequately at least four important concerns:

First, Government cannot and should not do everything. Determining core functions and prioritizing them should be the first step to achieving more accountability in state government.

Many state agencies don’t have a clear understanding of what their priorities should be. This concern was highlighted in a legislative hearing where the head of an agency was asked by a freshman legislator what his highest priority activities were.* Without hesitation, the agency head looked at the freshman and told him that everything his agency did was high priority.

The legislator then asked what would be cut if the agency budget ended up smaller than requested. The agency head stated, again without hesitation, that he couldn’t cut anything. He repeated that everything his agency did was a top priority.

If everything is a top priority, then nothing is a top priority.

The proper role of government in a free society clearly includes the protection of our rights to life, liberty, and property. But just as clearly, for example, it should not include provision of our jobs, entertainment, and alcohol. We should be willing to end state economic development programs, which do not create jobs so much as they pick winners and losers in the economy.

We need to end state control of liquor through the OLCC, and we should not even consider using tax dollars to fund entertainment venues such as sports stadiums. These belong in the private sector.

Of course, sticking to core functions is hard, especially because of the misguided belief that anyone’s unmet need is the proper concern of government. It is not. The average person can’t afford the time in Salem to lobby against any given program that may only cost him or her a few dollars a year. However, it is well worth the time for those who benefit from a program to spend as much time and money as needed to ensure that the millions or billions of dollars at stake move from the taxpayers to them.

The pressure is always in favor of more government, not less. To resist this pressure, lawmakers need to understand government’s proper role and the harm they do when taking money from some to provide benefits to others. Citizens need to learn why more government means less freedom and how they might meet their needs better through voluntary, private sector approaches.

Second, we need to understand why one of the Governor’s 10-Year Plan Guiding Principles—the reliance on evidence-based information to make informed policy decisions—hasn’t worked before and may not work in the future.

In the late 1980s, then-Senator President John Kitzhaber relied on this principle when he helped create the Oregon Health Plan (OHP). The Plan attempted to use medical and scientific evidence to prioritize treatment of medical conditions for Medicaid patients based on cost-benefit analysis. The problem then was (and likely will be now) that politics gets in the way.

Medical conditions that objectively should have fallen below the cutoff line in the OHP rose above the line because special interest groups successfully lobbied for their constituents. Consequently, the plan saved little, if any, money for taxpayers. As long as government provides the service, or provides the funding, this dynamic will be hard to change.

Third, achieving streamlined operations and cost savings through consolidation of agencies, boards, and commissions will be harder than it sounds.

Forces are at work in large firms and governments that cause them to produce goods and services at increased per-unit costs. Economists call these forces diseconomies of scale. They are especially prevalent when trying to combine monopolies―which defines government agencies.

Take, for example, Oregon’s attempt from 1992 through 2001 to reduce education costs by consolidating school districts. Legislation resulted in 277 school districts being consolidated down to 198. Rather than fewer districts resulting in less administrative overhead, at the end of the period there were actually more central office staff per pupil than at the beginning. Also, non-teaching staff grew faster than teachers, and real per student spending rose more than 11 percent. We should not be surprised if upcoming efforts to consolidate boards, commissions, and agencies yield similar results.

Finally, as famed management consultant Peter Drucker warned: “There is nothing so useless as doing efficiently that which should not be done at all.”

This gets us back to the first concern above. Unless we prioritize core functions, and stop doing other things, state government will expend a lot of energy, and a lot of taxpayer dollars, trying to do efficiently that which government should not be doing at all.

* House Agency Oversight and Efficiency Committee, Oregon Legislature, April 8, 1997. Rep. Ryan Deckert (D) questioning William Scott, Director, Oregon Economic Development Department.

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Executive Club: Oregon’s (free market!) Environmentalist

Randal O’Toole a Senior Fellow at the Cato Institute is one of the most respected thinkers and essayists to grace our meeting lectern and we are delighted to bring him back to mark the publication of his latest work, American Nightmare: How Government Undermines The Dream of Homeownership.

In American Nightmare, O’Toole says Portland Metro is aiming to reduce Portland-area single-family homes from 65 percent to 41 percent … this is nothing short of a war on home ownership.  The author also inveighs against government subsidies for housing by illustrating how subsidies do more harm than good by actually making housing more expensive.

O’Toole contends that the elimination of both land use-regulation and subsidies would increase homeownership rates to nearly 75 percent!  Be there to meet this original thinker and enjoy what is guaranteed to be a lively, informative and, above all, a thought provoking presentation.

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Tear Down These Walls!

As a founder of Cascade, I was asked to speak at the fourth annual Oregon Tax Day Tea Party, this year held on April 14 in Clackamas County. Some 400 activists attended what turned out to be the most inspiring event of its kind since the Tea Party began organizing in 2009. For a full description and video of the event, go to www.OregonTeaParty.org.

 

I told the audience a human story from when the Berlin Wall fell in 1989. My friend Wall Street Journal editorial writer John Fund wrote about his encounter with four teenage girls while visiting East Berlin in 1984. As he prepared to board the train that would take him back to the West, John asked them what they wanted to be when they grew up.

 

“A schoolteacher, said one. A hairdresser, said another. A nurse, said the third. Only Monika, the oldest and clearly the wisest, hesitated. Finally, she sighed and said, ‘It doesn’t make any difference what we become when we grow up. We will still always be treated like children.’”

 

That statement made a profound impact on John. He noted how he could go anywhere in the world from that street corner, but these teenagers could not go 500 yards to see the bright lights of West Berlin.

 

They had to remain in “a semi-comfortable, but drab and kindergarten-like existence, in which independent thoughts were hidden from the government.”

 

John and Monika kept in touch over the next few years. Then, two days after the Berlin Wall fell on November 9, 1989, John’s phone rang.

 

There was the unmistakable sound of an overseas call. “This is Monika!” she shouted in halting English. “I am calling from Berlin West! I am over the Wall!”

 

Monika did not plan to flee East Germany. But now that the Wall was down, she could leave if the people who ran that government reneged on their promises of free elections and economic reforms.

 

John reminded Monika of their first meeting and asked if she felt she was finally being treated like a grownup.

 

“Yes,” she said. “I think everyone in my country decided for themselves to grow up overnight.”

 

I explained to the Tea Party audience that Monika knew what it was like to be treated like an adult by her government; but Americans are now being treated more like children, as the limited government our Founders gave us morphs into a behemoth. Activists like them must stand up and tear down the Walls of national programs like ObamaCare, and the Walls erected by local programs like “Smart Growth” that have overtaken Multnomah County and threaten to encroach into neighboring counties.

 

Many in the Tea Party audience were part of what is becoming known as the “Clackastani Rebellion” because of their efforts to defeat smart growth and light rail plans in cities like Damascus and throughout Clackamas County.

 

Cascade Policy Institute has helped educate Oregonians since 1991 about the benefits of freedom and liberty. We look forward to working even more closely with everyone who is committed to keeping our communities and our state from being encircled by our own, self-created Berlin Walls.

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Divorcing Lady Liberty

Numerous recent news stories have reported on high-net-worth Americans renouncing their U.S. citizenship to protect assets from high tax rates. Last Friday, a Wall Street Journal editorial suggested the U.S. government should not seek to “punish” ex-citizens through high “exit taxes.” Instead, Congress should work “to make the U.S. so appealing and dynamic again” that people will be “sorry [they] ever left.”

 

It seems unreal that citizens should find it in their interest to leave the United States of America. Our country and its material success were built by millions of the world’s “huddled masses, yearning to breathe free.” Men, women, and children have come to America for centuries in search of freedom, justice, and an upwardly mobile future that results from both. When the tax code is so punitive that Americans would relinquish willingly the rights and privileges of U.S. citizens, we know we have a problem.

 

Our tax policies should encourage entrepreneurs, investors, and individuals of financial means not only to come here but to stay. Yet, it bears remembering that our identity as Americans and our relationship with our country should have value to us beyond whether they are financially “worthwhile.” Americans have grown used to acquiring whatever we desire, but our American heritage can’t be purchased―and you can’t put a price on freedom. That’s why it’s a sorrow to see Americans choosing to go.

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John Charles talks with Victoria Taft about the Portland-Milwaukie Light Rail Project

Victoria Taft, radio host on KPAM 860, interviewed John Charles about his latest commentary, Transit Hypocrisy, which discusses TriMet’s Portland-Milwaukie Light Rail Project.

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Testimony Regarding TriMet Proposed FY 13 Budget

Testimony before the Multnomah County Tax Supervising and Conservation Commission

Regarding the TriMet Proposed FY 13 Budget

 

John A. Charles, Jr.

President & CEO

May 23, 2012

 

 

The TSCC is charged with reviewing local government budgets and certifying that they comply with state law. I encourage you to withhold your approval of the TriMet FY 13 budget, on the grounds that it is not balanced.

 

TriMet pretends to show a balanced budget by using at least two gimmicks: (1) assuming that $5 million in potential employee compensation costs will disappear via labor arbitration with the ATU; and (2) deliberately under-funding pension and OPEB trust funds to solve immediate cash problems.

 

If the TSCC were to use a more realistic assumption for the ATU/TriMet arbitration, and if you required TriMet to begin funding retirement trust funds at prudent levels, the TriMet budget would be severely out of balance. That should be addressed now, not next year.

 

Problem #1: Assuming that management will win the arbitration with  ATU

 

By making this assumption, TriMet closes a $5 million gap in the budget. But why is this a realistic assumption? TriMet has been making the same prediction for over a year, and has yet to be right, as seen in the following statements:

 

  • TriMet press release, April 13, 2011: “The FY2012 budget assumes that a new Working and Wage Agreement with the ATU has benefits more in line with peer agencies, and consistent with those contained in TriMet’s July 2010 Final Offer.”

 

  • TriMet FY 2012 budget message, July 2011: “A critically important assumption upon which TriMet’s financial forecast and the FY 12 Adopted Budget are based is that TriMet enters into a Working and Wage Agreement WWA) with the Amalgamated Transit Union, and that the wages and benefits are consistent with those contained in TriMet’s July 2010 Final Offer….”

 

  • TriMet FY 13 budget message, April 2012: “…the FY 13 proposed budget includes a $12 million revenue increase/expenditure reduction package, based on the assumption of a labor arbitration decision favorable to TriMet.”

 

Unless TriMet can provide you with some analytical justification for its continued assumption that management will win the ATU arbitration, TSCC should reject this forecast as wishful thinking and require that TriMet plan a budget on the assumption that ATU wins. That would require $5 million in new revenue and/or expense cuts.

 

Problem #2: Disguising revenue-expenditure imbalances by underfunding retirement trust funds.

 

TriMet has been hiding budget problems for decades by deliberating underfunding the trust accounts established to pay for post-employment obligations. This is not apparent to anyone who simply reads the budget; it can only be discerned by looking at the budget and the audited financial statement together.

 

For your convenience, page 48 of the 2011 TriMet Annual Report is attached. It shows that the trust funds for OPEB and the two pension plans are severely underfunded. Not only that, when expressed in terms of “UAAL as a percentage of covered payroll”, the trends since 2004 are all going in the wrong direction.

 

Lest you think that this is some kind of 8-year statistical fluke, the chart below shows that management has been underfunding the largest employee pension fund for nearly 30 years.

 

Trends in pension obligations for TriMet

1983-2011

(millions)

 

Bargaining Unit Plan                      1983       1987       1991       1995       2001       2005       2009       2011

 

AAL                                                        $17.5     $23.6     $33.1     $113.1   $194.9   $345.4   $460.3   $517.9

Unfunded AAL                                  $7.1        $17.7     $22.7     $61.1     $94.6     $189.6   $243.2   $228.6

 

UAAL as a % of Cov. PR                  17%        46%        52%        92%        107%     178%     196.5%  192%

 

 

TriMet managers know this is not prudent. They have repeatedly stated that changes must be made. For example, in the budget message for the FY 2011 budget, management stated: “Over time, TriMet will need to increase annual pension fund contributions in order to achieve 75% or higher funding of the defined benefit pension plans.”

 

The message also noted,  “TriMet needs to begin to take steps to partially fund a retiree-medical trust to assure a funding source for retiree health benefits, which have already been accrued but are not yet funded.”

 

That language was repeated almost word for word in the FY 2012 budget message last May.

 

The message for the FY 13 budget states, “TriMet must continue to improve its financial position by addressing the following areas: reduce retiree medical costs and fund existing liabilities with deposits to an OPEB trust; increase the funded ratio for existing pension plans.”

 

For three years in a row, TriMet has promised to address this problem, yet as of June 2011, the funded ratios for the OPEB trust, the management DB pension plan, and the union DB pension plan were 0%, 68%, and 56%, respectively.

 

The relative scale of TriMet’s OPEB liability can be seen in the attached spreadsheets, which are excerpted from a larger analysis we undertook last year. The first spreadsheet (blue) is rank-ordered by Actuarial Accrued Liability; the second by UAAL as a % of covered payroll. By either metric, TriMet has the biggest OPEB problem of any unit of government in Oregon.

 

According to the auditor, the annual OPEB cost last year was $86.2 million, and TriMet only paid for $15.9 million, or 18% of the total cost. If TriMet tried to make the Annual Required Contribution of $77.6 million calculated by the actuary, it would almost wipe out TriMet’s transit service.

 

At the January meeting of the TriMet board, the TriMet CFO reported that OPEB unfunded liability had increased by roughly $60 million since June 30, which implies that the unfunded liability is (or was) growing at a rate of $2.3 million per week. In essence, TriMet cannot afford to pay its workers, and is using the OPEB trust fund as an ATM.

 

If an employer paid its employees under the table to avoid payroll taxes, everyone would know that the business was not really viable. Yet TriMet is essentially doing the same thing by moving the growing levels of UAAL for OPEB and pensions off the balance sheet. While this may be legal in the public sector, it is not a sound budgeting practice, and guarantees an even worse budget crisis in the future.

 

Conclusion

 

Municipalities and special districts across the country are facing massive budget problems caused by unsustainable retirement obligations for public employees. Yet in every case, something could have been done about it in prior decades, if only policy-makers had had the courage to act.

 

The same thing is happening at this very moment with TriMet. Year after year, the agency defers more unfunded liability to future years, because the TriMet board is unwilling to make the tough decisions. Members of the TSCC have an opportunity to help put a stop to that practice.

 

I hope you will reject the proposed budget on the grounds that it hides the true long-term effects of current and past decisions, and require that TriMet resubmit a budget that more accurately states the costs of fringe benefits.

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Legislative Testimony Regarding Public Purpose Tax

Testimony of John A. Charles, Jr.

President & CEO

Regarding Oregon’s Public Purpose Tax

 

May 22, 2012

 

Oregon’s public purpose tax was enacted in 1999 through the passage of Senate Bill 1149. The tax went into effect on March 1, 2002. The stated purposes were to subsidize “new cost-effective local energy conservation, new-market transformation efforts, the above-market costs of new renewable energy resources, and low-income weatherization.”

 

Many diverse interests went into formulating the bill, and all participants were clear that the tax would sunset in ten years. For example, Ron Eachus, the chair of the Public Utility Commission at the time, stated:

 

“[The public purpose tax] provides a reasonable sunset that is long

 enough that enables a more competitive market to develop for those

programs and it gives some stability to the financing of these programs.”

 

He reiterated that, “10 years provides both an assurance of funding and provides some stability and at the same time it provides an opportunity for a competitive market to develop. Then you can decide that the public purpose charge is not needed.”

 

Rep. King stated, “…[renewables] might require a period of ten years until it could be competitive and survive in a competitive market.”

 

In 2007, the legislature passed SB 838, which imposed renewable portfolio standards (RPS) on large electric utilities.  For reasons never explained, the bill also extended the sunset date of the public purpose tax to 2026. So instead of having the PPT disappear on March 1 of this year – as promised in SB 1149 – ratepayers are facing billions of dollars in rate premiums during the next 14 years. This is a legislative bait-and-switch that should not be tolerated.

 

During the 2012 interim, the Legislative Audits committee should take a hard look at the history of SB 1149 and ask the proponents why their 1999 predictions were so wrong. And more importantly, if subsidies for 10 years turned out to be inadequate, why should we assume that more subsidies will make the renewable energy industry competitive?

 

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Jeff Kropf talks with John Charles about TriMet’s Transit Hypocrisy

KUIK radio host Jeff Kropf interviewed Cascade President John Charles on his latest commentary, Transit Hypocrisy, about federal funding for the Portland-Milwaukie Light Rail Project.

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Transit Hypocrisy

Two years ago, the head of the Federal Transit Administration (FTA), Peter Rogoff, gave a speech to a room full of transit executives. His remarks were unusually blunt. Mr. Rogoff admitted that the transit planning process for new projects was biased in favor of light rail. But he reminded people that rail systems had significant long-term costs. FTA recently had concluded there were more than $78 billion in deferred maintenance costs for public transit agencies in the U.S., and three-fourths of those costs were associated with rail systems.

Mr. Rogoff pointed out that many local transit districts were seeking large federal grants for new rail lines, even though their overall levels of service were shrinking. He asked rhetorically, “If you can’t afford to operate the system you already have, why does it make sense for us to partner in your expansion?”

In the face of funding shortages at all levels of government, Mr. Rogoff reminded the executives that decisions about new transit service were moral decisions and that political leaders needed to “have the guts to say ‘no’ when everyone else wants to say ‘yes’.”

Unfortunately, Mr. Rogoff apparently forgot this speech as soon as he gave it. During the next two years, his agency encouraged Portland’s TriMet to continue planning for the most expensive transit project in the state’s history, the Portland-Milwaukie light rail line (PMLR). The Milwaukie line will cost more than $205 million per mile to construct and will destroy 68 businesses and 20 private homes.

In order to partially finance the so-called “local share” of the price tag (50% of construction cost), TriMet will have to sell $60 million of bonds in the next two years, and the debt service on those bonds will cannibalize bus service that has already been reduced four times since 2009.

Since TriMet service is shrinking, the agency is clearly in need of the “tough love” that Mr. Rogoff preached in 2010. Yet tomorrow, Mr. Rogoff himself will be in town to announce FTA approval of a Full Funding Grant Agreement (FFGA) that will waste some $745 million in federal money on the project over the next eight years.

There are many reasons why federal funding should have been denied years ago for the PMLR project. The most important is that TriMet has consistently violated FTA requirements that local transit agencies successfully operate federally funded capital projects for at least 20 years.

The most egregious example is the original MAX line that opened in 1986. At the time the Blue Line was being planned, TriMet promised that trains from Gateway to downtown Portland would run every five minutes during peak periods. Today, the actual frequency (known as “headways”) is every 8 minutes, or 60% worse than promised.

TriMet learned a lesson from this experience, but unfortunately it was the wrong lesson. Instead of killing the expensive rail program, TriMet simply lowered expectations for service on future rail lines. For the Yellow Line to North Portland, TriMet promised 10-minute service intervals for peak periods. Yet even with this lower bar, the agency could not meet its commitment. Peak-hour service on the Yellow Line currently operates at 15-minute headways, 50% below what was committed to.

The agency’s newest rail line, the Green Line to Clackamas Town Center, opened in September 2009. By then TriMet’s finances were so bad that project managers knew even before it opened that promised levels of service would not be met. Green Line service has been at least 33% below FFGA requirements since day one.

TriMet is now promising FTA that when the Milwaukie line opens in March 2016, it will offer peak-hour service every 10 minutes and off-peak service every 15 minutes. But since TriMet is unable to offer such service on any of its rail lines right now, no one should take this forecast seriously.

The saddest part about Milwaukie light rail is that it will make current transit riders in that corridor demonstrably worse off than they are today, due to the elimination of express bus routes. Nine buses stop at the Milwaukie Transit Center, and five of them travel on McLoughlin Boulevard to Portland city center. However, once light rail opens, all of these buses will no longer provide service north of Milwaukie. Transit customers boarding buses from points south will be forced to transfer at Milwaukie.

Light rail will also take longer than express bus service. The current scheduled time-of-travel for a trip from downtown Milwaukie to Portland State University on the #99 McLoughlin Express bus averages 17.5 minutes. An early morning run makes it in 12 minutes. The forecasted time of travel for light rail – which offers no express service – is roughly 19 minutes for the same distance.

None of this is necessary, because there is a very cheap alternative – a fact well known to Mr. Rogoff. Last month the FTA released a study, Metro Orange Line BRT Project Evaluation, looking at the cost-effectiveness of two different versions of bus rapid transit (BRT) in Los Angeles. The Orange Line is high-end BRT that resembles light rail because it has its own exclusive right-of-way and never has to travel in mixed-flow traffic. A second variation, known as the Metro Rapid bus, operates in general purpose arterial lanes, but achieves relatively high travel speeds simply by spacing stops apart by about 0.8 miles.

The study showed that in most respects, both light rail and exclusive-lane BRT are not cost-effective. The Metro Rapid bus system is the real bargain, especially compared with expensive light rail projects:

Capital Costs of Light Rail and Bus Rapid Transit Projects

Portland-Milw. Light Rail Line

LA Gold Line Light Rail

LA Orange Line BRT

LA Metro Rapid BRT, Ventura Line

Capital cost/mile

$205 million

$62.7 million

$26 million

$0.2 million

Peter Rogoff is about to hand over $745 million in federal funds for a Portland light rail line that will cost 1,017 times more than the LA Metro Rapid system. In what ways is it 1,017 times better?

Actually, it’s not even as good. The Rapid Bus system is cheaper, more flexible, twice as fast, arrives more often, and is easier to implement.

For more than 25 years, the Federal Transit Administration has been playing Charlie Brown to TriMet’s Lucy. No matter how many times TriMet promises to successfully operate another light rail project, in the end they always yank the ball away from FTA. Yet, here is the FTA administrator, getting ready to tee up another new project.

We know how this is going to end. TriMet’s rail empire will grow by a tiny fraction, while more bus service gets cut. As Mr. Rogoff once said, we need someone with the guts to say “no,” but it certainly won’t be him.

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Bill Post interviews Sarah Ross on a need for competition in education

KYKN radio host, Bill Post spoke with Cascade Communications Coordinator Sarah Ross on Thursday to discuss the evolution of technology and a need for competition in education.

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Bill Meyer talks with Steve Buckstein about Right to Work in education

KMED host Bill Meyer spoke with Cascade Senior Policy Analyst Steve Buckstein about the philosophy of right to work, education unions, and the Eagle Point School District teacher strikes.

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Bill Meyer talks with Steve Buckstein about right to work in education

KMED host Bill Meyer spoke with Cascade Senior Policy Analyst Steve Buckstein about the philosophy of right to work, education unions, and the Eagle Point School District teacher strikes.

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The Cost of Cutting Online Learning

By Diana Moore

 

This article by the Freedom Foundation’s Diana Moore was originally published on GettingSmart.com.

 

State budgets have been hurting in a bad way. Across the country, legislatures continue to struggle to close deficits while still providing essential services. While cuts have been necessary, the wrong cuts can be devastating and ironically, very costly.

 

On the chopping block time and again has been online learning. This is due to the fact that, financially speaking, there’s a common misunderstanding about how online learning fits into public education. Unfortunately, it is viewed as an extra program, something schools and taxpayers pay more to offer. In reality, online and blended schools are simply alternative methods of delivering a public education. But because of this misunderstanding, legislators continue to go to online learning when making cuts.

 

So why is online learning a costly cut? There are three unique costs when budget cuts force an online program to close.

 

First, cutting funding to online programs can actually cost taxpayers more money.

 

When reduced funding forces an online program to close its doors, it’s likely the majority of students will return to traditional public schools. Each state has its own funding mechanism for online schools, but it’s typically safe to say digital programs receive funding from fewer sources than traditional schools and are therefore more cost-effective. (For example, in Washington, online schools typically don’t receive any local levy funding.)

 

Thus costs increase when students who formerly attended an online school are forced to transfer to a traditional school. In this situation, the only savings comes if students choose to opt out of the public school system altogether and attend a private school or homeschool. Students leaving the public school system should never be considered a viable cost-savings measure.

 

But even more important than the increased expense is the cost to students and their futures when online programs are cut.

 

While simply an alternative to traditional public school (and not an add-on), online programs have the ability to offer much more than their brick-and-mortar counterparts. They create opportunities where none exist, allowing students in every corner of America to get state-of-the-art instruction from world class teachers in subjects their local schools might not be able to offer.

 

They provide flexibility and customization that isn’t possible in a classroom of 30 students with a single teacher and a whiteboard.

In a nutshell, online learning opens a world of opportunity to every student wherever Internet access is available.

 

When an online school is forced to close due to funding cuts, the door to that world of opportunity is slammed shut. Kids are sentenced back to the 19th century education model their great-grandparents used.

 

When state policymakers cut online learning, taxpayers pay more and students get less.

 

The third cost of cutting online programs is to the state that moves backward in the education race while the rest of the country and world press on.

 

The only direction any society can afford to move in education is forward. That’s why digital learning—in all its forms—must be a priority if this generation and the next are to compete in today’s global idea economy and become tomorrow’s leaders.

 

 

Visit Cascadepolicy.org for more about online learning in Oregon and why Oregon’s legislature should continue to support expanding online learning options for public schools and public charter schools.

 

*Diana Moore is senior education analyst at the Freedom Foundation and director of the iLearn Project. She is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy organization. This article was originally published on GettingSmart.com.

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Insolvency, One Step at a Time

The Oregonian on Sunday examined TriMet’s deteriorating finances and called attention to high-cost union contracts, first approved in 1994, as the starting point of the decline. Due to the compounding effect of these contracts, TriMet now spends $1.63 in benefits for every $1.00 spent on wages, and the agency has more than $1.2 billion in unfunded actuarially accrued liabilities for promised retirement benefits.

 

As a result, transit service has been cut by 14% in the past four years, and more cuts are due beginning September.

 

What was revealing in the Oregonian feature was how no one was willing to accept responsibility. At any point during an 18-year period, dozens of people served on the TriMet Board or in top management positions, and they could have demanded change. But they didn’t.

 

Of course, leadership starts at the top, and it’s the governor who appoints the TriMet Board. In August 1994, then-Governor Barbara Roberts met with the TriMet board chair, Loren Wyss, who strongly objected to the draft contract. Instead of supporting him, she forced him off the board.

 

The legacy of that decision is a terminally dysfunctional business model at TriMet. Someone on the TriMet board needs to have the courage to say that. But who will do so when it’s so much easier to remain silent?

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Rural Freedom Project- Juniper Entrepreneur

Gerard Joseph Lebreque talks with Cascade Policy Institute about his struggles with regulations on juniper and his life in rural Oregon.

His work can be found at: http://www.creationsbyjoseph.com/

 

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Learning Freedom and Integrity from a Cold War Hero

By Susan Gore

Freedom fighter Vaclav Havel’s recent death reminded freedom lovers everywhere that no matter how entrenched rulers seem to be, they are vulnerable to so-called “powerless” citizens who in fact are not powerless when they refuse to surrender their consciences. The lessons of his life can speak to us this election season, as we debate competing visions for the direction of our state and our country, the limits of government power, and what we expect of our elected officials and of ourselves as citizens.

 

Vaclav Havel’s perseverance in speaking his conscience played a crucial part in an awakening that led to Czechoslovakia’s 1989 Velvet Revolution and the establishment of a free republic. After four decades of Soviet control of Czechoslovakia, and freshly released from prison, Havel gave the presidential inaugural address on January 1, 1990.

 

The country was an ecological mess and in economic shambles, but Havel focused his remarks on the havoc worked upon the character of Czechoslovakians themselves. He told his battered people, “I assume that you did not propose me for this office so that I, too, would lie to you.”

 

“The worst thing is that we live in a contaminated moral environment. We fell morally ill because we became used to saying something different from what we thought. We learned not to believe in anything, to ignore one another, to care only about ourselves. Concepts such as love, friendship, compassion, humility or forgiveness lost their depth and dimension, and for many of us they represented only psychological peculiarities.”

 

Although Havel was a playwright whose first love was theater, he became “…dedicated to trying to behave like a citizen, even where citizenship is degraded.” As a master writer he had a profound impact on Eastern Europe. He quickly prepared his essay The Power of the Powerless in 1977 for a secret meeting in Poland with Solidarity activists such as Zbygniew Bujak. Bujak recalled:

 

“This essay reached us at the Ursus factory in 1979 at a point when we felt we were at the end of the road….We began to doubt the purposefulness of what we were doing. Then came the essay by Havel. Reading it gave us the theoretical underpinning for our activity. It maintained our spirits; we did not give up, and a year later it became clear that the party apparatus and the factory management were afraid of us. We mattered.…When I look at the victories of Solidarity…I see in them an astonishing fulfillment of the prophecies and knowledge contained in Havel’s essay.” (Open Letters: Selected Writings 1965 – 1990, by Vaclav Havel, edited by Paul Wilson, Vintage Books)

 

Solidarity was organized in 1980 and is largely credited with the 1990 overthrow of the Communist regime in Poland by the presidential election of Lech Walesa.

 

The “theoretical underpinning” of Havel’s essay is that totalitarianism is like a machine constructed with interchangeable parts: Government officials play the same roles, coming and going as the machine grinds on relentlessly. Havel told how the machine-like specter of totalitarianism stripped innocent individuals of their integrity when they complied with meaningless regulation. Thus, a master beer brewer miserably made bad beer in the state factory, students reluctantly learned Russian, writers had recourse to underground publications, and unlicensed musicians could only perform illegally.

 

All tyrannies seek to divest individuals of their power by imposing a wedge of tension between inner truth and outer behavior. In The Power of the Powerless, Havel’s fictitious example is a vegetable-seller, a greengrocer who was required to place a “Workers of the World Unite” sign next to his tomatoes, lest his son be denied entrance to the university.

 

Why would totalitarianism react viciously to the simple omission of a sign next to some tomatoes? Because, just as a child ends the entire parade by asking why the emperor has no clothes, one person pointing to truth threatens a bureaucratic house of cards entirely based on lies. Cumulative instances of honesty – genuine art, competence, trusting friendships, verified information – wear down tyranny like waves eroding the foundation of a sand castle so the whole structure crumples.

 

Those who survive intact morally by choosing truth may pay a price physically. Havel never recovered from the pneumonia he contracted during his four years in prison. Yet, Havel’s inaugural remarks targeted the more toxic effect lies have on people: meaninglessness, loss of genuine friendship, and so on. We lose what makes us human. Writers employ such terms as “truncated individuals,” “empty cores,” and “nobody in the building” to describe the loss of inner integrity due to complying with lies.

 

Vaclav Havel was as surprised as anybody when the USSR left Czechoslovakia in 1989:

 

“When you try to act in accordance with your conscience, when you try to speak the truth, when you try to behave like a citizen, even in conditions where citizenship is degraded, it won’t necessarily lead anywhere, but it might.”

 

The challenge in dissenting from tyranny is to persevere in what we believe is right even though we cannot be sure of the outward result. There is a price to pay for standing for our principles, but the reward is the treasure of personal integrity. Vaclav Havel’s words ring true for us today.

 

*Susan Gore is founder of Wyoming Liberty Group and a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research organization.

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Rescue Children from Our Burning Public School System

Newark, New Jersey Mayor Cory Booker is a larger-than-life figure fighting for what he calls the “Most Important Civil Right of All – equal access to high quality education.”

Last week Booker gave an inspiring keynote address before the American Federation for Children, a national school choice organization. He said his strong support for school choice stems from the options he was afforded in his own life-  options denied to millions of children because their ZIP codes determine what schools they must attend.

A Black Democrat himself, Booker made it clear he is disappointed that “his president” hasn’t yet joined him in supporting school choice for every family, not just for those he calls “the connected and elected.”

Not surprisingly, the left was upset that Booker would speak before a group partially funded by what it considers right-wingers. Booker slapped those concerns aside in his talk, making it clear that to him school choice is not a left/right or partisan issue, but one of equal rights.

But, the heat Mayor Booker took from the left last week pales in comparison with the heat he took last month. Ignoring his security team’s advice, he ran into a burning building to save his neighbor trapped in the flames. He rescued the woman and then went to the hospital with second-degree burns and smoke inhalation.

Cory Booker is a genuine hero. Not just to the woman he saved from that fire, but to the millions of poor and minority children trapped in a life of disappointment and failed dreams by what, in effect, is our burning public school system. Booker is trying to rescue those children, too. Please join him by making full school choice a reality in your community.


Addendum: On May 8th Cory Booker tweeted about another education hero I wrote about recently. Booker said to Salman Khan: You’re an American Hero – Watch the video.

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What is a Libertarian, and Why Should I Care?

Please join us for Cascade’s monthly Policy Picnic featuring CPI Board member Michael Barton.

We at Cascade Policy Institute fashion ourselves a libertarian think tank. This description is often misunderstood or ignored, but it is important to us because our goal is to advance liberty in the face of coercion from both the right and the left.

In this discussion Michael hopes to describe what it means (to him) to be a libertarian, how that system of beliefs differs from both the conservative and liberal worldviews, and how Cascade Policy Institute hopes to ally itself with elements of both the right and the left in order to advocate for an Oregon that is both more free and more prosperous.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to ten guests on a first come, first served basis, so sign up early. To RSVP, email Patrick Schmitt at patrick@cascadepolicy.org or call 503-242-0900.

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Philosophy and Economics in Public Policy

Please join us for Cascade’s monthly Policy Picnic. Dr. Bill Conerly will lead a discussion of philosophy and economics in public policy, exploring the need to consider fundamental principles when forming public policy conclusions.

Dr. Conerly is an economic consultant and chairman of the board of Cascade Policy Institute. Before entering the business world, he taught economics and public policy at the college level.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to ten guests on a first come, first served basis, so sign up early. To RSVP, email Patrick Schmitt at patrick@cascadepolicy.org or call 503-242-0900.

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Why the Lorax Loves Forestry

By Todd Myers

“From outside in the fields came a sickening smack of an axe on a tree.
Then we heard the tree fall. The very last Truffula tree of them all.”
–From The Lorax, by Dr. Seuss

This spring, a motion picture version of Dr. Seuss’s The Lorax hit the big screen with a not-so-subtle environmental message about the threat timber harvesting poses to the environment. Published in 1971, the book tells the story of a business, led by the “Once-ler,” that cuts down all the trees in the Truffula forest, destroying wildlife habitat, the air, and water in the process.

The Lorax, a friendly, furry creature that “speaks for the trees,” announces what he thinks has caused this catastrophe, scolding the businessman, “Sir, you are crazy with greed.”

Forty years after the book was published, however, a different story has been written in forests across the globe. Rather than being at odds, the Once-ler and the Lorax have found a common interest in making sure forests grow and expand―and many of the world’s forests have benefitted.

In the industrialized world, instead of the scarcity Seuss predicted, forests are plentiful. Last year was the International Year of the Forest, and the United Nations offered some good news. For the last two decades, total land area covered by forest in the Northern Hemisphere―where forestry is particularly active―has increased.

Despite the implication that economic growth, or as Seuss has the Once-ler say, “biggering, and biggering, and biggering,” would lead to environmental destruction, the nations where growth has been most steady are the ones enjoying the best environmental outcomes.

Not only are nations in the Northern Hemisphere seeing forestland expand, but wood is increasingly recognized as one of the most environmentally friendly building materials.

At the University of Washington, researchers compared the environmental impact of building with either wood, concrete, or steel. The hands-down winner for lower energy use, less waste and less water use was wood. While concrete and steel can be mined only once, trees are constantly replacing themselves.

One thing Seuss got right was that once the Once-ler cut all the trees down, his business went down with them. Foresters understand this. Destroying a forest by cutting down every last tree makes no sense, and so there are more trees in American forests today than there were just a few decades ago.

Indeed, the economic value of the trees ensures forests are replanted and available for wildlife and future generations. Even companies not planning on harvesting in 60 years recognize that land with 20-year-old trees is more valuable than land with no trees at all. Replanting isn’t just good for the environment, it’s good for business.

This is not to say the world’s forests are forever safe, or to dismiss the impact deforestation has on the environment. The enemy in these areas, however, is more likely to be poverty than industry. Few people realize the most common use for trees across the globe is as firewood to heat a home and cook a meal. These trees are not cut down by machines, but by people struggling to meet the needs of daily living.

It is true that government regulation of forestry is stricter today than it was forty years ago. It is also true, however, that we are still harvesting a significant amount of wood in the Northern Hemisphere, while preserving vast areas for future generations. Sawmills are making the most of every part of the tree, literally using lasers to measure the best way to saw the log. Technology has made effective regulation possible by using every tree wisely and limiting short-term pressures to overharvest.

Forty years after he sprang from the imagination of Dr. Seuss, the Lorax would be happy to see that, far from disappearing, many forests today are thriving. They are there because the real story of the forests has not been about an unending battle between the fictional Lorax and the hard-hearted Once-ler, but a friendship that understands that both benefit from healthy forests that future generations can enjoy.

Todd Myers is the environmental director at Washington Policy Center. He has more than a decade of experience in environmental policy and is the author of the book Eco-Fads: How the Rise of Trendy Environmentalism Is Harming the Environment. He is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research center.

 

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Portland – the city that works (over consumers)

The slogan “Keep Portland Weird” was reinforced recently when the city threatened to fine two local companies a total of $895,000 for—get this—offering to charge prices the city deems are “too low.”

You see, a 2009 law requires that limousine and sedan rides to or from Portland International Airport must cost you at least $50. Limos and sedans also must charge you at least 35 percent more than what taxis would charge for a trip anywhere else in the city. And, such taxi alternatives can’t pick you up any sooner than an hour after you call.

This new real-life Portlandia chapter started when Fiesta Limousine and Towncar.com offered $32 one-way trips to the airport through the daily deal website Groupon.com. City enforcers immediately threatened them with huge fines and suspension of their operating permits. The companies canceled the promotions and refunded their customers.

But, the companies did something else, too. Last Thursday they filed a federal lawsuit challenging the constitutionality of Portland’s limousine and sedan regulations. Their attorney with the national public interest law firm Institute for Justice put it this way:

“These laws amount to nothing more than naked economic protectionism…they have nothing to do with protecting the riding public. They have everything to do with protecting the city’s taxicab companies from competition and driving up prices for consumers.”

Portland has a long history of protecting favored businesses while harming consumers through such anti-competitive regulations. Hopefully, this time the courts will slap down the regulators and cut the rest of us a break.

Of course, the City Council can do the right thing first and repeal these regulations. Before voting for your favorite mayoral or council candidate, you might ask them whose side they’re on: favored businesses or yours?

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Steve Buckstein talks with Victoria Taft about ‘TowncarGate’ and public transportation

Victoria Taft spoke with Senior Policy Analyst Steve Buckstein on Monday about public transportation and the Institute for Justice lawsuit against the City of Portland because of its towncar regulations.

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