Month: April 2013

Metro’s Open Space Levy: A Bait and Switch for Taxpayers

Since 1995, Metro has been steadily buying up thousands of acres of undeveloped land with bond money approved by the voters. Most of the large parcels are located far from population centers, often outside the Portland urban growth boundary.

In addition to their being geographically remote, Metro has made little effort to provide public access to these lands. Entrances are frequently gated and locked, signage is poor, and there are few parking lots or restrooms.

Unfortunately, this problem will not be addressed with Metro’s proposed levy (Measure 26-152) that will be on the May 21 ballot. Metro officials have stated that if the operating levy passes, only 5-15% of the money will be used to make natural areas more accessible to the public.

According to the levy proponents, the rest of the estimated $10 million in annual tax funding will go to the following uses:

  • improving water quality in rivers for salmon and other native fish;
  • restoring wildlife habitat;
  • removing weeds;
  • restoring wetlands; and
  • providing nature education programs.

While some of these uses sound good, we are already paying for similar programs through other taxes. For instance, we pay electricity surcharges of $650 million annually to finance the Columbia River Basin Fish and Wildlife Program (administered through the Northwest Power Council). Since 1978 we’ve spent more than $14 billion on regional fish and wildlife habitat improvements. There is no justification for spending an additional $10 million through the Metro levy.

Moreover, Metro’s conception of “habitat restoration” is not very compelling. It includes projects such as clear-cutting politically incorrect tree species (Douglas fir) in order to re-plant with Oregon white oak. There is no scientific reason to replace one tree species with another; it is simply an aesthetic preference of Metro planners.

Given that taxpayers already have provided more than $300 million for Metro to buy up lands, a more respectful approach would be for Metro to make public access the top priority and to pay for it out of Metro’s general fund. Over the past decade the Metro budget has grown steadily, and more than 60 new full-time employees have been hired. Obviously, Metro could pay for parks maintenance without a levy.

We also know that maintenance should not cost $10 million annually, because in 2011, Metro’s net operating cost of managing seven natural areas was only $630,747. Even if Metro had to maintain 25 areas instead of seven (as would be the case under this levy), maintenance costs should be closer to $3 million, not $10 million.

As the national recession continues, Oregon families have had to make difficult choices in order to stay afloat. Many people have lost homes to foreclosure or had their electricity shut off. Metro councilors need to do some belt-tightening of their own. They should pay for operations of natural areas out of existing revenues and make public access to those areas the top priority.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Should Oregon Replace the Income Tax with a Sales Tax?

In 2007 Governor Ted Kulongoski appointed me to represent taxpayers on the legislatively created Comprehensive Revenue Restructuring Task Force. The Task Force reviewed and analyzed revenue and spending streams in the state, but did not recommend comprehensive reforms to the tax system.

At the first Task Force meeting in November 2007, Portland pollster Adam Davis presented his focus group work around tax reform. He told us that public negativity on government and politics was higher than he’d ever seen in his 30-year career.

One key finding stood out, and I believe this is an accurate paraphrase:

“Any sales tax is dead in this state―unless coupled with elimination of another tax. Reducing other tax rates won’t sell a sales tax.”

“Even when it was explained that reduced income and/or property tax rates could be locked into the Constitution, voters responded that ‘They’ll find a way to jack the rates back up.’”

Adam Davis recently told me that his firm later did more quantitative analysis which confirmed his focus group findings that Oregonians will not accept a third tax…period.

With that realization in mind, I proposed to the Task Force, and I propose now, that Oregonians should have a serious discussion about replacing our economically harmful income tax system with a less harmful sales tax system. Research finds states without an income tax have experienced higher economic and job growth than states with high income tax rates like Oregon. Last year, two economists who study this trend said:

“Every year for the past 40, the states without income taxes had faster output growth (measured on a decadal basis) than the states with the highest income taxes….

“Over the past decade, states without an income tax have seen 58% higher population growth than the national average, and more than double the growth of states with the highest income tax rates….

“The transfer of economic power and political influence from high-tax states toward low-tax, right-to-work ones is one of America’s most momentous demographic changes in decades. Liberal utopias are losing the race for capital.”*

While it seems clear that income taxes do harm our economy, sales taxes appear to do less damage, and therefore may be preferable when we cannot find voluntary ways to fund government services.

This month a state senate committee held two public hearings on bills that would impose a five percent retail sales tax while somewhat reducing income and property tax burdens. At the first hearing, Governor John Kitzhaber suggested that sales tax advocates (he among them) should first get a better sense of what voters think is wrong with the current system—and then get a “better handle on spending.”

One state senator suggested that a better handle on spending could be achieved by tying state spending to inflation and population growth, as a 2006 defeated initiative would have done. If it had passed, legislators would be sitting in Salem today with a significant budget surplus, instead of wondering how to wring more tax dollars out of a struggling economy. That may not be the kind of handle on spending the Governor had in mind, but it sure beats having no handle at all.

I testified at the second hearing, proposing that the bills (SJR 36 and SB 824) be amended so that they not only create a state sales tax, but that they prohibit income taxes in the Oregon Constitution (Article IV, section 32). If Oregon voters understand that it would be unconstitutional to tax their incomes, they might render a different verdict on a sales tax than they did when rejecting them nine times at the polls since 1933.

Eliminating the income tax completely is important for economic reasons, but also because, as focus groups and polls have shown, Oregonians simply don’t trust their elected officials to keep rates on other taxes down once a new sales tax is in place. I also believe they understand that states with so-called “three-legged tax stools” have budget problems, too, such as our neighbor to the south, California.

One of the perceived advantages of adding a sales tax to currently existing taxes appears to be that the mix of different taxes seems to reduce instability in the system. A number of people testified that budget stability is important to them, especially for local school budgets which are funded significantly from the state General Fund.

But at the hearings, I was the only person who questioned why the state budget should be more stable than our own business and family budgets. As a former and current member of the Governor’s Council of Economic Advisors wrote in 2007:

“It is not clear why government budgets should be more stable than private budgets. It is already the case, with the kicker and without any rainy day fund, that public employment in the state is 20% more stable than private employment.”**

If legislators are not careful, making state revenue more stable will make their constituents’ after-tax family budgets even less stable, and many of them will not appreciate that.

In conclusion, until we reduce the size and scope of state government, no third source of tax revenue will solve our state’s financial problems. It will simply mask them.

* “Laffer and Moore: A 50-State Tax Lesson for the President,” Arthur Laffer and Stephen Moore, Wall Street Journal, April 20, 2012.

** Excerpt from an email to then-State Senator Ryan Deckert from economist Randall Pozdena, Ph.D., dated March 6, 2007.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Marketplace Fairness Act: Taxation Without Representation?

Congress is poised to raise taxes again, this time by allowing states to impose sales taxes on online sales. Senators Ron Wyden (D-OR), Max Baucus (D-MT), and Kelly Ayotte (R-RH)―all representing states without sales taxes―oppose the Senate’s “Marketplace Fairness Act” as “taxation without representation.” The proposed legislation would burden online businesses with enforcing potentially thousands of state and local taxes across the country at the point of sale.

 

Andrew Moylan, senior fellow with the R Street Institute in Washington, D.C., writes, “This means quizzing purchasers about their location, looking up the appropriate rules and regulations in more than 9,600 taxing jurisdictions across the country, and then collecting and remitting sales tax for that distant authority. No brick-and-mortar shop has to do this for in-store sales, and yet every online retailer would have to do it for remote sales.”

 

In an editorial this week, The Wall Street Journal added: “Small online sellers will therefore have to comply with tax laws created by distant governments in which they have no representation, and in places where they consume no local services.”

 

Senator Dick Durbin (D-IL) claims tax accounting software makes it easier for smaller businesses to comply with the proposed law than opponents allege. Still, forcing retailers to enforce the tax laws of thousands of different localities across the country is a massive change in the way we do business―one that will have far-reaching consequences for small businesses and consumers alike.

 

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

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Earth Day Exposes the Ironies of the Left’s Trendy Environmentalism

By Todd Myers
On April 22, in cities across America, some environmental activists will celebrate Earth Day, claiming only increased government control can protect the environment. Those celebrations will expose a couple ironies.

First, many activists will arrive in a Toyota Prius, which has become the symbol of environmental consciousness. Ironically, however, the Prius is not a triumph of political planning but of the free market. In the 1990s, while California was requiring “zero-emission” vehicles, leaders at Toyota and Honda saw an opportunity to sell cars to people who want to spend less on gasoline, drive a car that emits less carbon dioxide, or both. Thus was born the hybrid vehicle. Even though it did not meet California’s regulation, it sold well, causing Golden State politicians to change the law.

Jumping on the bandwagon, politicians began to give preferences to hybrids. Politicians did not lead, but followed the innovation of the free market. Most Prius drivers, however, don’t know that history; and some will spend Earth Day opposing the free-market policies that created the car they are so proud of.

Many activists on the left will also spend Earth Day complaining that people who see the benefits of the free market don’t care about the environment. A look at the national political map, however, tells a different story.

Across the country, the parts of the nation that most consistently support free-market candidates are those surrounded by stunning natural beauty. The most vocal environmental activists —who are quick to lecture others about caring for nature—tend to live in cities, where nature has been thoroughly controlled, constrained, and paved.

How, we should ask, can environmental activists get away with this? How can they continue to advocate top-down policies that don’t help the environment? How can those who live where nature has been subjugated lecture those who live in it and with it every day?

Environmentalism has become trendy and a way to show you are a good person, rather than actually helping the environment. Environmental activists and politicians choose government-mandated approaches not because they help the environment, but because the policies make them feel good about themselves and make them look good to others. The strategy is as simple as the fourth-grade playground: Build up your own environmental credentials by tearing others down and calling names.

Rather than pointing out these ironies, however, free-market conservatives often fall into the trap of arguing there are no risks to the environment, fitting perfectly into the stereotype imposed on them by the left. Some conservatives fear that by admitting they care about the environment, they must then endorse a range of leftwing policies they oppose.

In fact, a strong concern for the environment is part of believing in personal responsibility and the free market. Conservatives believe people have freedom, but must take responsibility for the impact they cause. If you commit a crime, you don’t get to blame society. A reason conservatives live near nature is that we love to hike, hunt, fish, and marvel at the awe-inspiring natural beauty with which our nation is so blessed.

Finally, the free market is the greatest system for allocating scarce resources and doing more with less, both of which are at the heart of a true environmental ethic. Rather than forcing behavior change, conservatives promote technological solutions that respect the freedom of individuals while reducing environmental impact. Rather than falling for the latest trendy environmental policy, conservatives demand that the government measure success or failure.

Better yet, we promote the creative competition that discovers options that we never imagined. As politicians spend billions on rail and buses that carry few people, the market is creating driverless, fuel-efficient cars that will more efficiently take people exactly where they want to go.

For energy efficiency, clean air, clean water, and smart resource use, the free market combines prosperity and innovation to successfully protect natural resources. April 22 may be a one-day event for some; but for those who embrace the free market and its push to do more with less, every day is Earth Day.

Todd Myers is director of the Center for the Environment at Washington Policy Center and a guest contributor at Cascade Policy Institute. He is the author of the book Eco-Fads: How the Rise of Trendy Environmentalism Is Harming the Environment and is designated a Wall Street Journal Expert panelist for energy and the environment.

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"After the Welfare State" Book Forum

Join Cascade Policy Institute and Atlas Economic Research Foundation as we welcome world-renowned speaker and Vice President for the Atlas Foundation Tom G. Palmer to discuss his new book, After the Welfare State.

 

 

Price for admission includes assorted appetizers, dessert, coffee, tea and a complimentary copy of the book.  A no host bar will also be offered.

To attend, RSVP with admission payment to Patrick Schmitt at 503-242-0900 or patrick@cascadepolicy.org by May 3, 2013.

Tom G. Palmer is the Executive Vice President for International Programs at Atlas Economic Research Foundation. He previously served as Vice President for International Programs at the Cato Institute and Director of the Center for Promotion of Human Rights. He is a Senior Fellow at the Cato Institute and Director of Cato University, the Institute’s educational arm. He is the author of Realizing Freedom: The Theory, History, and Practice of Liberty. He received his BA from St. Johns College, MD, his MA in philosophy from The Catholic University of America, and his doctorate from Oxford University.

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Even in Portland, Bike Share Can’t Get Private Investors

By Doug DeFilipps

Bike share is a rental system in which bicycles are made available to individuals at low cost for a short period of time. City planners across the United States like bike share programs. Proponents claim that such systems, once created or subsidized by the government, will reduce traffic congestion and pollution.

Portland’s bike share program, run by a company called Alta Bicycle Share, has already received two million dollars from the federal government. Apparently, this was not enough “free” money to be successful, as the program has been hampered by delays. It is also short about three million dollars in equipment costs, and private sector investment has not been forthcoming.

However, the bike share program’s delays may be good for Portland’s bicycle rental companies. The Oregonian reported last year that regular bike rental companies worried about losing money to government-subsidized competition.

If demand for a bike share program in Portland were so great, wouldn’t private investors be lining up to fund it? And why should Portland bike businesses be damaged by a rival with a distinctly unfair advantage―namely, taxpayer money? Portland is a city that values bicyclists. It also should value its private rental companies, not undercut them with taxpayer money. Portland should not throw more good money after bad for government-funded bicycles.

Doug DeFilipps is a research associate at Cascade Policy Institute. He is a graduate of Santa Clara University.

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Time to Reset Oregon’s Budget and Recharge Our Economy: Facing Reality 2013

The Oregon legislature is struggling to balance the state budget while meeting the perceived need to adequately fund education, health care, public safety, and other services. In 2010, Cascade and Americans for Prosperity – Oregon published our first Facing Reality report, offering state legislators an opportunity to “reset” state government using the time-tested principles of limited government and pro-growth economic policies. While this opportunity was mostly ignored in the 2011 legislative session, we decided to update several key proposals from that report, add one more, and present them to the 2013 legislature.

We have just released our new report, Facing Reality 2013. Together, its proposals can save over one billion dollars in the state budget, and add 50,000 jobs over the next five years without any cost to taxpayers. These savings and economic benefits more than counter any claims that we need to raise taxes on hardworking Oregonians and businesses.

Here, in brief, are these proposals and their potential benefits:

FACING REALITY 2013 Components

Benefit Summary

Privatize liquor distribution and sales

$8 million biennial revenue

Reduce corrections costs

$68 million biennial savings

Eliminate the PERS pick-up

$772 million biennial savings

Align state employee compensation with private sector compensation

$160 million biennial savings

Enact Right-to-Work legislation

50,000 more people working in five years; 110,000 more working in ten years.

 

$2.7 billion more in wage and salary income in five years; $7.0 billion more in ten years.

 

14 percent more taxpaying families per year moving into Oregon from non-right-to-work states.

 

Our Right to Work proposal stems from Cascade’s 2012 report, Right to Work Is Right for Oregon, which broke new ground by covering 70 years of data and every state, and relying on what we believe to be the largest datasets ever used to study the impacts of right-to-work laws. Coincidentally, an initiative petition may be circulated soon to grant such freedom to all Oregon public employees. If that happens, Cascade will be in the forefront of making the economic and moral case for its approval.

Decades of well-meaning politicians, bureaucrats, and special interests have grown state government spending without regard for long-term consequences, producing an unsustainable budgetary premise that threatens Oregon’s financial stability. Long-term debt, unfunded liabilities, inefficient programs, unnecessary spending, and bloated bureaucracies all contribute to this bleak future. Along with higher tax rates, fee increases, and unfunded mandates that make it harder for businesses to produce a profit, we face the perfect storm that manifests itself in Oregon’s budget and economy today. Without a drastic change in direction, it will only get worse.

Unfortunately, the demonization of corporations and small businesses during the debate over tax-increase Measures 66 and 67 which passed in 2010, along with proposed regulations and higher state fees, has reinforced the impression that Oregon is not business-friendly. This must be addressed immediately if long-term investments in expanded business capacity are to occur.

The proposals in Facing Reality 2013 represent significant changes in the way Oregon government operates. More will need to be done, but these are a good start. We encourage all Oregonians to study them and ask their state legislators to do the same. It is not too late to refocus Oregon government on its core functions, reduce its costs, and remove it from areas in which it has no business, such as the distribution of liquor.

While we recognize the enormity of the politics that surround these concepts, we believe they are essential if we are to “recharge” our economy and ensure Oregon’s long-term future. Without them, Oregon’s future looks dim. With them, the future is as bright as we want it to be. 

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Cascade in the Capitol: Testimony on proposed Oregon sales tax

Testimony before the Senate Committee
on Finance and Revenue
regarding sales tax bills SJR 36 and SB 824
by Steve Buckstein

[This testimony was submitted for the April 15, 2013 hearing, but was held over for the April 17, 2013 hearing. My prepared April 17th testimony is posted at the end.]

Good afternoon, Chair Burdick, Vice-Chair George, and members of the Committee. My name is Steve Buckstein. I’m Senior Policy Analyst and founder of Cascade Policy Institute, which is a non-profit, non-partisan think tank based in Portland.

In 2007 I was appointed by Governor Kulongoski to represent taxpayers on the legislatively created Comprehensive Revenue Restructuring Task Force. The Task Force reviewed and analyzed revenue and spending streams in the state, but did not recommend comprehensive reforms to the tax system.

At the first Task Force meeting in November 2007, we heard from Portland pollster Adam Davis about his focus group work around tax reform. One key finding stood out, and I believe this is an accurate paraphrase:

“Any sales tax is dead in this state – unless coupled with elimination of another tax. Reducing other tax rates won’t sell a sales tax.”

“Even when it was explained that reduced income and/or property tax rates could be locked into the Constitution, voters responded that ‘They’ll find a way to jack the rates back up.’”

Mr. Davis recently told me that his firm did more quantitative analysis for two state senators which confirmed his focus group findings that Oregonians will not accept a third tax…period.

With that realization in mind, I proposed then, and I propose now, that we should have a serious discussion about replacing Oregon’s economically harmful income tax system with a less harmful sales tax system.

Research finds states without an income tax have experienced higher economic and job growth than states with high income tax rates like Oregon.

I want to be clear that I don’t like sales taxes very much either, but I’m convinced that they do less damage to the economy than do income taxes.

I suggest that SJR 36 and SB 824 be amended so that they not only create a state sales tax, but they prohibit income taxes in the Oregon Constitution (Article IV, section 32).

Once Oregon voters understand that it will be unconstitutional to tax their income, they may render a different verdict on a retail sales tax than they have nine times in the past.

If you worry that this proposal may not raise enough revenue, then you should shelve any talk of tax restructuring until the legislature and the Governor, or the people, have comprehensively restructured and reduced state spending.

I know that many of you don’t want to hear this, but simply adding a sales tax to our current income and property taxes never has been, and I believe never will be, acceptable to Oregon voters. They know that states with so-called three-legged tax stools have budget problems, too.

Until we reduce the size and scope of state government, no third source of tax revenue will solve our problems, it will simply mask them.

Thank you.
______________________________________________

April 17, 2013    Buckstein testimony on SJR 36 and SB 824

I want to highlight key points in my written testimony [above] that you already have, and respond to several issues raised here on Monday, April 15th.

First, I appreciated the Governor’s suggestion that sales tax advocates should first get a better sense of what voters think is wrong with the current system — and then get a better handle on spending.

Senator George suggested a spending limit like the one voters rejected in 2006, which would have tied state spending to inflation and population growth.  If that limit had passed, you’d be sitting here today with a significant budget surplus instead of wondering how to wring more tax dollars out of a struggling economy.

That may not be the kind of handle on spending the Governor has in mind, but it sure beats having no handle at all.

As to what voters think is wrong with the current tax system, you heard from the chair of Governor Kulongoski’s Comprehensive Revenue Restructuring Task Force.

Lane Shetterly told you that the Task Force discussed sales tax proposals, but chose not to recommend one based partly on polling data.

I was a member of that Task Force, appointed by the Governor to represent the taxpayers.

At the first Task Force meeting in November 2007, we heard from Portland pollster Adam Davis about his focus group work. He told us that public negativity on government and politics was higher than he’d ever seen in his 30 year career.

One key finding stood out, and I believe this is an accurate paraphrase:

“Any sales tax is dead in this state – unless coupled with Elimination of another tax. Reducing other tax rates won’t sell a sales tax.”

“Even when it was explained that reduced income and/or property tax rates could be locked into the Constitution, voters responded that ‘They’ll find a way to jack the rates back up.’”

These findings mirror a concern several people mentioned here on Monday — the lack of Trust in government. Voters simply won’t trust you to keep income and property taxes down once they give you a Sales Tax.

Adam Davis recently told me that his firm did more quantitative analysis later, which confirmed his focus group findings that Oregonians will not accept a third tax…period.

With that realization in mind, I proposed then, and I propose now, that we should have a serious discussion about replacing Oregon’s economically harmful income tax with a less harmful sales tax.

Research finds states without an income tax have experienced higher economic and job growth than states with high income tax rates like Oregon.

I want to be clear that I don’t like sales taxes very much either, but I’m convinced that they do less damage to the economy than do income taxes.

I suggest that SJR 36 and SB 824 be amended to PROHIBIT income taxes in the Oregon Constitution.

Once Oregon voters understand that it will be unconstitutional to tax their incomes, they may muster up enough trust to finally approve a retail sales tax.

There was quite a bit of discussion on Monday about devising a more stable source of revenue for state government. Paul ably showed you that a mix of different taxes could reduce instability in the system.

But there was no discussion about why the state budget should be more stable than our own business and family budgets. As a member of the Governor’s Council of Economic Advisors wrote then Senator Ryan Deckert in 2007:

It is not clear why government budgets should be more stable than private budgets.  It is already the case, with the kicker and without any rainy day fund, that public employment in the state is 20% more stable than private employment.”

If you’re not careful, I fear that making state revenue more stable will make your constituent’s after-tax family budgets even less stable, and I doubt many of them will appreciate that.

Finally, the last person to testify on Monday, representing the League of Women Voters, told you that she wanted to see a so-called three legged tax stool in Oregon. But as you know, states with three legged tax stools have budget problems too. Just look south to California to see why the three legged stool is no panacea.

Until we reduce the size and scope of state government, no third source of tax revenue will solve our problems, it will simply mask them.

Thank you.

 

 

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“Housing Fairness” Bill Is Unfair to Landlords

By Doug DeFilipps

Ending “housing discrimination” against holders of Section 8 rent assistance may sound like a worthy goal, but not all ways of expanding their living options are fair. Oregon House Bill 2639 is one such deeply flawed method.

On the surface the law seems reasonable: It requires landlords to consider applications from Section 8 voucher holders, but it does not give special preference to such renters. However, the catch is that any landlord who accepts Section 8 voucher payments must have the building undergo inspection, and it must meet certain marketplace standards. This may be fine when landlords’ participation in Section 8 is voluntary; but is it fair to place these requirements on all landlords?

Meeting these standards takes time and money. No one benefits from landlords having to consider renters whom they then have to accommodate differently from other people. The landlord loses money by having to bring the building up to these standards.

Ending discrimination is one thing. It’s another to saddle Oregon landlords with the burdensome requirements that come with House Bill 2639.

Doug DeFilipps is a research associate at Cascade Policy Institute. He is a graduate of Santa Clara University.

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Indiana Court Upholds School Choice Program, Invites Hope for Oregon’s Kids

On March 26, the Indiana Supreme Court issued a unanimous opinion holding that the state’s Choice Scholarship Program is constitutional. Indiana’s voucher program is one of the most expansive school choice reforms in the country, permitting any child eligible for free or reduced-price lunch to receive a voucher to attend a private school―whether or not the school is religious. The Choice Scholarship Program is only two years old, but already 9,324 low- and middle-income families are participating.

A group of state taxpayers funded by a teachers’ union filed suit against the program in May 2011. Meredith v. Daniels alleged that the voucher program violates the IndianaConstitution, which requires the state “to provide, by law, for a general and uniform system of Common Schools.” The plaintiffs claimed that allowing students to choose a private school violated this duty. (A similar argument overturned Florida’s opportunity scholarship program in 2006.) However, the Indiana Supreme Court rejected this argument, noting that it was inconsistent with the plain text of the state’s constitution.

The plaintiffs also alleged that the voucher program violated the state constitution’s provision forbidding the state from compelling individuals to support “any place of worship” or “ministry,” and another provision forbidding the state from drawing money from the treasury for the benefit of a religious or theological institution.* (However, the U.S. Supreme Court ruled in Zelman v. Simmons-Harris in 2002 that Ohio’s voucher program does not violate the establishment clause in the U.S. Constitution, undercutting the argument that institutions, rather than parents, are the primary beneficiaries.)

The Indiana Supreme Court rejected the “religious support” arguments, noting that government expenditures frequently benefit religious institutions. “[F]or example, fire and police protection, municipal water and sewage service” all benefit religious institutions:

“Certainly religious or theological institutions may derive relatively substantial benefits from such municipal services. But the primary beneficiary is the public, both the public affiliated with the religious or theological institution, and the general public.”

The court explained that such benefits were ancillary to the substantial benefits received by families:

“The direct beneficiaries under the voucher program are the families of eligible students and not the schools selected by the parents for their children to attend. The voucher program does not directly fund religious activities because no funds may be dispersed to any program eligible school without the private, independent selection by the parents of a program-eligible student. Participation in the voucher program is entirely voluntary for parents of eligible students.”

The Indiana Supreme Court’s interpretation of its state constitution in favor of parents’ directing their children’s education should encourage families in other states across the country. Vouchers, education tax credits, and opportunity scholarship programs have demonstrated repeatedly that children benefit from educational choice. Oregon has some limited forms of school choice, including over 100 charter schools and open enrollment among some public schools; but Oregon parents still deserve better. Hopefully, victories like Indiana’s will provide support for states like Oregon to recognize the right of parents to choose options for their children beyond their local public school.

* Oregon’s constitution has a nearly identical provision, stating: “No money shall be drawn from the Treasury for the benefit of any religeous [sic], or theological institution.” Anti-school-choice groups in Oregon have used the same arguments against proposals for voucher or tax credit funded scholarship programs.

Christina Martin is an attorney with Pacific Legal Foundation, a nonprofit legal foundation devoted to litigating for freedom, property rights, and individual rights, including school choice. She is a former policy analyst for Cascade Policy Institute, Oregon’s free market public policy research center.

 

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Coalition Releases New ‘Facing Reality’ Budget Report

For Immediate Release

April 8, 2013

 

PORTLAND, Ore. – Americans for Prosperity-Oregon and Cascade Policy Institute have released a new report, Facing Reality 2013, which calls attention to limited government and pro-growth solutions to current Oregon budget problems.

 

“The Legislature continues to give citizens the false choice of either failing our children or increasing taxes,” stated Karla Kay Edwards, Oregon State Director of Americans for Prosperity. “Facing Reality clearly demonstrates that Oregon can invest in our children’s education without negatively impacting our slow economic recovery.”

 

The report is based on a “Reality Based Budgeting” approach, encouraging political leaders to face reality, stop procrastinating, and adopt ideas to lower the cost of government and get the economy going again.

 

“It’s not too late to refocus Oregon government on its core functions, reduce costs and get out of areas it has no business in, such as the distribution of liquor,” said Steve Buckstein, Founder and Senior Policy Analyst at Cascade Policy Institute.

 

The report focuses on five public policy areas:

– Privatize Liquor Distribution and Sales

– Reduce Corrections Costs

– Eliminate the PERS Pick-Up

– Align State Employee Compensation with Private Sector Compensation

– Enact Right to Work Legislation

 

With solutions to controversial topics such as PERS reform, the report authors challenge legislative leaders to take effective steps to recharge the state economy.

 

“It is time for the Oregon Legislature to ‘Face Reality,’ as Oregonians have had to do, and adopt these non-partisan recommendations,” said Edwards.

###

Click here to read the report.

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Buying Off Discontent: The Economic Wreckage of Disability Benefits in America

By Elise Hilton

You lose the factory job you’ve had since high school due to cutbacks. When the unemployment runs out, the only jobs around for high school graduates are fast food joints and entry-level work – a huge pay cut. You discover you can make nearly as much money on disability. Your doctor diagnoses you with chronic back pain (all those years of standing on the factory floor), and you have joined the ranks of “not-unemployed-but-disabled.” The state in which you live is happy because you don’t need any more of their unemployment money, and the federal government is happy that you are not an unemployment statistic, gumming up jobless rates.

 

Or there’s this. You scrape by on your job, managing bare essentials, but it’s tough. There’s no health insurance. You find out from your kid’s school counselor that because he has ADHD and isn’t learning at grade level, he may be eligible for disability. Suddenly, you’ve got $700 more every month, so long as your kid stays below grade level. You have a perverse hope that your kid doesn’t catch up in school.

 

It’s a boardwalk shell game with the federal government as huckster: Is the money under the shell marked “unemployment,” “disability,” or “Social Security”? Is the disabled person the kid who can’t read, the factory worker whose unemployment ran out, or the truly disabled? The shells get moved, sleight of hand is performed, and the player’s money is quickly scooped up.

 

Disability has become America’s hidden welfare and unemployment program. People on disability don’t count in the ranks of the unemployed, and those unwilling to work but not eligible for welfare can often find a medical issue to keep checks rolling in. Perhaps most devastating, we’ve unwittingly created a system where people who could genuinely be helped by neighbors, churches, and charitable organizations are simply sent a check and told to go away.

 

By now, NPR’s Unfit for Work: the startling rise of disability in America has made the media rounds. Chana Joffe-Walt spent months researching the enormous rise in disability payments in the United States. Is the health of Americans spiraling downward at an alarming rate? Are disability claims being rubber-stamped by careless government wonks? Why are 14 million Americans (more than the total number of employees in the manufacturing sector of the economy) categorized by the government to be so ill that they’re unable to work?

 

In Samuel Gregg’s Becoming Europe, he examines the entitlement state that is modern Europe. In today’s European Union, people expect lifelong job security, health care, and education, along with cushy pensions. Politicians, not wanting to deal with civil unrest and eager to please voters, have been happy to “buy off discontent” (Gregg) despite the cost.

 

That’s the problem: “Wilhelm Röpke pointed out that welfare states are like progressive taxation: once one accepts the basic principle, there is nothing in the welfare state’s conception to set a limit to it,” Gregg writes. In other words, where does it stop? When does the government say, “We can’t and won’t pay for that?” In the EU’s case, the answer seems to be “never.”

 

Increasingly, this seems to be the American answer as well. Is it hard to get disability? Yes and no. The process is tedious, but the categories that constitute disability are broad and ambiguous. An infographic for those researching disability says this: “If you believe you’re eligible for Social Security Disability Insurance benefits, don’t be discouraged by funding issues. These should ease when the economy improves and the government tightens spending on lower priorities.”

 

Americans should not only be discouraged, but deeply alarmed by funding issues. Since 1960, entitlement programs (like Social Security, unemployment, and disability) have grown twice as fast as personal income. Today, government entitlement accounts for two-thirds of government spending. One in five Americans now receives some form of government benefit. The cost for disability, including health care for the disabled, is at least $260 billion a year.

 

Beyond the obvious fiscal nightmare, there is a cultural timbre that resonates throughout the numbers, statistics, and programs: We are a nation of takers. Increasingly, we want what our European counterparts have: a guaranteed paycheck, free education, and health insurance, all government-provided.

 

There has always been a generous spirit in America towards the downtrodden, but it’s time to realize that we are no longer being generous: The government is leading us merrily along the path of fiscal fugue. If you’ve got a job, you’re paying for someone else’s big screen TV, disability check, and health insurance. This is not to say that there are not those who are genuinely disabled. However, America has millions of people who could work but don’t. There aren’t jobs for them, they don’t have the skills for the jobs available, or they just plain don’t want to work. We’ve got children whose inability to read well is helping pay the family rent.

 

This is our miserable “system”: We have a cultural climate that wants something for nothing. We’ve got people who’d like to work, but have to function in a stagnant economy that removes incentives to creativity and entrepreneurship. For jobs that are available, there are millions of under-skilled people. We are paying to keep children from learning. We’re in the midst of shredding a safety net for the truly needy, attempting to solve issues such as learning disabilities, underemployment, and unemployment with a program that can’t and won’t ever resolve those problems. We are stalled in finding real solutions because the federal disability program as it stands now is essentially hiding these dilemmas.

 

America is attempting to buy off people in their discontent. The discontent remains, the money will dry up, and we’re left with 14 million people who’ve been taught their gifts and talents have no value in this American society. Our disability system needs to be dismantled.

Elise Hilton is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research organization. She is the marketing coordinator for the Acton Institute in Grand Rapids, Michigan.

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Saving Transit by Shrinking TriMet

In the past eight years, the all-funds budget for TriMet has gone up by 125%, but transit service has dropped by 14%. This trend will only get worse. In what future historians likely will refer to as a suicide note, TriMet recently predicted that within seven years, much of its bus service will have to be cancelled due to the high costs of operation.

Several bills have been introduced in the legislature to address this problem. Rep. Chris Gorsek (D-Troutdale) is sponsoring HB 3316 to expand the TriMet board and change the board composition. This bill is tentatively scheduled for a hearing on April 15.

Sen. Alan Olsen (R-Canby) has sponsored SB 826, which would allow local jurisdictions to leave TriMet at any time, for any reason.

Both bills actually could be combined. A more diverse board could bring better oversight, and allowing cities or counties to leave the district (as Wilsonville, Sandy, and Canby already have) would encourage innovation and reduce TriMet’s unsustainable operating costs.

After 44 years, it’s time to admit that TriMet has failed. Its cost structure is too high and cannot be reformed. The policy objective from now on should be to serve transit riders, not the TriMet bureaucracy. Transit advocates should speak forcefully to these points at the April 15th hearing in Salem.

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Cascade in the Capitol: Testimony in Favor of Decriminalizing Marijuana

Testimony before the House Committee on Judiciary
in Favor of HB 3371
by Steve Buckstein

Good afternoon, Chair Barker and members of the Committee. I’m Steve Buckstein, Senior Policy Analyst and founder of Cascade Policy Institute, which is a non-profit, non-partisan think tank based in Portland.

I have provided you with a commentary I recently updated making the case for ending the war on drugs. I see HB 3371 as a significant step in that direction, although I do question some of its provisions.

The main purpose of the bill seems to be revenue generation, with a secondary purpose being the reduction of harm caused by marijuana prohibition.

I suggest that these purposes be reversed. State government is already addicted to revenue from alcohol, gambling and tobacco. You don’t need to add another addiction.

By dedicating marijuana tax revenue to specific state programs, you risk creating what economists call a moral hazard. Allocating set revenue percentages to the public school system and the state police, for example, could inadvertently encourage people in those organizations to root for more marijuana smoking.

I’m also concerned that the bill allows the Oregon Liquor Control Commission to regulate the marijuana business and collect the new taxes. Prohibiting the Commission from purchasing, owning or selling marijuana is good, but why let it have these other roles at a time when many people are seriously considering getting the state out of the alcohol business? These provisions make the bill seem as much  a full-employment program for OLCC employees as a marijuana decriminalization bill.

As a matter of public policy, I don’t want the state to support or oppose the use of marijuana. I hold the same position with regard to alcohol, gambling and tobacco. As a libertarian, I think such decisions should be left to up to free adults.

In conclusion, I hope this bill leads to decriminalizing marijuana as much as possible. I then hope that, if done right, it can serve as a guide to decriminalizing other drugs, thus winding down the disastrous war on drugs. Every such step will be good for individual Oregonians, and good for the state as a whole.

Thank you.

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