Year: 2020

Oregon Is Stopping Hospital Construction for Your Own Good-cm

Oregon Is Stopping Hospital Construction for Your Own Good

By Vlad Yurlov

COVID-19 cases are spiking in Oregon and hospitals across the state are struggling to keep up. The Oregon Health Authority (OHA) reports that over 80% of Oregon’s adult Intensive Care Unit beds are full. But the OHA has continued to suppress health care facilities and services, by using Certificate of Need (CON) laws. For more than 50 years, Oregon has required health care facilities to demonstrate a “need” for any new or expanded facilities. Throughout the lengthy certificate of need process, competing providers are permitted to provide evidence showing that current and future demand for services can be satisfied by existing facilities. In this way, existing providers can block the entry of newcomers. In the best of times, stifling the supply of health care facilities can be life threatening. During a pandemic, it can be catastrophic.

In 1974, the National Health Planning and Resources Development Act established CON laws at a federal level. The Act stated “[t]he achievement of equal access to quality health care at a reasonable cost is a priority of the Federal Government.”[1] But CON laws create a series of unintended consequences that reduce health care accessibility and quality, while increasing costs. In 1986, the United States Congress recognized the damage that CON laws inflict and repealed the 1974 act.

As part of Oregon’s CON process, the OHA regularly uses the analysis and opinions of incumbent service providers to judge the “need” for new facilities. This creates a conflict between the new entrant and existing providers. Competing health care providers have a direct motive to impede the availability of new services. Just like every other market, competition forces incumbent businesses to either improve services or cut costs to retain customers and profits. Instead, the American Medical Association says “CON programs tend to be influenced heavily by political relationships, such as a provider’s clout, organizational size, or overall wealth and resources, rather than policy objectives.”

CON laws have serious consequences for the delivery and quality of health care. In research published by the Mercatus Center at George Mason University, Thomas Stratmann and David Wille found that limiting entry into the hospital market is associated with the quality of the hospitals in the area. For example, mortality rates are statistically higher in areas that have such laws.[2] Competition forces hospitals to provide the best possible care to their patients. With CON laws, hospitals don’t have to compete with as many other providers, which harms patient outcomes.

In response to the COVID-19 pandemic, 20 states have loosened CON laws in order to boost the supply of hospital beds and treatments.[3] Meanwhile, Oregon has made no moves to reduce the state’s burdensome rules.

Mercatus recently published the estimated effects of Oregon’s CON laws on health care costs and outcomes.[4] They found that 19 health care services are subject to a CON or a cap, which may produce similar effects. The average Oregonian is estimated to save $220 in annual health care spending if CON laws are abolished in the state. Furthermore, deaths resulting from post-surgery complications are estimated to decrease by nearly six percent. Access to health care could also improve, because total facilities are estimated to increase from just 63 to 89. The research suggests that without CON laws, Oregon would have better health outcomes at a lower cost to consumers.

Supporters of CON laws argue that suppressing “excess” services reduces the incentive for hospitals to charge high prices to cover their costs. But even the federal government has conceded that this has not been the result. A joint statement published by the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice stated “CON laws raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers.”[5] Despite this, Oregon has kept its practice of government insiders picking and choosing how many services its residents “need.”

Each year shows more harmful effects of CON laws’ unintended consequences. They degrade the incentive and results that competition provides. It is clear that CON laws restrict health care supply, reduce quality, and increase costs of services, which are directly opposite to the laws’ intention. Oregon should repeal Certificate of Need laws and allow equal access to health care for Oregonians.


[1] https://www.govinfo.gov/content/pkg/STATUTE-88/pdf/STATUTE-88-Pg2225.pdf#page=51 2226

[2] https://www.mercatus.org/system/files/mercatus-stratmann-wille-con-hospital-quality-v1.pdf 46-47

[3] https://pacificlegal.org/certificate-of-need-laws-covid-19/

[4] https://www.mercatus.org/system/files/oregon.pdf

[5] https://www.ftc.gov/system/files/documents/advocacy_documents/joint-statement-federal-trade-commission-antitrust-division-us-department-justice-regarding/v170006_ftc-doj_comment_on_alaska_senate_bill_re_state_con_law.pdf 15

Vlad Yurlov is a policy analyst at Cascade Policy Institute, Oregon’s free market public policy research organization. He can be reached at vlad@cascadepolicy.org.

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Wind turbines are not a birds best friend-cm

Wind turbines are not a bird’s best friend. Black paint may be able to help.

By Rachel Dawson

The U.S. Fish & Wildlife Service estimates up to 500,000 birds are killed annually in the United States due to wind turbine collisions. The number of deaths will continue to increase as more turbines populate our nation’s landscape.

Raptors are especially vulnerable to colliding with wind turbines due to their flight patterns. They typically soar during high winds, bringing them in line with spinning turbines that appear to them as nothing more than a blur.

The first wind farm to formally ask the Fish and Wildlife Service for permission to harm golden eagles is located right here in Central Oregon. The Obama Administration later passed a rule allowing energy companies to apply for 30-year permits for any “non-intentional eagle deaths at wind farms.”

However, Norwegian researchers may have a simple solution to save their lives.

Dr. Roel May from the Norwegian Institute for Nature Research presented a decade-long study to the Oregon House Committee on Natural Resources earlier this year about how black paint could minimize fatalities.

Researchers painted one turbine blade black, reducing the “motion smear” that makes it difficult for birds to see the spinning blades. The result was an astonishing 71% decrease in collisions. Wind farms should not get a free pass to kill a protected species. However, if the government continues to turn a blind eye, wind farms should at least consider the results of this study and paint turbine blades black to save our birds.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research center.

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Winter is coming the homeless need shelter and the expo center has the space-cm

Winter Is Coming, the Homeless Need Shelter, and the Expo Center Has the Space

By Eric Fruits. Ph.D.

Winter is coming to Oregon, and it might be a rough one. As if the pandemic, riots, and a recession weren’t enough, the Northwest is looking at La Niña weather conditions that will bring us a cold, wet winter. While most of us will tough it out in our warm homes, thousands of unsheltered homeless will be stranded on the streets or in camps, unless we make better use of the resources we have.

In November 2016, Portland voters approved a $260 million bond measure to build more affordable housing in the city. Two years later, Metro voters approved a $650 million affordable housing bond. Combined, the measures promised to build more than 5,200 units of affordable housing throughout the region. Currently, only 51 units have been completed.

This year, the region’s voters approved Metro’s two new income taxes to provide “supportive housing services” to the homeless and those at risk of becoming homeless. The taxes are anticipated to bring in approximately $250 million a year. During the campaign, proponents claimed, “We know what works, it’s just a matter of scale.” They say what works is a “Housing First” approach providing thousands of units of permanent affordable housing along with a wide range of support services for those placed in housing.

To be blunt, no one knows what works, and there appear to be no economies of scale. For more than two decades, the Housing First approach has been heralded as the best solution. But, these projects take years to build and construction costs per unit are more than double private sector costs. The “wrap around” services are expensive and require individuals to have the ability and intent to fully use them. Even worse, there is no evidence that the Housing First approach is effective at reducing the total number of unsheltered people in a community.

Observers and experts concluded Portland and Multnomah County’s emphasis on a Housing First approach diverted money away from emergency shelter beds. Housing redevelopment projects before and after the Great Recession replaced single-room occupancy apartments and low-cost motel rooms with high-end apartments and condominiums. Put simply, there are not enough beds to support all the homeless in the region. Local governments’ slow-motion construction of affordable housing units can’t satisfy existing demand, let alone keep up with future demand.

With winter approaching and an unknown end to the pandemic, the region needs thousands of emergency shelter beds now. Fortunately, the region has a facility that is well suited to house thousands of people in such an emergency.

The Portland Expo Center is a 330,000-square-foot exposition center sitting on 53 acres. The Expo Center is owned and operated by Metro. The facility has meeting rooms, a full-service kitchen, a restaurant, and flexible outdoor exhibit space. The facility has been losing money for years and needs significant capital upgrades to compete in the exposition market.

The exhibition space alone could serve 2,000 to 3,000 individuals. Its 2,500-vehicle parking lot provides ample space for individuals who prefer to camp or sleep in vehicles. It is located away from residential and commercial areas, but also has easy access to public transit—the TriMet Yellow Line terminates at the front of the Expo Center and provides frequent service to downtown Portland.

Because the pandemic effectively closed the Expo Center, Metro should work with other local governments to immediately open the Expo Center as a temporary emergency homeless shelter. Repurposing an existing exposition center would be much less expensive than Metro and the City of Portland’s current “affordable housing” construction projects. Over time, Metro can use its Supportive Housing Services funds to redevelop the Expo Center into a permanent emergency and/or transitional housing shelter providing services to those in need.

Converting the Expo Center could bring immediate relief to thousands of homeless individuals and families while providing a much better return on investment than current plans to remodel the site for low-attendance expositions. If we’re truly all in this together, it’s time to put the Expo Center to work.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization, and an adjunct professor at Portland State University, where he teaches courses in urban economics and regulation. He can be reached at eric@cascadepolicy.org. A version of this article was published in the Portland Tribune on November 22, 2020.

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Oregon should be supporting restaurants and bars not freezing them out-cm

Oregon should be supporting restaurants and bars, not freezing them out.

By Rachel Dawson

Governor Kate Brown recently decided to take her Coronavirus “two-week pause” one step further by issuing an aggressive statewide “two-week freeze” running from November 18th through December 2nd (with an additional two weeks for Multnomah County).

Among its many restrictions, the freeze forces restaurants and bars to offer take-out only, and gyms, museums, and many indoor entertainment activities will be required to close once again.

The freeze comes at a time when more Oregon restaurants and bars are permanently shutting their doors due to lost revenue from the pandemic. Unfortunately, they will feel some of the hardest effects of the freeze even though health officials found that restaurants are not to blame for the recent rise in covid cases. Oregon health officials stated that social gatherings, including at least five Halloween events and parties, are the main culprits for the case increase over the past few weeks.

According to the president of the Oregon Restaurant & Lodging Association, “Few cases of the virus have been linked to the state’s food and drink establishments, which provide a needed refuge.” Placing stricter rules on restaurants and bars may very well backfire on officials as Oregonians shift their outings elsewhere, increasing the number of private gatherings where social distancing is less likely than in a formal restaurant setting. Restaurants represent many Oregonians’ livelihoods and should not be used as a scapegoat for the state. Governor Brown should rescind her restriction on restaurants.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research center.

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What is Going On Cases Rise and Oregon Schools Open-cm

What is Going On? Cases Rise and Oregon Schools Open

By Helen Doran

“What is going on?” That’s what many Oregon parents are asking as their kids struggle with online learning, all while public officials flip-flop on education policies during a wave of COVID-19 cases.

On October 30th, Governor Kate Brown added to the mayhem. On the same day the state announced a record breaking number of cases, the governor rolled out relaxed safety standards for reopening Oregon elementary schools. Since then, the case count has climbed higher by the day.

The Oregon Department of Education explained that the change in direction was because the benefit of in-person education outweighed the risk of spreading the disease. But why was this announced when cases are at an all time high…after two months of distance learning?

The governor’s relaxed standards at a time when cases are trending dramatically in the wrong direction is a cognitive dissonance for exhausted parents who have been told that keeping their kids behind a laptop was for the greater good.  Students and families can’t afford to ride the ODE’s wave of ever-changing priorities and promises. A money-back guarantee would be a lifeline for students struggling in the public school system and needing a solution urgently. Oregon needs to make school choice a priority during the 2021 legislative session. Children’s futures depend on it.

Helen Doran is a Program Assistant, External Affairs at Cascade Policy Institute, Oregon’s free market public policy research center.

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New Oregon data shows where electric vehicles are located and where they continue to remain a rarity-cm

Dude, where’s my car? New Oregon data shows where electric vehicles are located and where they continue to remain a rarity

By Rachel Dawson

Where are all the electric cars in Oregon? If you live in Portland, they’re hard to miss. But leave the metro area, and EVs are a rare sight. To get an idea, check out the Oregon Department of Energy’s new interactive EV dashboard. The dashboard tracks EV purchases by county and model.

The dashboard clearly shows that Oregon’s wealthy and urban counties are benefiting most from subsidies for a costly technology that remains out of reach for many Oregonians. Rather than letting the market operate freely, Oregon officials and utilities alike are attempting to push more consumers towards purchasing EVs by offering taxpayer funded rebates.

Total Number of Electric Vehicles by County

Where are those subsidies going? Nationally, around 60% of EV buyers have six-figure incomes. About half are aged 25 to 55, and 75% are male.

At the state level, the Oregon Department of Environmental Quality (DEQ) offers a “Clean Vehicle Rebate” program and a “Charge Ahead Rebate” program that provides up to $2,500 for the purchase or lease of a new qualifying EV with an additional $2,500 for Oregonians with low or moderate incomes for either a new or used EV. However, low-income Oregonians can only receive both rebates if they purchase a brand new EV. DEQ receives $12 million annually to fund these programs from a vehicle privilege tax imposed on car dealers throughout the state. In other words, someone purchasing a traditional gas power car is helping pay for someone else’s EV purchase.

On top of that, the federal government offers a tax credit for all new EVs and hybrids up to $7,500, depending on the model. Additionally, many Oregon utilities offer monetary incentives for EVs and charging infrastructure. For example, the Emerald People’s Utility District (PUD) offers a $100 incentive for customers registering new or used EVs, while the Central Lincoln PUD offers customers a $250 rebate for purchasing a level 2 EV charger.

Of the 31,977 EVs in Oregon, around 64% (or 20,559 vehicles) are located in the Portland area. One could argue that more EVs are in the Portland metro area due to its larger population size. However, data from ODOE’s own dashboard shows that EV adoption grows as a county’s wealth increases even when accounting for population size.

Further, the most commonly purchased EV is a Tesla, which accounts for around 27% of all EVs registered in Oregon. The vast majority of these, around 70%, are registered in the Portland area. You certainly won’t see a Tesla driving around Harney, Morrow, or Wheeler counties in Eastern Oregon.

This is likely because in addition to being costly, current EV technology faces difficulties with range and cold temperatures. The vehicles use lithium-ion batteries which are sensitive to temperature changes. Cold temperatures can cut their range by up to one-third. These issues make EVs a suitable option for warm, urban areas—a big reason why the largest markets for EVs in the US can be found in California, Texas, and Florida. However, EVs may experience difficulties during Eastern Oregon’s cold winters.

David Larson, Jaguar Land Rover’s general manager of product development, told ABC news that EVs “still cost a lot more than ICE [internal combustion engine] cars and charging takes a long time…. For a rancher in Montana, EVs are not the solution. These cars are for people who live in urban areas and don’t travel more than 100 miles or more a week.”

As car companies continue to innovate, the cost of EVs will likely continue to fall while EV registrations increase without additional government pressure. People should be free to make the decision to purchase an EV using their own hard-earned money. However, the state should not be using tax dollars, especially from rural and low-income Oregonians, to subsidize their cost.

The privilege tax does not bring the state together. Rather, it illuminates the existing rural and urban divide. If Governor Brown were truly committed to equity, she would repeal this divisive privilege tax.

Rachel Dawson is a Policy Analyst at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. She can be reached at rachel@cascadepolicy.org

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Avoidable Expenses for Affordable Housing-cm

Avoidable Expenses for Affordable Housing

By Vlad Yurlov

While many people in the Portland region value efficient governments, prevailing wage laws are rarely questioned. Prevailing wage laws drain tax-payer funded resources by increasing the labor costs of public construction projects such as affordable housing. These laws were originally enacted to shut out minorities from construction jobs in the 1930s. Portland and Metro are currently using more than $900 million in tax dollars to build affordable housing projects. Both jurisdictions are subject to prevailing wage laws that significantly decrease their efficiency.

Portland and Metro’s housing bonds are already spending roughly $300,000 per new unit, which is nearly double market-rate projects. The Bond Stakeholder Advisory Group of the Portland Housing Bureau found that “[p]revailing wage typically increases the labor costs in a project by approximately 12% to 18%.” This means fewer housing units can be built.

One of Portland’s recent projects avoided paying prevailing wages by limiting the number of project-based vouchers that their building contained. This clearly shows that prevailing wages inhibit the creation of affordable housing. To increase efficiency in affordable housing construction, Oregon must end prevailing wage laws.

Vlad Yurlov is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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It’s Creepy Season Metro’s Haunted Lands-cm

It’s Creepy Season: Metro’s Haunted Lands

By Helen Doran

Did you know that more than three-fourths of Metro’s park lands purchased with bonds since 1995 are hidden from the public? You might as well call Metro’s lands haunted.

Metro has no problems with this fact, no matter how shocking this number is to its residents. In fact, with its newest land acquisition — an 86-acre property in the Sandy River Basin — Metro makes it painstakingly clear that this land (along with its 1,400 acres already in the area) is not for human use.

What will the land accomplish for taxpayers? Unfortunately, the answer is a bundle of vague promises, none of which help the average Oregonian. For example, Metro promises that the land will “improve landscape connectivity and climate resilience” as well as “provide potential opportunities for native plant harvest by Indigenous communities.”

These promises have very little to do with Metro’s residents and everything to do with Metro’s mission creep. You might as well call it “nature creep” because the restoration and conservation work supposedly occurring on 88% of Metro’s properties has no end date. Even Metro’s promised Chehalem Ridge park, which has been undergoing supposed restoration for over a decade, will periodically close to visitors for restoration once finally opened. It’s time for Metro to stop investing in haunted lands and end its nature creep. Taxpayers should encourage Metro to use its 2019 bond money to build more parks that are useful to the public.

Helen Doran is a Program Assistant, External Affairs at Cascade Policy Institute, Oregon’s free market public policy research center.

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$7 Billion for That-cm

$7 Billion for That?

Metro’s Transportation Tax Will Overspend on Underused Projects

By Rachel Dawson and Vlad Yurlov

What could you do with $7 billion? That’s the question on a lot of people’s minds as the Metro regional government pushes a permanent transportation tax this November. The tax will be paid by employers at workplaces with 26 or more workers, including nonprofit organizations. Metro, however, exempted itself and other local governments from paying the tax. Many of these projects will end up causing more problems in the future, creating congestion and redundancy and saddling us with more public debt.

The crown jewel of Metro’s transportation tax program is the Southwest Corridor light rail line extension, which is expected to cost $2.8 billion. This project encapsulates many of the problems in this measure. Southwest Corridor is an 11-mile extension of the MAX Green Line from Portland State University to the Bridgeport Village luxury mall. The draft environmental impact statement for the project concludes it will increase congestion at 46 intersections during the PM peak and 30 intersections during the AM, compared to only 36 and 14 intersections otherwise. Multiple I-5 ramps will see increases in congestion during both peak hours.

While some argue that light rail investments will get people out of their cars, much of light rail ridership comes from commuters who already ride public transit. Furthermore, light rail ridership has decreased by roughly 65% since the beginning of the pandemic, and many riders won’t return because CDC recommends that employees avoid transit. Roughly $2.8 billion will be spent on a rarely used facility that will worsen our region’s congestion.

Congestion Creators

Projects such as bus-only lanes will create bottlenecks and increase congestion on multiple corridors. Taking away a traffic lane before an intersection will force other vehicles to merge into a neighboring lane, increasing traffic and creating safety hazards. For example, Metro wants to implement at least one mile of bus-only lanes at various intersections along the Tualatin Valley Highway corridor. Portland’s proposed bus-only lanes are expected to increase delays for cars and trucks, divert traffic to nearby streets, and remove parking. Metro’s bus-only lanes are sure to produce similar congestion effects throughout the region.

Redundant Projects

While Portland certainly needs more bridges for cars and trucks, Metro’s bond measure will fund an unnecessary pedestrian bridge. The Trolley Trail Bridge is a $14.4 million project within the McLoughlin corridor. The bridge would cross the Clackamas River between Gladstone and Oregon City. The proposed bridge, however, is located right next to the recently renovated 82nd Drive Pedestrian Bridge. It takes less than 3 minutes for a cyclist to get from the proposed bridge’s end to the 82nd Drive Bridge and about 8 minutes for pedestrians. If local residents want to build a bridge next to an existing one, local jurisdictions should be the funding source. While it might be nice to have, this redundancy adds little value to the region.

Lavish Costs

The Foster/172nd Roundabout included in the Clackamas to Columbia corridor is a clear example of lavish spending and inflated costs. The City of Gresham’s 2018 cost estimate for a roundabout or traffic signal at this intersection was $342,000 (or approximately $348,197 in 2019 dollars). Metro’s new cost estimate for this project is more than 18 times higher at $6.5 million in 2019 dollars. This drastic increase in price calls into question the validity of this corridor’s cost estimates. Since the City of Gresham’s Transportation System Plan had this roundabout in its 50-year construction forecast, it is not an urgent development. However, safety improvements could be installed here with a traffic light for under $200,000. This amount can fit within a local jurisdiction’s budget without a regional wage tax.

These four examples were selected from hundreds of problematic investments proposed in Metro’s 2020 transportation measure. Increased congestion, redundancy, and lavish spending are not what we should be funding. Portland’s business community has made it clear that the tax imposed by this measure would cost jobs in our region. During an economic recession we should be leaving money in the voters’ pockets. Although Metro pushes this measure as a regional effort, everyone’s tax burdens will fund projects that few people will use. Metro area residents should vote “NO” on Metro’s Measure 26-218 this November.

Rachel Dawson and Vlad Yurlov are policy analysts at Cascade Policy Institute, Oregon’s free market public policy research organization. They can be reached at rachel@cascadepolicy.org and vlad@cascadepolicy.org.

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The Boardman Coal Plant Closed. Now What-cm

The Boardman Coal Plant Closed. Now What?

By Rachel Dawson

On Thursday, October 15, Portland General Electric pulled the plug on the Boardman Coal Plant, PGE’s largest power plant. Boardman had a nameplate capacity of 550 firm megawatts of power and was decommissioned 20 years prematurely.

While environmentalists celebrate the plant’s closure, utility executives are still trying to figure out how they will keep the lights on in our region.

That’s because the more coal plants our region removes from the grid, the more likely we are to experience future blackouts. Multiple studies from groups like the Northwest Power Pool, E3, and the Northwest Power and Conservation Council all reached the same conclusion: Our region will have a shortage of power by the mid-2020s that could lead to blackouts and extreme price volatility.

Curious about what this would look like? Look no further than California. In August, the state experienced rolling blackouts as it leaned too heavily on imports and didn’t have enough of its own firm power.

Our utilities aren’t far behind. Large Northwest utilities plan on investing in wind, solar, batteries, and—like California—market purchases. To avoid California’s same fate, our utilities and officials need to acknowledge that an intermittent resource powered grid is not a reliable or an affordable grid. Instead of celebrating Boardman’s closure, they should invest in firm power sources like natural gas and clean nuclear power.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research center.

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Cascade Policy Institute Responds to the Early Closure of the Boardman Coal Plant-cm

Cascade Policy Institute Responds to the Early Closure of the Boardman Coal Plant

October 19, 2020

FOR IMMEDIATE RELEASE

Media Contact:

Rachel Dawson

(503) 242-0900

rachel@cascadepolicy.org

PORTLAND, Ore. – At 11:56 am on Thursday, October 15, Portland General Electric (PGE) pulled the plug on the Boardman Coal Plant, PGE’s largest power plant. Boardman had a nameplate capacity of 550 firm megawatts of power and was decommissioned 20 years prematurely.

While environmentalists celebrate the plant’s closure, utility executives are still trying to figure out how they will keep the lights on in our region.

That’s because the more coal plants our region removes from the grid, the more likely we are to experience future blackouts. The Northwest Power and Conservation Council is tasked with running models to determine whether there is enough electricity supply to meet demand in the future during a “worst case scenario.” The Council considers the supply adequate if the Loss of Load Probability (LOLP) is 5% or less. In late 2019, the Council found the LOLP by 2026 to be 26%. This means that more than one out of every four simulations run by the Council shows the region facing a shortage of electricity.

To put that percentage into perspective, the LOLP during the 2001 energy crisis was predicted by the Council to be 24%. During this crisis, the Pacific Northwest experienced a prolonged drought that resulted in the loss of 4,000 megawatts of hydropower compared to the average year. To balance the grid, Bonneville Power Administration took back electricity previously sold to the aluminum industry, effectively putting 5,000 aluminum employees out of work.

Since natural gas emits 60% fewer emissions than coal, it would make sense to replace a firm baseload resource with another, cleaner firm resource. However, that’s not what PGE and PacifiCorp plan on doing. Both Investor Owned Utilities (IOUs) plan on replacing lost coal plant megawatts with market purchases, wind, solar, and batteries.

While other utilities have succumbed to criticisms of any and all fossil fuels, the Benton Public Utility District released a report calling out its peers for engaging in virtue signaling and not taking steps to protect the electrical grid. Benton says what others are afraid to: Investing only in wind, solar, and batteries won’t work. For example, Benton found that wind output during the coldest night will only reach around 7%, which won’t provide sufficient electricity when people need to heat their homes. Instead, Benton PUD recommends using natural gas as a transition fuel to nuclear power.

The recent California blackouts should prompt officials to hit pause on their plans to overhaul the electrical grid with intermittent wind and solar resources. Officials charged with managing the California grid admitted the blackouts were due to poor planning. California leaned too heavily on imports and didn’t have enough of its own firm power. Between 2014 and 2018, California reduced natural gas consumption by 21% while increasing renewable energy capacity by 54%. When the sun went down and the wind stopped blowing during the August heatwave, it was clear the ever-decreasing portfolio of firm power wouldn’t make the cut.


Cascade Policy Institute policy analyst Rachel Dawson says, “As more Oregonians work and learn online, it’s critical we take actions that avoid devastating blackouts. Officials know we have a problem; and utilities know that with current technology, intermittent resources alone can’t solve it. Now is the time for them to reverse course and protect the reliability and affordability of the grid.”

To avoid California’s fate, Oregon utilities and officials need to acknowledge that an intermittent resource powered grid is not a reliable or an affordable grid. Instead of celebrating Boardman’s closure, they should take a page from Benton PUD’s book and invest in natural gas and nuclear power.


Contact Rachel Dawson by email at rachel@cascadepolicy.org for more information or to schedule an interview. 

About Cascade Policy Institute: 

Founded in 1991, Cascade Policy Institute is Oregon’s free-market public policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity. For more information, visit cascadepolicy.org.

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Poll Shows Support for Parents to Use State Education Funding for School Choice-cm

Poll Shows Support for Parents to Use State Education Funding for School Choice

By Kathryn Hickok

A RealClear Opinion poll released at the end of September revealed that parents with children in school increasingly—and overwhelmingly—favor the concept of school choice. More than 2,000 registered voters were asked this question: 

“Recent federal legislation gave governors new funding they can use for K-12 education. Some governors have let families control the funds for the purchase of education technology and materials, private school tuition, and home education. Would you support or oppose your governor sending the funding directly to families and allowing them to choose how to use those funds to support their child’s education?”

Seventy-eight percent of public school parents and 79% of non-public school parents supported that statement.

As families today struggle with school situations that aren’t meeting their children’s learning needs, options have suddenly become necessary for many parents, especially low-income and single parents. If their zoned public schools aren’t working for their children or families, Oregon parents should get a kind of “money-back guarantee” that will enable them to make other arrangements. One simple way to do this would be an Education Savings Account program, like those already operating in other states. ESA programs give parents control of a portion of their state’s allocated education funding, which they can use to pay for out-of-pocket education expenses.

An ESA program would be a lifeline for Oregon families whose kids are not being served well by their zoned public schools. The purpose of education funding should be educating students, and all parents should be empowered to obtain a quality education for their kids.

: Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Press Release METRO GOVERNMENT’S INAPPROPRIATE USE OF TAX DOLLARS TO PROMOTE NEW PAYROLL TAX TO VOTERS-cm

Press Release: METRO GOVERNMENT’S INAPPROPRIATE USE OF TAX DOLLARS TO PROMOTE NEW PAYROLL TAX TO VOTERS

Cascade Policy Institute urges Metro Auditor and the Oregon Secretary of State to immediately investigate Metro’s likely abuse of power.

October 12, 2020

FOR IMMEDIATE RELEASE

Media Contact:
Eric Fruits, Ph.D.
(503) 242-0900
eric@cascadepolicy.org

PORTLAND, Ore. – Last week, thousands of Oregon residents received a multi-color postcard from Metro urging them to vote on the regional government’s payroll tax, Measure 26-218 (Exhibit 1). The expensive mailing was sent far and wide, with even some Bend residents finding Metro’s postcard dropped in their mailboxes.

The postcards were designed and mailed using tax dollars, and Metro made no effort to disguise their support for the payroll tax. In large type, Metro’s mailer promotes the ballot title number, uses the “Get Moving 2020” slogan from campaign proponents, and has a multi-color map similar to the map shown in TV ads in favor of the tax.

Approximately 70% of the mailer’s text presents positive messages about the measure, including a listing of the projects Metro anticipates funding, describing input from the community and “leaders” in creating the measure, and identifying oversight provisions if the measure passes.

Less than one-quarter of the postcard’s text mentions the primary purpose of Measure 26-218—to impose a payroll tax on 70% of the region’s workers. The payroll tax is the only reason for the ballot measure. Metro already has the authority to fund transportation projects, but needs voter approval for a payroll tax.

Rather than encouraging recipients to “get both sides” of the arguments for and against Measure 26-218, the mailer directs recipients to Metro’s own webpage for more information (oregonmetro.gov/transportation). This link immediately redirects the visitor to another page titled “Proposed Measure 26-218: ‘Get Moving 2020’” (https://www.oregonmetro.gov/public-projects/get-moving-2020Exhibit 2).

Oregon’s election finance law limits the political activities of public employees while on the job during working hours. Restrictions also prohibit the solicitation of public employees for political activity.

ORS 260.432(2) provides, “No public employee shall . . . promote . . . the adoption of a measure . . . while on the job during working hours.”

ORS 260.432(1) provides, “No person shall attempt to, or actually, coerce, command or require a public employee to influence or give . . . service or other thing of value to promote . . .  the adoption of a measure  . . . .” 

Metro’s mailer does more than encourage individuals to return their ballots. The mailer does not encourage recipients to vote for federal, state, or local candidates. Recipients are not urged to vote for any other state or local measures. Instead, Metro exhorts recipients to vote on a single issue: Measure 26-218, “Get Moving 2020.”

Metro used public employees’ time and the public’s money to create and send the postcards. In addition to the money spent on postage, public employee time was likely used to draft and edit the language of the postcards and design the layout. The out-of-region addresses suggest Metro used public money to purchase a politically targeted mailing list from a third party.

Cascade Policy Institute demands that Metro immediately stop production on any additional promotional mail pieces and asks that Metro’s independently elected auditor and the Oregon Secretary of State to immediately investigate whether Metro’s mailers are an inappropriate or illegal use of tax dollars to encourage voter approval of Measure 26-218.

Under ORS 294.100, Metro Council President Lynn Peterson, as well as any other councilors or Metro staff, may be personally liable for reimbursing Metro taxpayers for the decision to create and mail the brochures [emphasis added]:

(1) It is unlawful for any public official to expend any moneys in excess of the amounts provided by law, or for any other or different purpose than provided by law.

(2) Any public official who expends any public moneys in excess of the amounts or for any other or different purpose than authorized by law shall be civilly liable for the return of the money by suit of the district attorney of the district in which the offense is committed, or at the suit of any taxpayer of such district, if the expenditure constitutes malfeasance in office or willful or wanton neglect of duty.

Eric Fruits, Vice President of Research at Cascade Policy Institute, concludes, “This taxpayer expenditure clearly crosses the line into using public dollars to advocate for the passage of this payroll tax measure. That is wrong and should stop. Metro’s auditor and the Oregon Secretary of State should immediately investigate this likely abuse of power.”

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Contact Dr. Eric Fruits by email at eric@cascadepolicy.org for more information or to schedule an interview.

 About Cascade Policy Institute:

 Founded in 1991, Cascade Policy Institute is Oregon’s free-market public policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity. For more information, visit cascadepolicy.org.

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Government Alone Can’t Solve Homelessness-cm

Government Alone Can’t Solve Homelessness

By Vlad Yurlov

On October 2, Helping Hands unveiled its latest transitional housing facility. After Wapato Jail collected dust for 14 years, Jordan Schnitzer bought the facility to create a homeless shelter. Allen Evans, someone who spent years battling homelessness, was eventually tapped to lead the effort. During months-long negotiations and media coverage, many public officials denounced the plan to house homeless people in what they still thought of as a jail. If a deal had not been made, the whole building would have been demolished.

All of their concerns were addressed by Helping Hands, the data-driven nonprofit organization that is now set to offer transitional housing to the homeless population. Under the leadership of Allen Evans, Helping Hands worked with many organizations to supply the Bybee Lakes Hope Center with education, internet access, and transportation.

At the grand opening, Portland Mayor Ted Wheeler admitted, “Government couldn’t do it alone.” Even when a solution was presented, the government didn’t back the shelter for months. The philanthropic community and private businesses banded together to solve a problem in an innovative way without the need for public money. To solve homelessness, Portland should embrace public-private partnerships that are led by people who know how to get things done.

Vlad Yurlov is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Reject Ordinance 20-1449-cm

Press Release: Eric Fruits, Vice President of Research at Cascade Policy Institute, urges Metro Council to reject Ordinance 20-1449

October 4, 2020

FOR IMMEDIATE RELEASE

Media Contact:
Eric Fruits, Ph.D.
(503) 242-0900
eric@cascadepolicy.org

PORTLAND, Ore. – On Thursday, October 1, Cascade Policy Institute’s Vice President of Research, Dr. Eric Fruits, testified before the Metro Council, urging them to reject Ordinance 20-1449. The ordinance would authorize the sale of up to $28 million in revenue bonds. The funds would be used to implement, impose, and collect Metro’s new personal and business income taxes.

Fruits also pressed the Council to delay implementation of Metro’s Supportive Housing Services income taxes scheduled to go into effect January 1, 2021.

“Metro has completely misplaced its priorities,” Fruits says. “Instead of focusing on its core obligations, it has spent the last two years expanding its mission by chasing expensive new programs funded with new and increasing tax burdens on its constituents.

“The Council must step back from the messes it has made for itself and Metro as a whole. It should spend the next two years recovering from the pandemic’s financial hit and focusing on the organization’s mission, not its mission creep.”

Cascade Policy Institute’s Vice President of Research, Dr. Eric Fruits, testified before the Metro Council

Click here to read Eric Fruits’ full testimony.

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Contact Dr. Eric Fruits by email at eric@cascadepolicy.org for more information or to schedule an interview.

About Cascade Policy Institute:

Founded in 1991, Cascade Policy Institute is Oregon’s free-market public policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity. For more information, visit cascadepolicy.org.

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I was homescholled, here is why i support school choice-cm

I was homeschooled. Here is why I support school choice.

By Helen Doran

Thanks to the COVID-19 pandemic, many parents now find themselves adding the position of “teacher” to their LinkedIn profiles. According to a recent Gallup poll, 1 in 10 American families are now officially homeschooling. Many more are supplementing the school system’s online programs with additional learning in the home or with “pandemic pods.”

What has become abundantly clear through this unconventional year of education is that a “one size fits all” education cannot be the policy of the future. Parents have had a closeup view of the quality of their children’s education. Many now see the need for change. In fact, 44% of public school families are considering making changes to how their children learn this fall, according to a September poll by Heart + Mind Strategies.

My family is the perfect example of why choice is the best policy of the future, especially during this period of distance learning. My mother homeschooled four children for religious and quality reasons, two of us all the way through high school. Each of our K-12 educations looked dramatically different and utilized various online classes, tutors, and private education; but they led each of us on our own unique paths to success.

This flexibility allowed us to dive deeply into our interests and to structure our learning in a way that enabled each of us to thrive. However, my point is not to advertise the benefits of homeschooling, but rather, to emphasize the uniqueness of each child’s educational needs. This has been made painstakingly clear by distance learning. Some children are thriving at home with a break from traditional learning. But many are seeing their grades and well-being suffer dramatically by traditional schools’ attempts to teach virtually. In fact, 59% of teens think that online learning is worse than in-person.

My family was lucky. Our parents could afford the time and money to choose the type of education we each needed, whether that be online, one-on-one, or private. But many families are not so fortunate, which leads to the difficult conversation of inequity. A child’s unique needs should not be a discussion merely for those endowed with the necessary resources and flexibility to consider them. Shouldn’t every child be given the option to choose?

School choice is not a new idea. But as parents’ frustration mounts over the inability of public schools to educate effectively during COVID-19, the concept of giving parents a portion of their state’s per-student education funding so they can choose the resources that work best for them has increased in popularity. Opponents of parental choice argue that such legislation favors middle-class families and draws funding away from the public schools. But education choice laws can be designed to be fiscally neutral or even net positive for local school districts. If the amount of funding provided to a withdrawing student is less than what would have been spent to educate that student in the public system, both students and school districts can be made better off.

School choice frees students from being coveted dollar signs in the state budget and instead allows any kid the option to chase his or her dream education. Isn’t that what equity is about? Equal opportunity? Access to education should be equitable, flexible, and focused on supporting the student, not the system. School choice is the fastest, most efficient path to that goal.

Helen Doran is Program Assistant for External Affairs at Cascade Policy Institute, Oregon’s free-market public policy research organization.

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Metro Deep in Debt and Getting Deeper-cm

Metro: Deep in Debt and Getting Deeper

The regional government plans to borrow money to implement its new income taxes

By Eric Fruits, Ph.D.

Hardly a week goes by that Metro isn’t reaching into your pocketbook or getting deeper in debt. This week, Metro will move forward on issuing $28 million in bonds.

Why does Metro need to borrow $28 million? There are two reasons.

First, Metro needs the money because that’s how much it’s going to cost to set up its new system to collect TWO new income taxes that go into effect in the New Year. We warned you it would be expensive to implement two new taxes on short order. But, even we had no idea it would cost a whopping $28 million. It takes a lot of money to take a lot of money.

Believe it or not, the second reason is even worse. Metro is out of money.

Since Lynn Peterson began leading Metro, the regional government has more than quadrupled its debt load and now has more than $1 billion in debt.

And that’s where the problems really are. Metro has never brought in enough money to cover its expenses. Out of control spending combined with reduced revenues because of the pandemic have worsened its shortfall.

As a result, Metro is under enormous pressure to raise more money from taxes, fees, and charges. They’ve dug us into a hole, and the only way they can fill it is with our tax dollars.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research center.

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Oregobn's NuScale is one step furth

Oregon’s NuScale is one step further to providing states with clean, reliable energy

By Rachel Dawson

Oregon’s very own NuScale Power, a company developing small-modular nuclear reactors (SMRs), has officially received a final safety evaluation report from the U.S. Nuclear Regulatory Commission. NuScale is the first company to be issued a report for an SMR by the Commission, and receiving one serves as a technical review and design approval for the new technology.

This is a major milestone for NuScale, which originally submitted its certification application in 2016 and puts it one step closer to installing its first 720-megawatt plant in Idaho Falls.

This is also good news for the Northwest, which is in need of reliable baseload energy in the future. Officials predict we’ll experience insufficient electrical generation by the mid-2020s.

The Northwest Power and Conservation Council estimates the earliest commercial online date for an SMR plant in our region is likely to be 2030 with energy produced by five reference plants.

However, no new SMR plant can currently be built in Oregon due to a moratorium passed by voters in 1980. Legislation was considered in 2017 to carve out an exception for SMRs, but it did not make it out of the House Committee after passing the Senate. Recent blackouts in California and upcoming coal plant retirements in the Northwest have established circumstances that call for additional reliable resources. Oregon officials should reintroduce legislation that would allow us to take advantage of NuScale’s new technology.

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Achieving Equity Oregon Students Deserve a Money-Back Guarantee-cm

Achieving Equity: Oregon Students Deserve a Money-Back Guarantee

By Eric Fruits, Ph.D.

On September 21, 2020, Oregon’s Senate heard policy proposals to advance equity in education. Senators seeking the quickest and most effective way to achieve equity during this pandemic should flip the state’s funding model. Instead of funding the public school system, the state should support students directly by providing each student as much as $10,500 from the State School Fund.

My fifth grader in Portland Public Schools just got his daily COVID-19 class schedule, and there’s a lot of alone time. On a typical day, he meets with his classroom teacher over Zoom for 75 minutes over the 6.25 hour day. There’s a half-hour “morning meeting,” 30 minutes to go over language arts and social studies, and 15 minutes to discuss math. Nearly three-quarters of the time he’s “in school” he’s actually watching videos posted by his teacher or working on his own.

Governor Kate Brown and the school system frequently remind us, “We’re all in this together.” But, if you talk to parents and kids, many feel like they’re all on their own. On their own to find space for their kids to work. On their own to buy the laptops, printers, webcams, microphones, and headphones to support “online learning.” On their own to pay their broadband providers to supply enough bandwidth to support multiple people video conferencing at the same time. On their own to balance their jobs or job hunts with the school’s Zoom-on, Zoom-off daily schedule.

When our politicians and policymakers say, “We’re all in this together,” what they’re really saying is, “Tighten your belt and toughen up.” For example, when parents tried to enroll their children in online charter schools with a long history of distance learning, the Oregon Education Association lobbied against lifting an enrollment cap. The union argued even a modest lifting of the cap would deny funding to public school districts. To them, our kids are just numbers fed into a formula that funds the system. Rather than working with existing money, they are demanding even more spending on the public school system.

Elizabeth Thiel, the president of Portland’s teachers’ union, says in order for schools to re-open to students, federal and state taxpayers must fund more “investments” in overhauling school ventilation systems, buying personal protective equipment for teachers, and “doubling or more” the number of teachers to allow small group instruction.

On average, Oregon school districts receive about $10,500 per student from the State School Fund. If students aren’t getting instruction from their public schools, they should get that money back to receive instruction elsewhere. States like Oklahoma and South Carolina have already taken advantage of similar ideas by reallocating much of their federal stimulus dollars directly to families to help them adapt to this school year.

Instead of waiting for DC to deliver more federal money, Oregon must put families first by allowing education dollars to follow children to the school that works best for them—whether that’s a traditional district-​run public school, charter school, private school, home school, or learning “pod.”

Think of it as a money-back guarantee. If the public school isn’t working for your kids or your family, you should have a right to take that money and spend it where it works with your child’s needs and your family’s schedule. If enough students leave the public system, the smaller class sizes demanded by Ms. Thiel can be achieved without doubling the number of teachers on the public payroll.

Direct funding of students reduces inequities in school systems because it allows all students to have access to education alternatives. Almost 60% of public charter school students in the U.S. are Black or Hispanic. Imagine what these families could do with as much as $10,500 per student to spend on educational expenses. If equity is the goal, school choice through direct funding is the surest and quickest path.

If your local grocery store doesn’t re-open or can’t keep its shelves stocked, families can take their money elsewhere. So why are families locked into schools that don’t fit their needs? Let’s give a money-back guarantee to every student and their struggling families. Education funding is intended to help children learn, not to entrench the education establishment.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization. He can be reached at eric@cascadepolicy.org.

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Low-Income Oregonians Need Wheels, Not Another Light Rail Line

By Rachel Dawson

Want to help a low-income individual prosper economically? Give them a car.

Multiple studies have shown that having access to private wheels is positively correlated with income levels and hours worked. Thus, giving someone a personal vehicle is a sure way to help them gain access to more job opportunities, and thus a greater potential for increases in personal wealth.

Metro is not ignorant of this data. In a recently released Regional Mobility Policy Report, Metro admitted that “[vehicle miles traveled] has been shown to increase directly with the growth of personal income.” However, Metro appears to have learned the wrong lesson from this information based on its conclusion that this signifies “that private vehicle ownership and the coinciding motor vehicle infrastructure benefits high-income populations most” and that “reducing VMT by supporting other modes of transportation is a more equitable approach to mobility.”

Metro would rather push residents onto transit, like the proposed $2.8 billion SW Corridor light rail line running from downtown Portland to a swanky outdoor mall in Tigard. However, doing so would do little to help the vast majority of low-income Portlanders efficiently get to work, school, day care, and medical appointments. Coronavirus social distancing rules, and recommendations from the CDC to avoid transit, also make dependence on a crowded train unappealing for many people.

Many scholars would disagree with Metro’s conclusion, instead finding that the most equitable approach would be to providelow-income residents access to personal vehicles and the associated infrastructure.

For example, Margy Waller, a former Brookings Institution fellow, found that car ownership is positively correlated with both hours of work and income. Transit-dependent low-income residents have a limited number of job opportunities available to them compared to someone with a private car, due to having a commute that is nearly twice as long. In addition, the rate of homeownership among low-income car owners was twice as high as low-income households without cars, as those with cars have more options for where they could live.

Further, researchers found in an evaluation of a subsidized car ownership program in Vermont that participants’ earned income increased by around $220 per month, 2.5 times higher than their earnings prior to receiving a car. Owning a car is valuable because it opens up opportunities for increased hours worked and income for low-income residents. Instead of funding a train to a mall, Metro should reverse its war on cars and promote access to a personal vehicle for all low-income and minority Portlanders. Public transit can sometimes be a good option, but it certainly should not be the only one. Metro should demonstrate its dedication to advancing equity by promoting a low-income car program, which would cost a fraction of SW Corridor project’s price tag. Doing so would be the best way to help Portlanders get where they need to go, when they need to be there.

Rachel Dawson is a Policy Analyst at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. She can be reached at rachel@cascadepolicy.org

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Emancipate the students-cm

Emancipate the Students

By John A. Charles, Jr.

The state legislature is seeking policy proposals for “equity in education.” Here’s an idea: how about a money-back guarantee for public schools?

The K-12 system is based on the assumption that all students should attend neighborhood public schools. Even in the best of times, that wasn’t working for many families. Now the assigned schools aren’t even open; the governor has mandated online learning.

Virtual education has some benefits, but also imposes new costs for parents. They are now part of the educational workforce, except they’re not getting compensated.

There is a solution. School districts are funded from three primary sources: the state school fund, the federal government, and local property taxes. The state share alone averages about $10,000 per student annually. The legislature should offer parents a refund of the $10,000 if they leave the public school system. This would instantly make the departing families better off, while reducing crowded conditions for those students who remain. With fewer students, it would be easier for public schools to restore classroom education. Everyone wins. One system cannot satisfy all needs. The best way to give families more options is to provide them with the equivalent of a Food Stamp card upon request, and let them swipe it for the instructional services they need.

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

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Metro mission creep-cm

Metro’s Mission Creep

By Vlad Yurlov

Metro is expected to spend over $1.4 billion this fiscal year. That nearly triples their revenue from a decade ago. But, has anyone received three times the service?

Instead of improving its basic functions, Metro is micro-managing the entire region. Metro’s original charter provided the regional government with a modest mission of growth planning. But, it also allows Metro to address “matters of metropolitan concern.” These four words have led to decades of mission creep.

A prime example of Metro’s mission creep is their upcoming transportation ballot measure, which has only one regional project. ODOT, TriMet, and every local jurisdiction already have dedicated transportation funding mechanisms, such as the gas and property taxes. Nevertheless, Metro is seeking to funnel another $5.2 billion in payroll taxes to fund its own priorities. By disrupting the tie between local money and local projects, Metro will continue to hurt local transportation.

Instead of 17 politically chosen projects, Metro’s residents should be using their money to decrease traffic congestion. The upcoming transportation measure only offers three percent to ease traffic congestion, while using up a tax base hammered by the pandemic.

Voters should reject Metro’s transportation ballot measure and call out their mission creep. There is no sense in laundering billions of dollars through a bloated bureaucracy when locally elected organizations already manage transportation improvements. Let’s keep taxes and transportation improvements local and worthwhile.

Vlad Yurlov is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Pinocchio Politics on the November Ballot

By Eric Fruits, Ph.D.

President Trump is frequently accused of lying. But he doesn’t have a monopoly on falsehood. Look around the Portland region and you’ll see our local politicians lying to us. We live in our own Pinocchio-land.

Metro’s “Get Moving 2020” ballot measure is a $5.2 billion tax increase disguised as a transportation measure. It’s a permanent tax on the total compensation paid by every private business and nonprofit with more than 25 employees. Metro says it’s a payroll tax, but it’s much more. It will tax every dollar you earn — even the money you save for retirement.

Comedian John Oliver says, “If you want to do something evil, put it inside something boring.” And, that’s what Portland City Council has done with a major charter change packaged as some minor housekeeping.

Portland says the amendment merely clarifies the charter. In reality, the amendment will open a spending tap with water customers on the hook for ever rising water bills.

Portland Public Schools deserves its own wing in the Hall of Pinocchios. PPS put a $1.2 billion bond measure on the November ballot. About $200 million of the new money will be used to fill cost overruns on the projects funded by the 2017 bond.

How did PPS run $200 million over budget? Simple: PPS lied to us. The school board intentionally low-balled cost estimates to fool voters into approving the measure.

This year, voters must put an end to the billions of dollars of fibs our local politicians are telling. Pinocchio learned his lesson about lying; it’s time for our politicians to learn theirs.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research center.

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The Dalles Dam on the Columbia River-cm

California Blackouts Show the Need for Reliable Hydropower

By Rachel Dawson

Recent blackouts in California have demonstrated the need for reliable and affordable power. Contributing to these blackouts were sudden drops in solar and wind power, as well as unavailable spare electricity from neighboring states who were also experiencing extreme heat.

To keep blackouts at bay, our region needs to continue investing in reliable power resources, such as carbon-free hydropower which makes up 45% of electricity used in Oregon.

Unfortunately, hydropower continues to come under attack by proponents of “renewable” energy sources other than hydro. Oregon Governor Kate Brown has supported removing, or breaching, the Lower Snake River Dams operated by Bonneville Power Administration (BPA) in a letter sent to Washington’s Governor Inslee. However, the recently released Columbia River System Operations Environmental Impact Statement (EIS) shows that breaching the dams will put us one step closer to facing our own blackout.

The EIS studied how operating the Columbia and Snake River dams will affect factors like fish populations, power supply, and greenhouse gas (GHG) emissions. The preferred alternative would not breach the dams and instead would utilize a flexible spill operation for fish passage that would spill more water at times when hydropower is not valuable to meeting demand. Under this alternative, Snake River chinook and steelhead are both expected to improve their smolt-to-adult return ratio.

Increasing fish populations is the primary reason environmental groups want to breach the dams. However, billions of dollars have already been invested in safety features to improve fish populations. According to NOAA Fisheries, we are now “close to achieving, or have already achieved, the juvenile dam passage survival objective of 96 percent for yearling Chinook salmon and steelhead migrants;” and the average number of salmon “passing Lower Granite Dam over the last ten years was the highest total of the last five decades.”

Peter Kareiva, the director of UCLA Institute of the Environment and Sustainability, has stated that while the “dams have caused salmon declines…the operators of the dams have spent billions of dollars to improve the safety of their dams for salmon, and it is not certain the dams now cause higher mortality than would arise in a free-flowing river.”

By increasing the number of “spills” in the preferred alternative, hydropower generation on the river would decrease by 210 aMW with average water supply. This is estimated to raise electricity rates by 2.7% and increase GHG emissions by around 1.5%.

It is vital that we protect Oregon’s hydropower supply, especially now when other baseload resources like coal are increasingly being retired. Unlike solar and wind, hydroelectric dams produce power at all times of the day, making hydropower a great baseload power source for our region.

If hydropower is reduced, we will need another baseload source to fill the gap it leaves behind. Typically, that role falls on natural gas or coal, explaining why GHG emissions are expected to rise if BPA decreases hydropower output in the future.

According to the Columbia River System Operations EIS, energy alternatives that include breaching the dams will increase both BPA’s wholesale power rates and the risk of power outages.

For example, breaching four lower Snake River dams would decrease hydropower generation by around 1,100 aMW of power. This would double the region’s risk of blackouts, increase wholesale power rates by up to 9.6%, and increase power related GHG emissions by up to 9% if the dams are replaced by natural gas plants. Replacing the dams with other renewable sources paired with batteries is estimated to cost $800 million every year, resulting in a 25% increase in ratepayer bills.

Oregon isn’t immune to threats of blackouts. Officials warn we may face a capacity deficit of thousands of megawatts due to planned coal plant closures, which may result in both extreme price volatility and blackouts by the mid-2020s. PGE is closing Oregon’s only coal plant in five months and will be relying on hydropower contracts to make up the difference at a time when our own Governor’s stance is using less hydropower. The power provided by BPA’s dams is vital if we want to avoid the power shortages experienced by California. Governor Brown should rescind her previous statement and support the continued use of the Snake River hydroelectric dams.

Rachel Dawson is a Policy Analyst at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. She can be reached at rachel@cascadepolicy.org

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Metro pushes transportation bond while acknowledging serious problems-cm

Metro Pushes Transportation Bond While Acknowledging Serious Problems

Oregon’s Business Community Is Challenging the $7.8 Billion Measure

By Vlad Yurlov

After years of planning, revising, and negotiating Metro’s transportation funding plan, the region’s business community has had enough. Last month, several tri-county chambers of commerce sent a letter to the Metro Council urging a delay on the measure, because of the COVID-19 epidemic.

Metro spent years finding ways to spend money on transportation projects, while spending about two months figuring out how to pay for it. They only settled on a payroll tax because polling was good.

But, Metro’s polling was from May, when much of the county was hopeful the pandemic would be over by the start of school. Instead, the economy has crashed with businesses closing, workers losing their jobs, and thousands of families struggling to pay their bills. For many households, Metro’s plan to create a permanent payroll tax costing $500 a year for the average worker reflects bad timing, if not poor judgment.

Metro Council President Lynn Peterson claims the spending will create jobs, reduce pollution, prepare the region for growth, and advance racial justice. But such claims require extraordinary evidence.

The plan will not “create” thousands of jobs. Metro President Peterson falls for the fallacy that spending more money creates more jobs. In fact, Metro’s payroll tax will reduce take-home pay and kill jobs. Research shows that workers pay the price of a payroll tax, with low-skilled workers suffering the most. Even the Draft Environmental Impact Statement for the Green Line extension states that “net employment change in the corridor and region over the long term…would likely be negligible.”

The plan will not “advance” racial justice. Metro admits the Southwest Corridor light rail line will displace hundreds of residents and businesses, many of whom are from minority and low-income communities. While strategies to reduce the impact have been discussed, communities of color will be forced to uproot their lives because of these projects.

Finally, the plan will not “reduce” pollution. Climate Solutions and Oregon Environmental Council expect that the measure’s projects would only reduce emissions by less than one-tenth of one percent per year.

The plan will not “transform” its key corridors. Most of the projects involve minor improvements such as adding lighting and mending sidewalks, as well as improved lights and access improvements.

The plan will not “prepare” the region for growth. Many of the new amenities will likely inhibit new commuters travelling between work, home, and leisure destinations, because most of the projects are designed to make congestion worse.

The Council President’s letters tried to cut deals with the business community. She offered a reduction of the payroll tax, on the condition that the Portland Business Alliance doesn’t campaign against the measure and lobbies Oregon’s legislature to recoup the losses. This was quickly rejected. Instead, Metro carved out local governments from the tax, right before the referral vote. This 11% loss further burdens businesses and residents.

Willamette Week reported that the Metro Council remains “undaunted.” The business community then filed a ballot title challenge arguing that Metro’s wording was unfair in using the phrase “business tax” rather than a “wage-based payroll tax.” While Metro employees use the term “payroll tax,” it was recharacterized as a business tax after realizing how unpopular the phrase sounds during a time when many firms can’t make payroll and so many families aren’t getting paid.

A large part of the push for the measure on the ballot is Lynn Peterson’s chase for federal funding, which she believes will run out if voters don’t approve the measure. Additionally, Lynn Peterson is suspected to be eyeing a run for Oregon governor. This means that this measure’s rush may not be out of preparedness, but of an eager Council looking to grab federal dollars, even if it means that our own tax rates will skyrocket, and personal gain.

Metro’s transportation measure would cripple the region’s COVID-19 recovery, because the payroll tax that funds it diverts development away from businesses that create wealth and into projects that merely move it around. This transportation bond measure will not allow the tri-county area to “Get Moving.” Residents and businesses will have to freeze in place to survive an additional payroll tax for another unsustainable gamble.

Vlad Yurlov is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization. He has closely followed Metro’s transportation bond and is currently researching its history and impacts.

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California blackouts serve as a warning to Oregon officials

By Rachel Dawson

California’s recent blackouts should serve as a warning to officials in the Northwest as we continue to increasingly crowd out fossil-fuel plants in favor of renewable alternatives.

The rolling blackouts were a “perfect storm” of events, resulting from sudden drops in solar and wind power, a heatwave driving up demand, the sudden loss of a natural gas powered plant, and the inability to import electricity from neighboring states dealing with their own extreme heat.

Over the past decade, California has replaced natural gas plants with solar and wind power as part of its efforts to reach 100% renewable energy by 2045. In fact, California reduced natural-gas consumption by 21% between 2014 and 2018, while increasing renewable energy capacity by 54%.

To make up for the loss of reliable baseload power during times when solar and wind aren’t producing power, California has increased its reliance on importing power from neighboring states. This risky tactic left California vulnerable when its own resources failed to produce sufficient power. Oregon isn’t immune to threats of blackouts: Officials warn we may face a capacity deficit of thousands of megawatts due to planned coal plant closures, which may result in both extreme price volatility and blackouts by the mid-2020s. To avoid California’s fate, our region needs to continue utilizing reliable baseload resources such as natural gas, nuclear, and hydropower. Otherwise, officials may risk keeping Oregonians in the dark.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research center.

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The nuclear waste reality that popular media loves to ignore

By Rachel Dawson

Did you ever watch the Simpsons and think nuclear waste from utility plants looked like glowing green goo oozing out of cans?

If you answered yes, you might be the victim of media propaganda. The waste produced by utility nuclear power plants is not a leaking green goo. In fact, it’s not capable of leaking at all as nuclear waste is a solid metal rod (better known as a spent fuel rod) instead of the green ooze many associate it with.

These misconceptions are important to dispel as potential future power shortages along with increased clean power mandates make having a clean and reliable baseload power source like nuclear increasingly important.

In reality, nuclear fuel is made up of multiple ceramic pellets stacked vertically in long metal tubes. The resulting waste looks no different and actually has the “consistency of a teacup.”

(United State Nuclear Regulatory Commission Photo)

Nuclear spent fuel remains radioactive for thousands of years. But the idea that it will one day be unearthed and “spilled” across green pastures and waterways is a scenario based more on science fiction than reality.

For one, spent fuel is never left exposed. The spent fuel rods are kept underwater for up to eight years (in what are known as spent fuel pools) “until the radiation levels decay to levels that can be cooled without water.”

From there, the spent fuel is either recycled or placed in large concrete canisters, known as dry casks, and stored underground. This step is where the United States differs from France, where nuclear energy makes up 71.7% of electricity generation.

Recycling spent fuel is the most efficient way to manage nuclear waste. Spent fuel contains over 90% uranium, which is usable fuel. Recycling spent fuel allows one to draw out more energy from the fuel, have less remaining nuclear waste, and convert the waste into immobilized chemical forms. France, for example, embeds its remaining nuclear waste in vitrified borosilicate glass.

However, it is currently illegal to do so in the United States. President Jimmy Carter prohibited recycling nuclear spent fuel in 1977 during the Cold War due to fears that it would be used to create nuclear weapons and concerns that it was not cost-effective. This left us with the remaining option of burying our country’s spent fuel in the ground.

In the 43 years since President Carter made this decision, multiple nations around the world, including France, Japan, and Great Britain, have all chosen to recycle their spent fuel without the proliferation of nuclear weapons officials were concerned would be correlated with it.

NuScale Power, an Oregon based company developing small-modular nuclear reactors (SMRs), claims to have more modern recycling technology than France, but is unable to take any action here in the United States.

Additionally, nuclear waste is not as dangerous as it’s made out to be, so long as it remains enclosed. There have been no recorded injuries or deaths caused by the commercial nuclear waste contained in dry casks.

Nuclear waste is the only energy resource byproduct that doesn’t make it into the environment, as it is completely contained. Environmentalists should be more concerned with wind and solar technology, which sends used wind turbines and solar panels to landfills after they’re retired.

Oregon passed a moratorium on building new nuclear plants in 1980 until the nuclear waste problem was solved. Perhaps our legislators were watching too many cartoons when the moratorium was passed, as burying spent fuel in dry casks has a track record for being safe and does not adversely affect the environment.

No energy source is perfect. But by utilizing improved safety technology and recycling spent fuel, nuclear energy can come pretty darn close. Oregon legislators should work to relegalize nuclear power in our state as future coal closures will cause our region to lose thousands of megawatts of reliable power “which may result in both extreme price volatility and unacceptable loss-of-load, or blackouts.” Doing so will allow our state to meet clean energy mandates while ensuring the lights are kept on when we need them most.

Rachel Dawson is a Policy Analyst at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization.

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Oregon Students Deserve Stability

By Helen Doran

Oregon guidelines for the 2020 fall semester have been remarkably inconsistent, causing confusion and mayhem for faculty, parents, and students alike. The Oregon Department of Education recently released new guidelines that allow students with special needs to have limited in-person instruction but with reduced hours and class size. This includes students with disabilities, English language learners, and those enrolled in career technical education (CTE) programs.

But even these guidelines are dependent on the absence of Covid-19 cases among staff and students for two weeks. This doesn’t guarantee a stable learning environment for students that need stability the most.

The guidelines also fail to explicitly address those affected by the decision to continue virtual learning in the fall. What happens to the student experiencing homelessness who has no access to a hotspot? What about the single mother who has to choose between keeping a job and staying at home with her child?

It’s time to face the reality that Oregon’s public school system cannot guarantee a “one-size-fits-all” solution for students this fall. A money-back guarantee for K-12 education would go a long way in empowering parents to find the stability they need in uncertain times.

Every parent and every child find themselves uniquely affected by the pandemic. They deserve unique solutions too. Let’s put the money in the hands of the parents, not the system.

Helen Doran is a Program Assistant at Cascade Policy Institute, Oregon’s free market public policy research center.

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Higher Taxes, Less Business

By Cooper Conway

Joe Rogan, the outspoken commenter, comedian, and host, announced on a recent episode of his popular podcast, “The Joe Rogan Experience,” that he would be moving to Texas in search of less homelessness, less taxes, and a little bit more freedom.

Rogan will be bringing his business that recently signed a 100-million-dollar deal with Spotify, too. The move to the Lone Star state will save Rogan and his company over $13 million in taxes and provide more economic growth for the state that is the perennial winner of the Governor’s Cup for economic growth and job creation.

Unlike California, Texas has no income tax and frequently poaches businesses from the West Coast, such as Tesla, Charles Schwab, and McKesson.

Oregon, whose top income tax rate is slightly under California’s at 10 percent, should note the multiple businesses fleeing California for Texas and follow Texas’s tax policy lead instead of California’s.

Amid a pandemic, now more than ever is the time for economic development and job creation to flood Oregon, allowing Oregonians to succeed. The implementation of free-market solutions such as lower-income taxes will alleviate local business owners from the damage that COVID has done while allowing more Oregonians to rejoin the workforce.

Cooper Conway is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Metro’s Untimely, Nonsensical Light-Rail Project

By John A. Charles, Jr.

Last month, the Metro Council voted to send a regional payroll tax to the November ballot. The rationale for the new $250-million-a-year tax is primarily to help fund a 12-mile light rail extension from Portland to Bridgeport Village in Tigard. It will also pay for a smattering of minor transportation projects throughout the region, but those are just ornaments on the tree.

There are at least three problems with this proposal. The first is that we already pay two transit taxes: the TriMet payroll tax assessed on employers, and the statewide transit tax collected from employees’ paychecks that was adopted by the Legislature in 2017. Most people don’t benefit from either one, because they don’t use transit. Adding a third tax to pay for light rail to Tigard ­– called the Southwest Corridor project – makes no sense.

Second, light rail ridership peaked in 2012 and has been dropping ever since. Now, amid the coronavirus pandemic, it is down about 70% from last July, according to TriMet ridership numbers. With many worried about the inability to physically distance on public transit and the prospect that some may work from home permanently, more rail is the wrong project at the wrong time.

Third, if the Metro tax is approved, TriMet could bulldoze nearly 300 homes and up to 156 businesses for the right-of-way, according to its environmental impact statement. Roughly as many as 1,990 employees will be forced to leave the area, the analysis states.

This ghastly level of destruction recalls the heavy-handed actions of the government when it rammed I-5 through the Albina neighborhood in the 1960s, an act that reverberates today as the state aims to widen the highway in that same stretch. Portland City Commissioner Chloe Eudaly, who resigned from the Oregon Department of Transportation’s steering committee for the I-5 project in June, emphasized this in her resignation letter: “In 1962, ODOT dug a trench through Oregon’s largest Black community, demolishing 300+ homes, disrupting and destabilizing the community, and polluting the environment.”

While the Southwest Corridor is not Albina and Commissioner Eudaly cannot undo history, she can help prevent a similar bulldozing of people’s homes. She is currently a member of the steering committee for the SW Corridor Project. If she really cares about protecting homes and businesses, she should resign from the SW Corridor Steering Committee and actively oppose more light rail construction. The other commissioners should join her.

But voters don’t need to wait for the Portland City Council to do the right thing. They will have the opportunity to reject Metro’s new tax in November, and they should.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free-market public policy research organization. This article originally appeared in The Oregonian on August 5, 2020.

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A Money-Back Guarantee for Oregon Students

By Eric Fruits, Ph.D.

Oregon public school students are not likely to return to their classrooms this fall, with Portland Public Schools bracing parents for at least a semester of online classes. Even if they return to campus, PPS students face a two-day-on, two-day-off schedule. The uncertainty and chaos partially explain the results of a June survey conducted by USA Today and Ipsos that reported 60% of parents are likely to continue homeschooling this fall even if schools reopen. If a large portion of the population opts out of public schools this year, what happens to all that money?

Funds for Oregon schools come from a complex mix of state, local, and federal sources. On average, school districts receive about $10,500 per student from the State School Fund. The figure below shows that districts in Multnomah County spend about $8,600 per student in instruction, which accounts for about half (or less) of total public school spending. If students aren’t getting instruction from their public schools, they should get that money back to receive instruction elsewhere. Imagine what families could do with $8,600 a year to spend on educational expenses.

Total expenditures per student (ADMr)
Multnomah County school districts, 2019-20 budget

Source: Multnomah County Tax Supervising and Conservation Commission

Because district funding depends on how many students attend school in a district, public schools have a keen interest in maintaining or expanding public school enrollment. In written testimony to the legislature, the state’s teachers union and school employees union opposed increased enrollment in online charter schools. They claimed that increased enrollment in charter schools would “reduce the funding that districts need.” Governor Kate Brown closed online charters along with brick and mortar schools in part because increased charter enrollment would “impact school funding for districts across Oregon.” For the unions and the governor, students are not kids seeking an engaging education, they are merely a source of funds to fuel the public school system.

Public education should fund students’ education instead of the education system. The money should follow the child, wherever he or she may choose to go. If a student chooses the public school, then the funds should flow to the public school. If a student chooses a private school or a charter school, then the funds should be used to offset those costs. Families of homeschoolers should receive funding to offset their out-of-pocket education expenses. If that seems obvious, that’s because it is obvious.

Think of it as a form of money-back guarantee. If you’re happy with your public school, stay there. But, if the public school isn’t working for your child, you should be able to get your money back and spend it where it works. In July, Education Secretary Betsy DeVos suggested rather than “pulling funding” from schools, the government is considering “allowing families…[to] take that money and figure out where their kids can get educated if their schools are going to refuse to open.” Many parents will find $8,600 to spend on education can go a long way if they shop around.

This isn’t a radical idea. It’s how higher education works for millions of college students. They can take their Pell Grants, GI Bill funds, and other financial aid to just about any school they want. Why is K-12 “financial aid” contingent on attending a bureaucratically assigned public school?

The practice of assigning students to schools based on street addresses is inherently unfair. Wealthier neighborhoods have better-funded schools with better measures of student achievement, while poorer neighborhoods have run-down schools with dismal academic performance.

The pandemic has exposed our state and local governments as broken. They only “work” during a booming economy, when wasted money and misplaced priorities are obscured by widespread prosperity. But when effective public services are needed most, our government institutions have ground to a halt and, in some cases, made things worse. Now more than ever, families should control their education funds to find schooling solutions that match their children’s needs, their work schedules, and their health concerns. A money-back guarantee of $8,600 per student would go a long way toward finding those solutions.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free-market public policy research organization.

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Oregon Needs a Moratorium on Overbroad Laws

By Vlad Yurlov

Once again, Oregon’s legislature has succumbed to shortsighted politics. Effective June 30, House Bill 4213 prohibits landlords from evicting tenants due to nonpayment until next April, regardless of their circumstances.

Of course, there could be many reasons tenants might not pay their rent. One of the most pressing is Oregon’s lockdown policy, which effectively prohibited many businesses and entire industries from operating, and their employees from supporting themselves. While these conditions may warrant legislative action, people who have continued to earn an income may simply choose to delay their rent payments.

By being so broadly applied, this legislation will harm landlords, particularly small private owners who still must pay utilities and property taxes on their units. But property owners won’t be alone in suffering. This moratorium will make it even harder for people to find apartments for rent, because only the most secure tenants would be considered during a time when anyone can simply put off their payments. In addition, the end of the moratorium likely will bring more debt, eviction, and ultimately homelessness to an already stretched system.

Legislators should understand that seemingly simplistic quick fixes can cause long-run damage. This legislation will push Oregon from having a health crisis to an even deeper housing crisis. Laws should be made with specificity, not reactionary haste.

Vlad Yurlov is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research center.

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Portland Politicians Suffer From the Edifice Complex

By Eric Fruits, Ph.D.

On July 24th, the New York Times ran a 2,300-word piece describing the challenges owners of vacation homes have faced in converting their second homes into their primary residences during the COVID-19 pandemic. Challenges included the inability to get a Starbucks vanilla latte or find a bagel shop.

Readers overwhelming responded: “Read the room, New York Times!”

With millions out of work and struggling to pay the bills, it’s hard to sympathize with a vacation homeowner struggling to find a place in her second home to put a pencil holder and paper tray she bought in Florence, Italy.

Closer to home, our elected leaders can’t read the room either. Sitting safely in their home offices, collecting steady paychecks, and venturing out for a photo op at a protest, they continue to push ever higher taxes on their struggling constituents.

Less than five months after sending two new income taxes to the voters, Metro is now charging full speed ahead on a payroll tax to pay for the unneeded Southwest Corridor light rail project from Portland to Bridgeport Village. The project anticipates tearing up Barbur Boulevard and adding congestion to dozens of intersections and highway ramps. Making way for light rail will require the destruction of at least 78 residential dwellings, and as many as 293. In addition, as many as 156 businesses will be forced out, displacing up to 1,990 employees.

The payroll tax will cost about $500 a year for the average household in the region. That’s $500 that can’t be spent on rent, utilities, groceries and other necessities.

Read the room, Metro. Is a light rail line to an upscale shopping mall more important than the houses that’ll be bulldozed, the business that’ll be shuttered, and paychecks that’ll be raided?

The City of Portland is no better. Because of years of mismanagement, the city’s parks bureau has spent itself into a deep hole. Last year, the city closed the Sellwood and Hillside community centers. This year, Mayor Ted Wheeler cancelled all summer parks programs. Even with the cuts, the city claims the parks program has a deficit of more than $6 million.

Earlier this month, the city council voted to send a $48 million-a-year property tax increase to the ballot to fund its mismanaged parks program. It’s not clear why the city needs $48 million to fill a $6 million gap. But, I’m just a dumb voter who doesn’t understand the ins and outs of government accounting.

Nevertheless, in a time when tenants can’t pay their rents and homeowners can’t make their mortgage payments, Mayor Wheeler and city council are promoting a tax increase that will cost the average Portlander $180 a year. Read the room, Portland.

Of course, Multnomah County has to get into the money grab game, too. In November, voters will decide on a $37 million property tax measure to increase library spending. That’s about $115 a year for the average household. Currently, all the county libraries are closed, except for picking up books put on hold. Maybe the libraries can wait until after this recession is over before reaching into our wallets. Read the room, Multnomah County.

Even though schools are closed and Portland Public Schools is still mumbling and fumbling over its plans for the fall, PPS is looking to send a $1.1 billion property tax measure to the ballot in November. A big chunk of that money is earmarked to pay for nearly $250 million in cost overruns from the last school bond measure.

With the pandemic causing a radical rethinking of how education is delivered to our children, perhaps now is not the right time to embark on a spending blowout to build more massive brick-and-mortar schools. Read the room, PPS.

For years – no, more like decades – Portland-area voters seemed to have demonstrated an endless tolerance for raising their own taxes. They also seem eager to elect politicians who promise more and more spending on massive and costly projects. This has been called the “Edifice Complex” – it’s fun and sexy to be at the ribbon cutting for a new MAX line, library or remodeled school. There are no photo ops for trimming a budget.

In 2020, Portland-area politicians have become so consumed by their Edifice Complex that they have failed to read the room. In the middle of a pandemic and recession, voters may teach the elected that feeding their families is more important than feeding the beast of local government.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free-market public policy research organization. This article was originally published in the July 2020 Oregon Transformation newsletter.

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Metro’s Broken Promise of Racial Equity

By Helen Doran

A scenic drive through the country does not usually call to mind the empty promises of local government. But this drive was different. I was taking the 30-minute journey from downtown Hillsboro to visit Metro’s Chehalem Ridge Nature Park.

The nearby farms provided a scenic backdrop to my mission, but my mind was focused on Metro’s long history of broken promises. One of these broken promises is particularly relevant to the recent calls for racial equity.

Not much of the drive has changed since I toured the park last summer. It still required white knuckle steering to keep control of the car around gravel turns. I tried to imagine how the neighboring farms would deal with the increased traffic to the park on these winding, rural roads. Miles away from the nearest bus stop, I also questioned how anyone without a car would get to this remote park.

Several construction signs and machines welcomed me when I parked. I had mixed feelings about this new development. I was glad Metro had finally broken ground after 10-years of promising a regional park. But I was more troubled by the many promises Metro broke along the way to build these several miles of trails on land far outside of its jurisdiction.

The regional government’s mission strongly emphasizes racial equity in its park plans. Yet these promises of equity and diversity are nowhere to be seen in the making of Chehalem Ridge. The parks’ master plan frequently mentions serving the area’s diverse population. It projects that, “the planning process and resulting improvements should be particularly attuned to the recreational interests of Latinos.” The plan also promises to remove barriers to accessing and using the park.

But my challenging drive to Chehalem demonstrates the discrepancy between Metro’s words and its actions. Despite multiple mentions in the master plan, Metro failed to address the greatest barrier of all to its promise of racial equity–getting to Chehalem in the first place. In particular, Metro noted that Spanish speakers surveyed strongly supported biking, walking, and shuttle serving the park. It further observed that “Spanish speakers reported experiencing greater transportation barriers.”

Yet the route is especially unfriendly to cyclists, pedestrians, and public transportation. Anyone attempting to visit the park must drive along nine miles of winding, rural roads to get to the entrance. Moreover, the park is outside Metro’s jurisdiction, and Washington County has indicated it has no intention of spending its transportation budget to improve access. This raises the question: why is Metro building parks inaccessible to the low-income and diverse communities it serves?

This summer, Metro referred its Get Moving 2020 transportation and payroll tax measure to the November ballot. The regional government claims the money will be used to improve transportation across the Portland region, especially for low-income communities and communities of color. Even so, the measure does nothing to improve access to Chehalem Ridge Nature Park.

In the end, Chehalem Ridge will be yet another Metro park accessible only to those privileged to own one of Metro’s long-running boogeymen: the automobile. If Metro sincerely seeks to fulfill its mission of racial equity, we would see parks full of amenities within Metro neighborhoods–near places people live. That is the essence of equity.

Helen Doran is Program Assistant, External Affairs at Cascade Policy Institute, Oregon’s free-market public policy research organization. In 2019, Helen co-authored the first independent audit of Metro’s Parks and Nature Program, titled “Hidden Lands, Unknown Plans: A Quarter Century of Metro’s Natural Areas Program.”

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School Choice Means Equitable Funding

By Cooper Conway

Last week, the United States officially surpassed 4 million documented coronavirus cases. With only a few weeks before students return to school, parents in Oregon are scrambling to find—or create—a safe and effective learning environment for their children.

Of the options available, some parents believe they have found the best solution for their family with micro-schools.

Micro-schools are small groups of children that learn at home. The parents of children in micro-schools pool their resources to hire a teacher, or instead become teachers themselves by obtaining teaching materials through homeschooling programs.

However, some families cannot afford a private teacher’s salary, even if they pool their funds with other parents. Parents who can’t or won’t send their children to public schools deserve to get their kids’ share of state instruction funds.

It’s a matter of equity. If public schools can’t safely and effectively provide education, the funds should flow to families so they can find a solution that works for them and their children. Putting schooling funds directly into the family’s hands allows for maximum flexibility when the local government school is unable to provide an option that parents feel comfortable with.

Parents know what options are best for their children, and Oregon lawmakers should allow all families, not just wealthy ones, to have the same access to those options.

Cooper Conway is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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COVID-19 is limiting classroom access; it’s time to stop limiting Oregon’s online charter school enrollment

By Cooper Conway

The Oregon Education Association (OEA) recently penned a letter to legislators urging them to maintain a strict limit on the number of children who may transfer to online charter schools. A 2011 Oregon law caps the number of students allowed to transfer to an online charter school at 3 percent of local district enrollment. The union argues that the cap was generous because only 1 percent of students were actively looking to switch at the time the cap was set.

However, that was 2011. We are now living in 2020, during a worldwide pandemic in which learning in person is impossible for most children.

Parents of more than 300 Oregon students recognized this new reality and completed paperwork to transfer their children to an online charter school soon after Governor Kate Brown suspended in-person classes on March 16. In addition to those 300 students, thousands more looked to transfer to one of Oregon’s 22 online learning programs after the shutdown of brick-and-mortar schools. Instead of receiving a quality education in a setting that embodies social distancing, Oregon’s Department of Education stepped in on behalf of teachers’ unions and denied the transfers of any more students looking to continue full-time learning.

Nevertheless, the OEA claims raising the cap by as little as one-half of one percent would be too much. The union argues the state’s Department of Education and local Education Service Districts are currently working to provide a better, hybrid program for students during COVID-19. In contrast, nearly two dozen online charter schools have had distance learning curricula in place for years.

Encouraging the switch to charter schools is more bang for the Oregon taxpayer’s buck, too. Charter schools historically operate with 80 to 95% of what public schools receive from the state school fund. The money saved by districts from the transfer of students to charter schools could help their budgets across the state—all while empowering students to get an education in the setting of their choice.

The union’s forceful defense of the 3% cap raises a key question: Why is there a cap at all? Such an arbitrarily low cap forces charters to rely on admission lotteries, turning education into a game of chance. In no other setting in America does this happen. For example, 41 million Americans have applied for unemployment since the start of the coronavirus pandemic. The government is not allowed to put a 3% cap on the number of citizens claiming unemployment, so why is the Oregon state government allowed to take away students’ choice to attend an online charter school?

The government school bureaucracy can’t parent a child better than the child’s parents do. Parents should choose where their children attend school—not politicians, not bureaucrats, and certainly not a union.

Moving forward, Oregon legislators not only should raise the charter school enrollment cap, but they should get rid of it entirely. A child’s education is not something that should be politicized.

Cooper Conway is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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TriMet’s decreasing ridership makes the SW Corridor project obsolete

By Rachel Dawson

TriMet’s weekly system boardings were down 68% in May compared to last year due to the Coronavirus, and ridership will likely stay down since the CDC is recommending that people avoid transit altogether. But it’s not just the pandemic; ridership has been dropping for years.

TriMet’s revenues have increased by 171 percent since 2000, while the agency’s ridership (number of originating rides) has increased by only 18 percent. However, ridership peaked in 2012 and has since dropped by 7 percent between 2012 and 2019.

The negative trend for ridership is primarily due to a drop in light rail utilization. Since the peak in 2012, bus ridership has decreased by 2% while light rail has decreased by 12% (a difference of just under one million for bus and 4.2 million for light rail).

Since 2000, TriMet has constructed four new light rail lines: the Red Line (2001), Yellow Line (2004), Green Line (2009), and Orange Line (2015). However, the costly increase in light rail capacity has not corresponded with a similar increase in ridership.

TriMet seems to have learned the wrong lesson from this underperformance. The agency is proposing a $2.6-2.8 billion light rail line from Downtown Portland to the Bridgeport Village mall, nearly $1 billion of which TriMet expects will be paid for by Metro’s Get Moving 2020 transportation measure.

The Southwest Corridor project is the wrong investment for our region. Portland Metro area voters should vote “no” on Metro’s transportation measure this fall.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Regulating Third Party Food Delivery Services is Hurting, Not Helping, Portlanders

By Rachel Dawson

Based on the passage of a 10% cap on commission fees collected by third-party food delivery services from Portland restaurants, it’s unclear if Portland City Councilors understand the basic principles of economics.

This new rule also bars food delivery companies from making up the lost revenue from delivery drivers and will end 90 days after Portland ends its state of emergency order.

However, there’s no such thing as a free lunch; someone will have to make up the difference. And that someone is the customer. UberEats has already added a $3 fee to all customer receipts from Portland businesses.

This fee isn’t applied to restaurants outside Portland city limits, so customers can simply avoid the added cost by ordering meals from businesses in surrounding cities. This likely will make Portland restaurants worse off, as many area residents will purchase food from neighboring cities or forego using food delivery apps entirely.

No one requires restaurants to use third-party apps like UberEats or Postmates; such services didn’t even exist more than 5 years ago. The fact that businesses use them demonstrates the value the apps provide to restaurants who no longer have to maintain their own delivery services. That value was reflected in the delivery fee previously charged to restaurants.

Portland officials should support economic activity, not make it more difficult or more expensive. They can do just that by rescinding this 10% commission fee cap.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Coronavirus Shouldn’t Stop Learning

By Cooper Conway

On March 16, Governor Kate Brown directed Oregon schools to stop in-person classes to slow the spread of COVID-19. Facing an uncertain future for “brick and mortar” schooling, 300 Oregon students completed the process to transfer to one of Oregon’s 14 online charter schools.

Eleven days after the shutdown of in-person schools, the Oregon Department of Education (ODE) prevented additional student transfers to online charter schools. Jeff Kropf, the founder of Oregon Connections Academy, estimated that around 1,600 students were unable to move to his school because of ODE’s decision to freeze further transfers.

ODE’s decision curtailed thousands of students from reaching their full learning potential this past semester. However, policymakers have a rare chance to right these wrongs going forward.

Nine states have reported spikes in COVID-19 this past month, and a similar situation may occur this coming fall. Given the uncertainties about the safety and feasibility of reopening all Oregon schools, lawmakers should allow parents to choose what kind of school in which to enroll their children. The resulting increase in competition among charter, private, and public schools will encourage all education providers to adapt to the current circumstances to provide the best education possible for students.

In addition to increasing the educational opportunities that will be available for students, rolling back unnecessary regulation of charter schools will put more power over education choices into the hands of parents, where it belongs.

Cooper Conway is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Energy Reform Is Needed to Combat Rising Energy Bills in Oregon

By Rachel Dawson

After 42 years, the Public Utility Regulatory Policies Act (PURPA) may be finally getting the update it has needed for years.

President Carter signed PURPA into law in 1978 when the U.S. was between the energy embargo of 1973 and the 1979 oil crisis, when the price of crude oil nearly doubled. Congress created this legislation with the aim of reducing the U.S.’s dependence on oil from international markets and encouraging fuel diversity.

PURPA requires electric utilities to purchase electricity from qualified facilities (QFs) such as small solar, wind, and biomass renewable resources at the utility’s “avoided costs.” A utility’s avoided cost is “the cost a utility would incur if it chose to generate the electricity itself or purchase it from another source.” The utility is locked into paying this cost for the contract’s length, which in Oregon is 20 years.

PURPA’s mandatory purchase obligation essentially forces utilities to purchase energy they do not need at rates that are higher than what is available on the market.

The Federal Energy Regulatory Commission (FERC) has proposed changes to PURPA that will help to decrease the law’s current purchase mandates and long contract terms. Included in the changes is the elimination of fixed rates currently afforded to QFs and the expansion of what is known as the “one-mile rule.”

Eliminating the fixed rates granted to QFs will give states more flexibility to account for time, dates, and market price fluctuations when calculating the avoided cost rate. A recent study from Concentric Energy Advisors shows that PURPA’s locked-in contracts now increase the cost of energy by as much as $216 million a year. The Oregon legislature isn’t forcing residents to purchase 42-inch plasma TVs at their average 2004 price of $4,000 when they can now buy them for under $500, but PURPA’s locked-in contracts with state utilities follow the same logic.

Under the current “one-mile rule,” QFs using the same energy resource and owned by the same entity are considered to be the same site if they are located within one mile of each other. Many renewable energy supplies have taken advantage of this rule by separating their facilities and forcing utilities to purchase their power at avoided costs. This PURPA rulemaking will expand that rule to ten miles.

The U.S. energy industry has come a long way since PURPA was created. American ingenuity has increased the production of renewables by over 115 percent since 1980, and solar costs have dropped in Oregon by 76 percent since 1999. Moreover, recent legislation passed in Oregon on renewable energy, such as our state’s community solar program, make PURPA obsolete.

Since energy rate increases are inherently regressive, Oregon’s low-income families suffer the most from PURPA’s added burdens. This is especially important now when ratepayers are finding it increasingly difficult to pay their energy bills due to COVID.

PURPA forces utilities to buy power at high prices, then locks them in for decades. Consequently, ratepayers are being overcharged. Since the renewable energy industry is now quite mature and market-competitive, we should get rid of those mandates so ratepayers can obtain the cheapest electricity possible. This effort led by FERC Chairman Neil Chatterjee represents a significant step in the right direction to reducing ratepayer bills.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Metro’s Transportation Package: Progressive Politics Mask Regressive Tax

By Eric Fruits, Ph.D.

While much of the region is stuck at home under the governor’s “stay home, stay safe” order, the Metro regional government is charging ahead with a $7 billion “T2020” transportation package focused on an expensive and unneeded light rail line. Unlike Metro’s recently passed taxes for housing services, T2020 will impose hundreds of dollars in new taxes on just about every working person in the region.

To fund its massive spending plan, Metro has settled on a new poll-driven tax: a payroll tax anticipated to cost about $250 million a year. Approximately 925,000 people work in Metro’s jurisdiction, so the payroll tax will be about $270 a year per employee. Where will that payroll tax money come from?

In most cases, the payroll tax will fall on the workers. A review of the research on payroll taxes concludes that workers tend to bear nearly all of the burden of payroll tax, even if the tax is levied on their employer: “virtually all applied incidence studies assume that both the employee share and the employer share are borne by the employee (through a fall in the net wage by the full amount of payroll tax).”

Research published earlier this year concludes “the employment effects of payroll taxes are concentrated among low-skilled workers and workers performing routine tasks.” In other words, payroll taxes are regressive and disproportionately burden low-wage workers. There are several ways workers would bear the full burden of the payroll tax.

Employers will reduce wages. They may not directly cut workers’ wages; instead, workers may find that they don’t get the annual pay raise they expected. Employers may cut workers’ hours. Wage reductions can come in the form of making workers pay more for employer provided benefits such as health insurance. Wage reductions can also come in the form of reduced benefits like less vacation pay. There are many ways to push the costs onto employees.

Employers will reduce the number of workers. Hiring plans can be put on hold, and retiring workers may not be replaced. Evidence indicates some firms replace low-skilled workers with higher-skilled workers. Other firms replace low-skilled workers with technology, as seen with restaurants replacing employees with computer ordering kiosks. With the pandemic, some firms have learned there’s no special benefit to doing business in the metro region. Why not move to Bend, Vancouver, or Boise?

Proponents of the payroll tax argue the money will come out of company profits. This is simply not true. Currently, Metro’s payroll tax would be assessed on all employers, including nonprofits and government agencies which have no profits to tax. Portland-area businesses have already had their profits extracted with Oregon’s Corporate Activities Tax, Portland and Multnomah County’s business income taxes, Portland’s Clean Energy Fund tax, and Metro’s new business income tax that goes into effect next year. There are no more profits to tax.

Unlike Social Security, Medicare, and unemployment payroll taxes, workers paying Metro’s payroll tax receive no direct benefit. Most of the tax will be used to build a light rail line from Portland to Bridgeport Village—a light rail line that will worsen road congestion. The project anticipates tearing up Barbur Boulevard and adding congestion to dozens of intersections and highway ramps. Workers will be handing over a chunk of their paycheck for projects that will make their lives worse, not better.

For years, TriMet has been violating its contractual obligations with the Federal Transit Administration regarding operations of the Yellow, Green, and Orange light rail lines. For example, TriMet promised both the Yellow Line and the Green Line would run 8 trains during peak hours in 2020. In contrast, before the pandemic TriMet was running only 4 trains an hour on these lines. TriMet promised the Orange Line would run 6 trains during peak hours in 2020; instead, before COVID-19 it had been running 23% below the promised levels.

Metro’s transportation package is a monument to misplaced priorities, and its reliance on regressive payroll taxes makes it an abomination. It’s time to tell Metro enough is enough.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Metro’s $700,000 Sentiment

By Helen Cook

On June 25th, Metro approved $700,000 in taxpayer money for what is best entitled a nice sentiment: Metro’s Nature in Neighborhoods program. The program hopes to improve water quality and wildlife habitats through grants to local organizations that promote racial and cultural equality.

But the program has a serious flaw: Success is not easily measured, despite the large amount of taxpayer dollars flowing into the grants.

Metro’s approved recipients for 2020 demonstrate the subjectivity of the program. Objectives include bringing “healing to the community and landscape through Traditional Indigenous healing practices” as well as building “youth of color’s relationship around the water and waterways.”

Perhaps an important question is whether our local government should be exploring these objectives with taxpayer dollars, especially during this time of economic instability. Ironically, Metro councilor Craig Dirkensen came close to this question when he asked whether Metro’s grant program was unique. The simple answer was “no.” Similar programs do exist, just not at taxpayers’ expense.

Metro should get out of the grant business and into the park-building business. The Nature in Neighborhoods program is yet another example of how Metro consumes taxpayer dollars without measurable benchmarks for success.

Helen Cook is a Program Assistant for External Affairs at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Big Jobs Squeeze of 2020

By Eric Fruits, Ph.D.

This is a terrible time to own and run a business. While the past three months have been dismal, the next few months could be even worse. Worse because no one knows what’s coming next. Even though many businesses have been allowed to reopen, many others have hesitated out of fear for the health of themselves, their employees, and their customers—and the fear of overbearing regulators and overeager plaintiff attorneys. No one should be surprised that so many businesses have decided to close permanently.

Reopening “the economy,” or even a single business, is a tough decision that can’t be boiled down to a FOX News or MSNBC talking point. It’s not as simple as, “We gotta open now!” or “You’re gonna kill grandma!” The world is much more complicated; and the coronavirus spread is so complex and uncertain that, put simply, no one knows what’s next. Anyone who says the science is settled one way or the other is gaslighting themselves and others.

Aside from the health and liability risks, CARES Act policies designed to protect family finances have made it especially challenging for firms to get back to work. Businesses that want to reopen have found it difficult to bring back their furloughed employees. Those employees who have successfully obtained unemployment benefits have also received a $600-a-week bonus provided by the CARES Act. When public health risks point to a policy of keeping people away from work, a government-funded bonus provides a financial incentive to stay away from work. That’s good policy, but there are side effects.

For millions of out-of-work Americans, the bonus has been a lifeline, allowing them to safely distance themselves without falling into destitution. For others, however, the bonus has been a windfall. For example, Portland Public Schools carefully structured its furlough program so that nearly every furloughed employee made more money being furloughed than they would if they continued working full time. Research from University of Chicago economists estimates 68% of unemployed workers eligible for CARES Act benefits would have lower incomes if they return to work.

This isn’t just theory or wild-brained economics estimates. Portland restaurateur Kurt Huffman has said he doesn’t plan on opening his restaurants any sooner than August 1, because the bonus payments have made it so difficult to bring back and hire employees. Kyle Freres, vice president of operations at Freres Lumber, says his company has 30 job openings that cannot be filled because of the pandemic and the CARES Act’s incentives to stay away from work. At Cascade Policy Institute, an intern turned down our summer job offer in part because she would make more money collecting unemployment.

The CARES Act’s $600-a-week bonus runs out at the end of July, and Congress is considering an extension to the program. Senate Majority Leader Mitch McConnell predicted, “If there’s another [stimulus package], it will come together in July.” Some members want the extra benefits to expire as scheduled. Others want to extend the current provisions through the end of the year. A proposal from Sen. Rob Portman (R-Ohio) would pay people who return to work an extra $450-a-week “back-to-work” bonus.

Hoover Institution economist John Cochrane suggests Congress tighten restrictions on who qualifies for bonus payments. For example, if a laid-off employee is called back by her former employer, then the bonus payments dry up. Or, if a county or metro area has a sufficient number of job vacancies, then workers in that area would no longer qualify for bonus payments. Proposals such as these allow flexibility across regions roughly in line with how well those regions are recovering.

Every policy has its problems or unintended consequences. That’s a big reason why we should limit the number of government regulations, policies, and programs we have in place. It’s like squeezing Jello. Squeeze it one place, and it squirts out another. A lifeline to help out-of-work employees can squeeze the life out of struggling employers. Any unemployment benefits must be tied to incentives to return to work safely as soon as possible.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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July Minimum Wage Increase Means Maximum Uncertainty

By Cooper Conway

On July 1st, the Portland area’s minimum wage will increase from $12.50 per hour to $13.25. This wage increase is part of a multi-year phase-in of Oregon’s three-tiered minimum wage law, passed by the State Legislature in 2016.

Andy Ricker, Michelin star chef and owner of Portland’s Pok Pok restaurant, foresaw the adverse effects of raising the minimum wage in 2016 when he told the Portland Business Journal that three of his restaurants would close partly due to the hikes in the minimum wage.

Four years later, his prophecy came true—and then some—with an Instagram post on June 15th announcing the closure of four of his restaurants based in Oregon. Sadly, Ricker’s former employees will join more than 41 million workers who have filed for unemployment since the coronavirus pandemic started.

Now is not the time to increase the costs of running businesses in Portland. Oregon lawmakers should extend a helping hand to those who are hurting and embrace free-market policies, not price job creators out of the market. Oregon should stop the economic bleeding and roll back regulations that were ill-conceived in the first place. Continuing to add to them when so many businesses are struggling to reopen their doors will only worsen the economic downturn and hurt Oregonians for years to come.

Cooper Conway is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Supreme Court Upholds Parents’ Right to Choose Religious Schools

By Kathryn Hickok

The U.S. Supreme Court ruled June 30 in Espinoza v. Montana Department of Revenue that states’ school choice laws may not discriminate against religiously affiliated schools.

Montana’s tax credit scholarship program, passed in 2015, enabled families to send their children to the private schools of their choice. The program was ruled unconstitutional by the Montana Supreme Court because some participating students wanted to apply their scholarships to religious schools, which the Department of Revenue argued violated the state’s Blaine Amendment. The Institute for Justice (IJ) appealed this decision on behalf of parents, arguing that the Court’s decision violated the Free Exercise, Equal Protection, and Establishment Clauses of the U.S. Constitution.

The Supreme Court decided in favor of the Montana parents, stating that “[a] State need not subsidize private education. But once a State decides to do so, it cannot disqualify some private schools solely because they are religious.”

Reacting to the Court’s ruling, IJ’s president and general counsel Scott Bullock commented:

The Montana high court claimed, as [educational] choice opponents have for decades, that allowing parents like Kendra [Espinoza] to [use a tax credit scholarship at a religious school] violated the state constitution’s Blaine Amendment—which forbids state funding of so-called sectarian institutions. The U.S. Supreme Court made clear in its ruling today that it was wrong. As Chief Justice Roberts wrote in the majority opinion, “Drawing on ‘enduring American tradition,’” the Court has long recognized the rights of parents to direct the upbringing of their children.

Back in 1926, another private school controversy made it all the way to the Supreme Court. With the goal of preventing students from choosing a Catholic education, the state of Oregon had outlawed all private schools. In the landmark ruling Pierce v. Society of Sisters, the Supreme Court wrote that “[t]he fundamental theory of liberty…excludes any general power of the State to standardize its children by forcing them to accept instruction from public teachers only.”

Parents have a right to direct the education of their children—they did in 1926 and they still do today. The Supreme Court’s ruling in Espinoza v. Montana upholds parental choice in education by ensuring that state-run school choice programs don’t discriminate on the basis of religion.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization. She is also Director of Cascade’s Children’s Scholarship Fund-Oregon program, which provides privately funded scholarships to lower-income Oregon children to help them attend the tuition-based schools of their choice.

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You can count on the “Every Mile Counts” plan to make life costlier for Oregonians

By Rachel Dawson

Governor Kate Brown took carbon policy into her own hands earlier this year after the failure of Oregon’s cap-and-trade bill by issuing Executive Order 20-04. This order creates new greenhouse gas (GHG) emissions reduction goals and directs various agencies to take actions and exercise their authority to reduce GHG emissions.

Four agencies, the Department of Transportation (ODOT), Department of Land Conservation and Development (DLC), Department of Environmental Quality (DEQ), and Department of Energy (ODOE), collaborated to develop a draft statewide work plan in response to the governor’s directive, known as the Every Mile Counts initiative.

The strategy is fundamentally flawed. On the one hand, it duplicates efforts already underway. On the other hand, it does so in a way that will impose additional costs on Oregonians without producing any measurable effects on global climate change.

Objective 1: Reduce VMT per capita

The work plan proposes a number of action items aimed at decreasing statewide vehicle miles traveled. In the 2004 Statewide Congestion Overview for Oregon report, ODOT predicted that we could expect an additional 15,500 vehicle miles traveled (VMT) annually for every job created in Oregon and 360 additional VMT for every $1,000 increase in total state personal income.

Traffic is tied to economic activity. Increased traffic is a sign of a growing economy, and VMT plummets during recessions. As the state’s economy came to a standstill during the COVID-19 pandemic, traffic volumes on Oregon roads steeply dropped. Stifling economic activity is the surest way to reduce VMT in state. Efforts to aggressively reduce VMT in Oregon go hand-in-hand with efforts to reduce employment and income growth.

Increasing VMT in Oregon is a sign that more people and businesses are moving to our state. More people are consuming goods and services; and thus, our economy is growing. Oregon is already experiencing record-high levels of unemployment due to COVID-19. The state should not actively be promoting a reduction in VMT.

This is especially important now with COVID-19. The Center for Disease Control (CDC) has concluded that cars are a better option than transit during the crisis and has urged businesses to offer their employees incentives to “use forms of transportation that minimize close contact with others,” such as driving alone or biking. This plan’s objective to reduce single-occupancy trips directly contradicts the CDC’s advice.

Business owners, and not state agencies, have a deeper knowledge of their firms’ transportation requirements. If trip reduction efforts, such as telecommuting and flexible work hours, will benefit their business and employees they should be willing to engage in such efforts without the need for government intervention.

Objective 2: Support use of cleaner vehicles and fuels

State agencies should not support a zero emission vehicle plan. This is redundant as Oregon utilities are already required by the PUC to support transportation electrification plans, which will invest ratepayer funds in statewide electric vehicle (EV) charging infrastructure and increase outreach efforts on EV adoption. Having four more agencies engage in the same type of investments would be an inefficient use of taxpayer funds.

Objective 3: Consider GHG in decision making

Finally, state agencies should not require local GHG reduction planning and related performance measures. One of the largest rulemaking efforts these agencies plan on engaging in an update to the Transportation Planning Rule (TPR) to require that local governments “plan for  transportation systems and land uses to reduce GHG emissions.”

However, the TPR already indirectly works towards reducing GHG emissions by promoting the development of transportation systems designed to reduce reliance on passenger vehicles. While explicitly adding GHG emissions reduction in the TPR may be a worthy endeavor, including it to an already lengthy list of objectives will make the planning process more complex and time-consuming for cities. According to ODOT, completing all elements of a TSP “typically takes 12-15 months, with additional time for public adoption.” This proposed change will simply add another layer of compliance.

It is not clear if the proposed actions derived from Brown’s EO are necessary given Oregon’s steady decrease in per capita emissions over the past few years. Oregon per capita emissions have decreased by 22.8% since 1990, and emissions per unit of GDP have dropped by 50.7%. According to ODOE, Oregon’s energy use per capita is the lowest it has been since 1960; and Oregonians have decreased energy consumption per capita by 37% since it peaked in 1972.

Oregon’s environmental goals need to consider the dramatic progress that has already been made in reducing emissions. For this reason, Governor Brown should suspend her costly Executive Order.

Policymakers also should acknowledge the truth about the vital role automobility plays in a strong statewide economy and rising personal incomes. The above state agencies should provide an explicit cost-benefit analysis demonstrating how the benefits of each action item will outweigh its costs. If they cannot clearly outline such an analysis, the plan should not move forward. During the midst of a financial recession and global pandemic Oregonians need stability and relief, not more costly government regulation with vague benefits.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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OLCC Provides a Silver Lining in COVID-19 Recovery

By Vlad Yurlov

Alcohol-lovers may have a reason for a toast. Oregon’s Liquor Control Commission is taking steps to decrease regulations on sellers, thereby expanding economic opportunity in the food and beverage industry, which was hit particularly hard by the COVID-19 crisis.

Alcohol sales are tightly controlled by the OLCC, which imposes stringent rules on individuals and businesses before, during, and after alcohol purchases. When restaurants and bars had to close their doors to on-site service due to Oregon’s coronavirus response, the OLCC temporarily relaxed some rules regarding alcohol delivery. Because these rules are temporary, though, Oregonians’ easier access to wine and microbrews could once again be limited before this fall.

Recently, the OLCC has begun a process to make the temporary relaxation permanent. These changes would allow increased flexibility in how alcohol can be delivered to customers and increase the hours during which alcohol may be purchased. The changes raise the question of why such burdensome restrictions were imposed in the first place.

When Oregon has to close a door, we can open a window. Let’s keep economic freedom for Oregon businesses and customers at the forefront of Oregon’s rule-making process.

Vlad Yurlov is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research center.

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Supporting Students, Not Systems, Is Social Justice

By Cooper Conway

George Floyd’s tragic death has led to growing calls for changes to antiquated policing systems. The recent protests asking for police reform over these past few weeks have caused many families to question the systemic discrimination that is hardwired into the assignment of students to public schools.

Census data reports U.S. spending per student has nearly tripled since 1960—and that’s after accounting for inflation. Oregon now spends almost $15,000 per student per year. In Portland Public Schools, it’s $27,500 per student. Even so, Oregon ranks near the bottom of the states in graduation rates.

Despite this monumental increase in funding the government’s school system with no positive results to show, most Oregon students are assigned a school based on their street address. This isn’t an accident—it’s written into district policies. Kids from low-income neighborhoods are placed in low-income schools, while wealthy families have the option to move to neighborhoods with better schools.

School choice is social justice. There is nothing fair or equitable about forcing low-income students into failing public schools with few options to choose the school that meets their needs. Even better, let’s fund students, instead of schools. Put the funds in the student’s hands and let them choose the school that fits best.

Cooper Conway is a Research Associate at Cascade Policy Institute, Oregon’s free-market public policy research organization.

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The Era of Permanent Prosperity Is Over: It’s Time for a Serious Budget Discussion

By Eric Fruits, Ph.D.

The 2020 we’re living in is very different from the 2020 we rang in at the beginning of the year.

In January, there were about a dozen Democrats seeking the nomination for President. Medicare for All, the Green New Deal, free college tuition, and universal basic income were seriously debated as potential policies for a Democratic President.

State and local politicians in Oregon were eagerly awaiting the first payments from the billion-dollars-a-year Corporate Activities Tax (CAT), the money earmarked to finally pull Oregon out of its near-last in the nation ratings of K-12 achievement. Cap-and-trade would end climate change. More bike paths, sidewalks, and light rail—always more light rail—would put an end to traffic congestion. A booming stock market meant we’d never have to reform PERS.

Today, schools are shuttered, businesses are crushed by the CAT, and TriMet ridership has evaporated and may never come back. Climate change is the least of our worries, and PERS will likely sink the state.

We began the year with an illusion of permanent prosperity, a game of musical chairs in which the music never ends. There wasn’t a single problem that couldn’t be solved with more spending. Tax increases were sold as equal to the cost of a latte a day. But, there were a lot of lattes.

Little did we know the music would stop so soon. Never mind buying a latte a day, today half the state can’t get a haircut even if they could afford one. Not only is the state’s education system deeply flawed, we learned our unemployment system is completely broken and our health care system is way more fragile than we thought. Rather than ramping up testing, the state simply tells us to “Stay home. Save lives.” The myth of permanent prosperity has given way to a reality of endemic dysfunction.

The latest revenue forecast for the state should be a wakeup call for the governor and the legislature. With anticipated revenues down $2.7 billion from pre-COVID projections, there is no way to avoid big budget cuts. Tax increases must be ruled out—struggling households and businesses need the cash to pay their own bills. We can’t turn the public sector’s budget problems into a private sector bankruptcy crisis. It’s going to take strong political leadership.

Three program areas make up nearly 90% of the state budget: education, human services, and public safety. Employee compensation—salaries, PERS, and other benefits—are a huge portion of these costs. There is no way to balance the budget without cuts in these areas.

PERS must be reformed. The first step should be to move all new employees to a 401(k)-type defined contribution program. This small move won’t solve the impending pension catastrophe; it’s simply a crucial first step toward more meaningful reforms. The most meaningful would be an amendment to the state’s constitution specifying public sector employment agreements are not contracts.

Public school spending must be cut. Construction projects should be shelved, and the money used for planning these projects should be shifted to the classroom. Introducing an education savings account program could save the state money by encouraging students to pursue schooling outside of the public sector, thereby reducing public school enrollment and expenditures. The state’s university system must be streamlined. This means closing smaller, struggling public institutions that have demonstrated a low return on investment for their students.

The legislature should reconsider Oregon’s participation in Medicaid expansion. While the feds pick up 90% of the costs for the expansion population, the cost to the state for the other 10% is eye-popping. In the last budget cycle, the state faced a $1.7 billion budget shortfall. At the time, Governor Kate Brown claimed, “Three-fifths of this deficit is the cost of expanding health care to all Oregonians.” That was when the economy was going gangbusters. Today, Medicaid expansion is a luxury the state cannot afford.

The cynic says, “Never let a crisis go to waste.” Nevertheless, a crisis is a time to re-evaluate priorities, and the best measure of politicians’ priorities are the budgets they pass. The era of permanent prosperity has ended, and we have entered an age where rational realism must rule.

: Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute and an adjunct professor at Portland State University, where he teaches courses in urban economics and regulation. He can be reached at eric@cascadepolicy.org.

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Cars, not transit, are the COVID-19 transportation heroes

By Rachel Dawson

When it comes to commuting during COVID-19, private vehicles are coming out well ahead of mass transit.

The Center for Disease Control has stated that cars are a better option than transit during the crisis and has even suggested that businesses offer their employees incentives to “use forms of transportation that minimize close contact with others,” such as driving alone or biking.

TriMet is seeing the effects of this recommendation firsthand. Transit use is estimated to have dropped 68% between February and May of this year as Portlanders chose to either stay at home or opt for other means of transportation.

TriMet is planning for significant revenue losses in coming years due to lost funds from payroll taxes and passenger fares. It may be years before the transit agency sees pre-COVID passenger numbers, which had already been falling since 2012 despite the addition of the Orange line in 2015.

Falling ridership and revenues should come as a signal to officials to halt any further investments to the costly light rail system. Instead, Metro and TriMet continue to push for the $3 billion Southwest Corridor light rail project from Downtown Portland to the Bridgeport Village.

Businesses and workers are already struggling with lost revenues and wages due to the virus. Our region doesn’t need another boondoggle, it needs relief. Metro residents should vote “no” on Metro’s proposed transportation measure this fall.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The hidden truth behind the Renewable Energy Certificate market

By Rachel Dawson

You may have noticed companies and public agencies using the words “renewable energy certificates” or RECs in regard to the alleged source of their electricity, but rarely do they explain what they are. Only that purchasing RECs on your behalf is a good thing.

But what exactly is a REC? And what benefits do we as voters and consumers reap from these entities’ continued investment in them?

As it turns out, they may not do as much “good” as you’re being told.

RECs are a tradable commodity sold by renewable energy facilities (such as wind and solar farms) to the wholesale market, that purport to represent the “environmental amenities” of certain renewable energy projects. By purchasing a REC, an entity has the legal right to claim it is using renewable energy; however, the group has not purchased any energy itself.

For example, the City of Portland has the objective of generating or purchasing “100 percent of all electricity for city operations from renewable resources.” However, the vast majority of the claimed “renewable energy sources” are actually RECs purchased on the market from wind farms. In fact, 14% of the renewable energy they claim to have comes from wind farms in Alaska. Since Portland is in no way connected to the Alaskan grid, the City of Portland is using taxpayers’ dollars to lay claim to wind energy that is actually being consumed by Alaskans.

Further, TriMet claims their electric buses run on 100% wind energy, however, TriMet’s buses are hooked up to the same utility grid as your home. This means that only 9% of the electricity they consume is actually wind, while 14% comes from coal. The only difference is TriMet spends $228.75 per month to claim their electricity is completely green.

Many private companies also purchase RECs, purely for public relations purposes. Buyers include Starbucks and General Mills. These costs are then passed on to consumers even though renewable energy was not actually used.

Fortunately one major company is pulling the curtain back on this practice, and ironically it’s the company Portland politicians love to hate: WalMart.

According to WalMart: (emphasis added)

“We want to do more than just shift around ownership (and marketing rights) of existing renewable energy…we prefer not to simply offset our non-renewable power by purchasing standalone renewable energy credits (RECs)…While REC purchasing may allow us to more quickly say we are supplied by 100% renewable energy…we do not have confidence that offsetting instruments alone are sufficient to drive new renewable projects, as opposed to simply shifting around ownership of existing renewable electrons.” (emphasis added)

WalMart’s analysis is backed up by leading academics. According to Daniel Press, a Professor of Environmental Studies at UC Santa Cruz, “RECs do little to reduce emissions in the real world because they have become too cheap to shift energy markets or incentivize businesses to build new turbines.”

Further, Michael Gillenwater, a Princeton researcher who helped to develop the EPA’s carbon emissions tracking system, admits that most renewable energy projects would have been developed without the help of consumer purchased RECs. It’s hard to verify claims made by utilities regarding the amount of carbon dioxide emissions that were avoided due to RECs and “you don’t have an overseeing regulator ensuring that the claims made are backed up.”

Private companies are free to spend their money as they please. However, Oregon should prohibit the purchase of RECs with tax dollars by government agencies. If the goal is more renewable energy, then like WalMart we should focus on generating actual electricity.

Certainly, it would be embarrassing for Oregon politicians to admit that they are wrong and WalMart is right. But the long path to moral redemption begins with the first steps.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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To Meet Kids’ Urgent Education Needs, Oregon Should Give Parents a “Money-Back Guarantee” Through School Choice

By Kathryn Hickok

School choice has been increasing in popularity with parents for years. Education policies that give parents more options for their kids have been trending positively across most demographics.

Now, a late-April poll conducted by Heart + Mind Strategies reports that a majority of parents are considering changing their children’s future school enrollment. Parents were asked: “Has the impact of coronavirus on your child’s education caused you to consider changing your child’s future schooling?” Among public school parents, 14% said they are considering homeschooling, 20% said they are considering a private school, and 26% said they are considering a different public school.

Education Savings Account programs are an education funding solution that addresses the needs of parents today. ESAs give parents a kind of “money-back guarantee” if they want to opt out of their zoned public schools and choose other options. ESA programs currently operating in five states deposit a portion of the state funding that would be spent for a student in a public school into an account associated with the child’s family. Families can use those funds to pay for tuition or other education expenses.

ESA legislation can be designed to be fiscally neutral, or even net-positive, for school districts while giving parents several thousand dollars per child to spend on the school options of their choice.

COVID-19 will change the way students attend school. Out of this situation can come a chance to improve kids’ options through flexible, personalized delivery of education.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization. She is also Director of Cascade’s Children’s Scholarship Fund-Oregon program, which has provided private scholarships worth more than $3.3 million to lower-income Oregon children to help them attend tuition-based elementary schools since 1999.

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Education Savings Accounts Are an Innovative Way to Provide Flexible, Safe K-12 Options

By Eric Fruits, Ph.D.

The COVID-19 pandemic has wrecked state and local budgets. Moreover, it’s looking more likely that school operations will not return to normal this fall. Social distancing guidelines will demand smaller class sizes. The days of 25-30 students per classroom are over for the foreseeable future. There is simply not enough space in our brick-and-mortar schools.

Some distancing can be achieved by staggering instruction across days or weeks. However, these arrangements will create scheduling havoc for families trying to return to work, especially for families with multiple children spanning several grades or schools.

We can also achieve the required social distancing by encouraging alternatives to existing brick-and-mortar schools. For example, online public charter schools have a long history of successful education outcomes while achieving social distancing. Many private schools had digital learning plans in place prior to the pandemic and were able to quickly adjust to Governor Kate Brown’s March 23 “stay home, save lives” order. For example, St. Mary’s Academy in Portland switched to digital learning the day after the order was issued. In contrast, Portland Public Schools took nearly a month to get its distance learning plans in place.

Education savings accounts are a readily available option to foster school choice and downsize public school enrollment to achieve class sizes consistent with social distancing guidelines. Moreover, a carefully crafted ESA program would reduce state spending on education while improving options and opportunities for thousands of Oregon students.

Five states currently operate ESA programs, in which the state deposits a percentage of the funds that otherwise would be spent to educate a student in a public school into an account associated with the student’s family. The family may use those funds for private school tuition, home-based learning, or other education expenses. Funds remaining in the account after expenses are paid may be “rolled over” for use in subsequent years.

Typically, the amount deposited in an ESA is less than the amount the state otherwise would pay for a student to attend a public school, with the state recouping the difference. In this way, ESAs can be designed to produce net cost savings to state and local government budgets.

The average General Purpose Grant per ADMw is about $8,600 for the 2020-21 school year. Even a modest ESA of $3,000 for children with a household income less than 185 percent of the federal poverty level and participating children with a disability (as defined in ORS 343.035) and $2,000 for other children would generate substantial savings to the state and local school districts.

  • Because the ESA amount is significantly less than the amount the state currently spends per student, the state would be making money from every student who participates in the ESA program.
  • Most local sources of funding, especially property taxes, will be mostly unaffected by the pandemic. These sources are not linked to public school enrollment. Thus, students with an ESA who choose to leave the public school system will be freeing up financial resources for those who choose to remain.

In the 2019 legislative session, SB 668 was introduced. The bill would have created an ESA program in Oregon. As introduced, the bill was designed for state and local governments to “break even” fiscally on the ESA program. SB 668 can be used as a template for future legislation, with present-day adjustments to ensure cost savings for the state as well as local school districts.

The COVID-19 crisis is a time to re-evaluate how education is provided and funded throughout the state. We are all learning that “business as usual” will not return anytime soon. Now is the time to develop innovative ways to provide education safely to our children while providing their struggling families with the flexibility to care for their kids while returning to work.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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School Choice Can Help Solve K-12 Social Distancing Challenges

By Eric Fruits, Ph.D.

The COVID-19 pandemic has wrecked education budgets. And, it’s looking more likely that school operations will not return to normal this fall. Social distancing guidelines will demand smaller class sizes, and there is simply not enough space in our brick-and-mortar schools.

Some distancing can be achieved by staggering instruction across days or weeks. However, these arrangements will create scheduling havoc for families trying to return to work, especially for families with multiple children spanning several grades or schools.

We can also achieve the required social distancing by encouraging alternatives to existing brick-and-mortar schools. For example, online public charter schools have a long history of successful education outcomes while achieving social distancing.

Many private schools had digital learning plans in place prior to the pandemic and were able to adjust virtually overnight to Governor Kate Brown’s March 23 “stay home, save lives” order. In contrast, Portland Public Schools took nearly a month to get its plans in place.

Education savings accounts are a readily available option to foster school choice and downsize public school enrollment to achieve class sizes consistent with social distancing guidelines. It can also save the state hundreds of millions of dollars.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Metro has a history of breaking promises to voters. The housing bond measure is no exception.

By Rachel Dawson

Metro has a history of breaking promises to voters. This track record continues with the Metro Affordable Housing Bond measure that was passed in 2018.

At the time the measure was passed, the regional government said the cost of new projects will be around $253,000 per unit. They also warned the costs could be much higher.

That warning is already proving true. Metro recently released cost data on the first four projects the agency has approved and committed funds for.

The average total cost for the four developments is nearly $365,000 per unit, with the most expensive project coming in at more than $405,000 per unit. This is 44% higher than what Metro projected only two years ago.

Because these are private-public partnerships, the Metro bond is not funding the entirety of the developments. Even so, had Metro placed a cap on bond funds distributed per unit, or a cap on the cost per unit of qualifying projects, we would likely see lower development costs.

Metro must be held accountable for its low-ball projections and its budget-busting cost increases. Every dollar wasted on cost overruns is a dollar that’s not spent on providing the affordable housing voters were promised.

Good government is services delivered. Metro has over promised and under delivered.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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COVID-19 Is Killing the Economy; New Business Taxes Are Bayonetting the Wounded

By Eric Fruits, Ph.D.

Many Oregon businesses are looking forward toward May 15. That’s the day the state expects to ease some of Governor Kate Brown’s COVID-19 “Stay Home, Stay Safe” order.

But, many businesses are considering whether they should they re-open at all. Dakine is closing its Hood River office and moving the outdoor gear company’s headquarters to Southern California. Nordstrom announced it is closing its Clackamas Town Center store. World of Speed motorsport museum in Wilsonville is permanently shutting down and sending its exhibits to schools and other museums.

As the state slowly re-opens, some businesses will be facing a seemingly insurmountable debt burden: delayed rent and utility payments will come due, Paycheck Protection Program loans may have to be repaid, lines of credit will have to be restored, and deferred taxes will have to be paid.

Coronavirus is only one of many new challenges facing Oregon businesses. Leading up to the pandemic, Oregon business owners were sweating the state’s new Corporate Activities Tax. Last year, in anticipation of the CAT and other new taxes, Stimson Lumber laid off 40% of its workforce in Forest Grove and moved some of the operations to Idaho and Montana.

While the rules governing this new gross receipts tax won’t be finalized until sometime in June, the first quarterly payments were due on April 30. Because it’s a tax on sales, the tax is due even if the business is losing money.

Portland’s Chown Hardware claims its first quarterly payment was approximately $30,000. Because of the combination of coronavirus and the new tax, the owner laid off 25 of his 100 employees. Facing a $10,000 quarterly tax bill, a pharmacist in the small town of Banks shut down his pharmacy and laid off his six employees.

In the middle of the pandemic, Multnomah County commissioners approved a steep increase in the county’s Business Income Tax, from 1.45% to 2%. The county expects the hike to increase business income tax revenues by one-third, or $900-$1,000 per affected business. These new taxes are on top of Portland’s 1% tax on the sales of large retailers which went into effect last year, with the money earmarked for so-called “clean energy” projects.

As if that’s not enough, the May 2020 ballot has Metro Measure 26-210. This measure imposes two new income taxes: one on businesses with more than $5 million in sales, and another on households with more than $125,000 in income ($200,000 if filing jointly). Business owners who earn pass-through income—many small and medium sized businesses—will be taxed twice under Metro’s measure.

Consider a pass-through business with income of $150,000 on just over $5 million in sales (that’s a 3% profit rate). The owner will be looking at more than $17,000 in new taxes this year:

Corporate Activities Tax $15,000
Multnomah County Business Income Tax 800
Metro business income tax 1,500
Metro personal income tax 75
Total $17,375

 

That’s the increase in taxes relative to last year, and it amounts to more than one month’s work—just to pay the new taxes.

As the economy slowly re-opens, business owners are going to go through the same calculus as Chown and the Banks pharmacist and ask themselves: “What’s the point?” Their businesses have been wiped out, they’ve racked up debt with unpaid rent and other bills, and to make matters worse they’re staring down steep new tax bills.

State and local politicians blandly remind us, “We’re all in this together.” But we’re not. You’re on your own. For business owners, your job is to toe the line on the state’s shutdown orders and cut checks to feed the government bureaucracies that got bloated during the boom times. No matter how much your taxes increase, they’ll keep saying your business doesn’t pay its fair share.

Someday, and that day may come soon, business owners will look at their financials and come to the conclusion that it’s easier to run a bookstore in Boise, open a restaurant in Reno, or a be financial adviser in Vancouver. Portland doesn’t have a monopoly on livability.

COVID is already killing the economy. We cannot let tax increases bayonet the wounded.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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COVID-19 and New Business Taxes: Bayonetting the Wounded

By Eric Fruits, Ph.D.

Many Oregon businesses are looking forward toward May 15. That’s the day the state expects to ease some of Governor Kate Brown’s COVID-19 “Stay Home, Stay Safe” order.

But, many businesses are considering whether they should re-open at all. And coronavirus is only one of many new challenges facing Oregon businesses.

Leading up to the pandemic, Oregon business owners were sweating the state’s new Corporate Activities Tax. While the rules governing this new gross receipts tax won’t be finalized until sometime in June, the first quarterly payments were due on April 30. Because it’s a tax on sales, the tax is due even if the business is losing money.

On top of that, in the middle of this pandemic, Multnomah County commissioners approved a steep increase in the county’s Business Income Tax.

As if that’s not enough, the May 2020 ballot has Metro Measure 26-210. This measure imposes two new income taxes: one on businesses with more than $5 million in sales, and another on households with more than $125,000 in income ($200,000 if filing jointly). Business owners who earn pass-through income—many small and medium sized businesses—will be taxed twice under Metro’s measure.

No matter how much your taxes increase, they’ll keep saying your business doesn’t pay its fair share.

COVID is already killing the economy. We cannot let tax increases bayonet the wounded.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Metro’s Housing Measure: Bad Policy, Terrible Timing

By Eric Fruits, Ph.D.

Does Metro’s appetite for more money ever end? Last November, Metro raised property taxes by $475 million for parks and nature. Now, with Measure 26-210, Metro wants another $2.5 billion for housing services. In November, Metro will have a third ballot measure, asking for an additional $3.8 billion to expand light rail. That’s nearly $6.8 billion in new taxes for Metro—in one year alone.

COVID-19 has crushed the economy. Our region is in a recession. Businesses are closing, and many of them will never reopen. Even so, Metro’s charging full speed ahead with Measure 26-210. Many small and medium sized business owners will be taxed twice by Metro’s measure. First on their business income, then on their personal income. It’s bad policy coupled with terrible timing.

In its rush to get Measure 26-210 to the ballot, Metro has left many unanswered questions. Who’s going to collect the taxes? How will collections be enforced? Who gets the money? How many people get off the streets and into housing? When will the camps go away? How do we measure success? No one knows.

Metro claims the measure is designed to provide “homeless services.” To most people, this means helping the people sleeping on the streets, in parks, or in cars. But if Measure 26-210 passes, those people will only receive a small fraction of the money.

Close to 40% of the assessed tax will go toward collection costs, administration, and overhead. Setting up two complex tax schemes is going to cost millions of dollars. Then, there are the costs of collecting the taxes. After that, there’s Metro’s overhead. Metro then passes the money to counties, who have their own overhead. The counties then pass the money to nonprofit service providers who also have their own overhead. Every time the money passes, the pot shrinks.

Based on Metro staff calculations, about 45% of the money raised will be spent on rent assistance for households who are facing “severe rent burden,” rather than those who are actually homeless. The measure itself makes clear that tax revenues will be used for “affordable housing and rental assistance,” “eviction prevention,” “landlord tenant education,” “legal services,” and “fair housing advocacy.”

According to Metro staff, only 15% of the tax money is earmarked for support services for unsheltered individuals and families.

Metro’s original mission was land use and transportation planning. Measure 26-210 expands Metro’s mission to include homeless and housing services. At a February work session, Metro Councilor Craig Dirksen declared, “it’s clear to me that Metro does not have the expertise or experience, let alone the capacity, to actually administer, to provide these services.”

Metro is already overwhelmed trying to manage its park and natural areas, the Oregon Zoo, the Convention Center, the Expo Center, and serving as the landlord for Portland area arts organizations. Adding another massive program to Metro’s expanding portfolio is more likely to lead to failure than success.

The region has had a homeless problem for more than 30 years. In 1986, Portland mayor Bud Clark made national news with his homeless plan: reach out to those who want help, be firm with those who don’t, and create an environment in which residents can feel safe and businesses can flourish. It was never fully implemented.

People have had enough of the homeless crisis. They don’t want camps in their neighborhoods, needles in their parks, or more crime. Rather than an expensive program of rental vouchers and “wraparound” services, the region needs more emergency shelters to transition the unsheltered into temporary housing and off streets.

Measure 26-210 doesn’t have a plan for action. It’s just a framework to create a plan. If it passes, the only thing we know for sure is that families and businesses will face a hefty new tax burden, with no clear idea of where the money will be spent or who will be helped. That’s a risk we can’t afford to take.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute and an adjunct professor at Portland State University, where he teaches courses in urban economics and regulation. He can be reached at eric@cascadepolicy.org.

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Think renewable energy is infallible? Michael Moore’s film “Planet of the Humans” says to think again

By Rachel Dawson

Despite the claims of environmentalists promoting wind and solar energy, there is no perfect energy source. Each alternative has its own unique benefits and costs.

So, it was certainly no surprise when a recent Michael Moore film criticizing renewable energy made headlines and caused panic in liberal circles. In his Earth Day film, Planet of the Humans, staunch environmentalist Moore discovered that renewable energy was not as infallible as he had been led to believe.

It is, he says, a “documentary that dares to say what no one else will this Earth Day…we are following leaders who have taken us down the wrong road.”

Through the film, Director Jeff Gibbs discovers, among other things, that:

  • Solar panels are created using coal and other rare earth minerals, leading to excessive mining in Third World countries and human rights issues.
  • Solar energy is intermittent, and many “green” events claiming to run on solar panels often must be backed up by reliable diesel generators when the sun stops shining.
  • “Renewable” biomass involves burning wood, emitting large amounts of pollutants into the atmosphere and leading to deforestation.
  • Electric vehicles are powered by the same resources that power the regional grid. Thus, EVs are powered primarily by fossil fuels.
  • Companies claiming to use 100% renewable energy are always hooked up to the electrical grid to ensure they have access to reliable power when the renewable sources fail to generate sufficient power.
  • Weather dependent, intermittent energy resources must be backed up by firm power such as nuclear, coal, hydropower, or natural gas at all times. Gibbs and Moore show that greenhouse gas emissions have increased since the Sierra Club began its “Beyond Coal” campaign. These retired coal plants are often being replaced by an even greater quantity of natural gas.
  • The renewable energy industry is just as susceptible to the incentive of increasing profits as the “money-hungry” fossil fuel industry that environmentalists criticize.

Environmentalists have decried Planet of the Humans and petitioned for it to be permanently removed from online film platforms. Because of this, it is currently available only on YouTube. But calls for censorship do little to refute the movie’s critiques of renewable energy and instead support Moore’s thesis that people with a stake in renewable resources are pressuring the United States to invest in an industry that is not as clean as it has been reported to be.

Similar to the renewable energy industry the film examines, Planet of the Humans has faults of its own that are important to recognize. For example, the movie refers to outdated solar panels that have an 8% annual capacity factor and last only 10 years. However, some solar panels today can last up to 20 years and have a capacity factor of 10-25%.

Of course, these numbers are still well below those of traditional non-renewable sources. Natural gas has an annual capacity factor of 60%, and a thermal power plant typically has a 50-year lifespan. The average age of hydroelectric facilities currently operating in the U.S. is 64 years, demonstrating their ability to last more than three times as long as the typical solar power farm.

This film demonstrates the importance of thinking critically about all energy resources. Michael Moore does not place fossil fuels on a pedestal, but rather admits that all energy resources have an impact on our planet.

It is vital that the sources we use to power our grid are affordable and reliable. Solar and wind power don’t do our communities any good if they can’t keep the lights on. This is especially true now in Oregon when officials are forecasting a 33% probability of blackouts in 2024 due to the early closure of our region’s reliable coal plants. To avoid a repeat of the 2001 energy crisis, we should replace our energy resources with firm, reliable power.

Oregon’s current requirement that large utilities procure at least 50% of their electricity from wind, solar, and biomass by 2040 can’t and won’t happen with current technology, because intermittency is fundamentally incompatible with grid operation. Legislators should face reality right now and end that requirement before the blackouts hit.

If they won’t repeal this mandate, they should at least define hydropower as “renewable.” Since hydroelectric dams provide 45% of Oregon’s electricity, that simple change would make it possible for Oregon to comply with the 50% mandate. They also should legalize nuclear power, which was outlawed by Oregon voters in 1980.

Like Moore and Gibbs, we must scrutinize the decisions being made by utilities and state regulators to ensure we have enough electric power when we need it. Otherwise, we may be at risk of spending hours in the dark.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Flexibility and Students’ Needs Should Drive Education Options in 2020

By Kathryn Hickok

Oregon’s experience with COVID-19 will change the ways students in our state are educated. Out of this public health crisis can come a unique chance to improve educational opportunity for all children through a more personalized delivery of education.

Long before schools closed or switched to remote learning formats in March, the landscape of options to meet the needs of K-12 students was already more diverse than ever. Oregon children were receiving a quality education outside the traditional public school system through online schools (including public charters), private and parochial schools, homeschooling, tutoring and learning centers, magnet schools, and more.

Countless Oregon families are now being exposed to homeschooling and distance learning options for the first time. Many may choose to continue learning from home next fall due to their families’ personal circumstances, or because they are discovering that home learning is providing tremendous benefits for their students.

As Oregon leaders look for solutions to enable students to return to school, they shouldn’t ignore the potential of home-based learning options. Flexible, personalized education options already exist that deliver quality education to children in many environments besides brick-and-mortar public schools. All these options should be valued, and parents should have the knowledge and power to choose among them to find the best fit for their students.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization. She is also Director of Cascade’s Children’s Scholarship Fund-Oregon program, which has provided private scholarships worth more than $3.3 million to lower-income Oregon children to help them attend tuition-based elementary schools since 1999.

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Ballot Measures with No Accountability Deserve a No Vote

By Eric Fruits, Ph.D.

We all need to raise questions about our politicians’ priorities and how they spend our money. Even well-meaning policies should be skeptically scrutinized. Especially well-meaning policies. At the heart of every crisis in Oregon, there’s a policy that’s gone sideways. From PERS to CoverOregon to housing affordability and homelessness to massive overruns on Portland Public Schools construction: All are failures because of inadequate scrutiny.

That’s why I’m opposed to both Metro’s housing measure and the renewal of Portland’s 10-cents-a-gallon gas tax. They’re both unfair taxes and are likely to fail to make any measurable improvement in the lives of Oregonians.

Much of the blame for the Portland area’s housing affordability and homelessness can be placed on Metro and other local governments’ decades-long policy to pursue density at any cost. Their push for expensive high-rise housing has displaced housing that was once available for low- and middle-income residents. Their refusal to expand the urban growth boundary has stifled any development of affordable housing on the edges of the region.

Now Metro tells us it will cost $250 million a year to deal with the problems their own policies have caused. Homelessness and affordable housing is a regionwide problem that affects almost everyone. However, Metro crafted their measure so the costs of Measure 26-210 fall on only 10% of households and businesses. That’s not a “we’re all in this together” approach, it’s an “us vs. them” approach—it’s not just unfair, it’s wrong.

Over and over in the endorsement interviews, the measure’s proponents were asked who they’re going to help and how they’ll measure success. Over and over, the proponents deflected from these obvious questions, saying it’s complicated or too hard to put numbers to. Willamette Week, which endorsed the measure, details the lack of accountability:

Here’s what gives us pause: The supporters of Measure 26-210 cannot say with any specificity how they plan to spend this money.

They don’t know how much money would be spent on rent assistance, how much on addiction treatment, how much on mental health care, and how much on employment services.

When pressed, the architects of the measure did not promise a single metric for measuring how many would be served by these tax dollars, or what aid they’d get. They have shielded themselves from failure by never saying what success might look like.

When most people think of the homeless crisis, they think of the people sleeping in doorways, under overpasses, or in their cars. They think of the camps scattered across the city. Even so, neither Metro nor Measure 26-210’s proponents can say how many people will get off the streets or how many camps will clear out. If there are no clear measures of success, then there’s no accountability, and the crisis will never clear up.

Portland’s streets are a mess. By the city’s last estimates, Portland has a road paving backlog of about 3,100 lane miles. That’s enough to pave a two-lane road from Pioneer Square to El Paso, Texas. Over the years, Portland has taken money away from road maintenance to spend on light rail and streetcars. For example, in 2009, Portland committed $30 million to the Milwaukie light rail project. That same year, the city eliminated paving projects on local streets. In 2012, the city suspended major paving projects.

Now Measure 26-209 is looking to raise about $75 million in gas tax revenues over the next four years to fund Portland’s “Fix Our Streets” program.

Except, very few of the streets will actually be repaired. The list of proposed projects shows paving projects for only seven miles of city streets. That’s less than one percent of the current backlog.

In the endorsement interviews, proponents claimed sidewalk repair would be a key areas of gas tax spending. But, again, the list of proposed projects identifies a total of only one mile of sidewalk repairs.

Take a look at the breakdown of spending under Measure 26-209. Many of the projects are designed to increase congestion and make things worse for drivers.

  • $4.5 million for Neighborhood Greenways designed to impose burdens on auto drivers. PBOT defines “Neighborhood Greenways” as “Streets with low traffic volume and speed where bicycles, pedestrians and neighbors are given priority.”
  • $1.5 million for all the “In Motion” plans—Northwest In Motion, North Portland In Motion, Southwest In Motion. All designed to make driving a car more costly. They’re more like “Slow Motion” plans.
  • $2 million for speed bumps.

We have a housing affordability and homeless crisis. We have a traffic congestion crisis. Both tax measures aspire to solve pressing problems. However, both measures are doomed to fail. They both lack the accountability that is necessary for effective government. That’s why Cascade Policy Institute spends so much time and energy staying on top of these issues—to provide skeptical scrutiny and accountability where they’re needed most.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Portland Gas Tax: Big Dollars, Minuscule Results

By Eric Fruits, Ph.D.

This May, Portland voters will be asked to renew the city’s 10-cents-a-gallon gas tax. As with the last one, Measure 26-209 promises slightly more than half of the money raised will be used to repair and repave Portland streets.

As with the last measure, while the dollars look big, the results are minuscule. For example, the street paving projects promise an eye-popping $25 million in spending. But, when you look at the actual projects promised, it adds up to only 7.5 miles of city streets.

But if you look at the breakdown of spending under Measure 26-209, you’ll see that many of the projects are designed to increase congestion and make things worse for drivers paying the gas tax.

  • $4.5 million for Neighborhood Greenways where “bicycles, pedestrians and neighbors are given priority.”
  • $1.5 million for all the Slow Motion plans—Northwest Slow Motion, North Portland Slow Motion, Southwest Slow Motion—all designed to make driving a car more costly.
  • $2 million for speed bumps.

Portlanders voting for Measure 26-209 will be voting to underwrite programs that will make their commutes measurably worse.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Portland’s homeless population needs a “hand-up,” not another Metro money grab

By Rachel Dawson

The Oregon nonprofit Cascadia Clusters understands the value of providing Oregon’s growing homeless population with a “hand-up” by helping individuals gain the skills needed to construct affordable transitional housing. Cascadia Clusters is a nonprofit charity that receives no government funding. Instead, it relies on donations.

The organization provides meaningful skills training for homeless individuals along with a daily stipend. These skills include framing, roofing, insulation, and finish carpentry. The “tiny homes” they build make up the units at Hazelnut Grove in North Portland and Agape Village in Southeast. Each tiny home is about 200 square feet and costs $18,000 to build. Each has a basic kitchen, a sleeping loft, and a composting toilet. The people who take part in Cascadia Clusters’ construction training gain both a safe home and the skills to lift themselves out of poverty.

The work being done by Cascadia Clusters differs dramatically from Metro’s “Supportive Housing Services” Measure 26-210 on the May ballot. Unlike Metro’s poorly planned and unclear measure, Cascadia Clusters has a straightforward plan for what the organization wants to accomplish and how, when, and where all donated money will be used. Its “hand-up” philosophy can be imitated by other groups wanting to help people leave the cycle of homelessness for good. Voters who want to assist the homeless should consider donating to one of the many Portland nonprofits with a track record of helping those in need, and vote no on Metro’s bureaucratic money grab.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free-market public policy research organization.

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Letting Oregonians Find a Path to Recovery Is Essential Business

By Eric Fruits, Ph.D. 

Oregon is nearing the end of the first month of Governor Kate Brown’s state-at-home order. The order is just one of many ways in which the COVID-19 pandemic is changing the way consumers shop and the way businesses sell. These shifts in behavior, designed to “flatten the curve” of infection through social distancing, are happening across many (if not all) markets. Even so, in many cases it’s impossible to know now whether these new habits are achieving—or will achieve—the intended effect.

Take a seemingly silly example from Oregon. We are one of only two states in the U.S. that prohibits self-serve gas. In response to COVID-19, the state fire marshal announced it would temporarily suspend its enforcement of the self-service ban. In the wake of the announcement, public opinion fell into two broad groups.

  • Those who want the option to pump their own gas argue that self-serve reduces the interaction between station attendants and consumers, thereby potentially reducing the spread of coronavirus.
  • On the other hand, those who support the prohibition on self-serve have blasted the fire marshal’s announcement, arguing that all those dirty fingers pressing keypads and all those grubby hands on fuel pumps would likely increase the spread of the virus.

Both groups may be right, but no one yet knows the net effect. We can only speculate. Policymakers often claim their decisions are guided by science. In the real world, however, science does not provide simple or quick guidance. Politicians and bureaucrats are simply guessing, just like the rest of us. The difference, of course, is that the guessers in government have the power of the state to back up their decisions.

The guesswork of COVID-19 response is a timely reminder of Hayek’s knowledge problem. Even well-meaning policymakers don’t have adequate knowledge of alternatives and preferences facing firms and consumers. They also don’t understand all the risks or consequences of their decisions. In many, if not most, cases firms and consumers are in a better position to assess the risks they face and the ways to mitigate that risk. Allowing firms to experiment and iteratively find solutions that work for their consumers and employees (potentially adjusting prices and wages in the process) may be better than a top-down determination of which businesses and products are “essential” or “non-essential.”

Consumers want to purchase goods without getting contaminated. Employees want to work in safe environments. Firms need to attract both consumers and employees, while minimizing potential liability. These (partially) aligned incentives will almost certainly induce individuals to take at least some steps that mitigate the spread of COVID-19. This might notably explain why many firms imposed social distancing measures well before governments started to take notice.

For example, one effect of COVID-19 is that it has become more expensive for firms to hire warehouse workers. Not only have firms moved up along the supply curve (by hiring more workers), but the curve itself has likely shifted upwards reflecting the increased opportunity cost of warehouse work. Predictably, this has resulted in higher wages for workers. For example, Amazon and Walmart recently increased the wages they were paying warehouse workers, as have brick and mortar retailers, such as Kroger, who have implemented similar policies.

In addition, some companies have found ways to reduce risk while continuing operations:

  • CNBC reports Tyson Foods is using walk-through infrared body temperature scanners to check employees’ temperatures as they enter three of the company’s meat processing plants. Other companies planning to use scanners include Goldman Sachs, UPS, Ford, and Carnival Cruise Lines.
  • Fred Meyer is limiting the number of customers in each of its stores to half the occupancy allowed under international building codes. Kroger will use infrared sensors and predictive analytics to monitor the new capacity limits. The policy will be somewhat straightforward to implement as Fred Meyer already uses the technology to estimate how many checkout lanes are needed at any given time.
  • Trader Joe’s limits occupancy in its stores. Customers waiting to enter are asked to stand six feet apart using marked off Trader Joe’s logos on the sidewalk. Shopping carts are separated into groups of “sanitized” and “to be cleaned.” Each cart is thoroughly sprayed with disinfectant and wiped down with a clean cloth.
  • In Portland, a small paint-your-own ceramics shop, Mimosa Studios, had to stop offering painting parties because of government mandated social distancing. One way it’s stanching the loss of business is with a paint-at-home package. Customers place an order online, and the studio delivers the ceramic piece, paints, and loaner brushes. When the customer is finished painting, Mimosa picks up the piece, fires it, and delivers the finished product. The approach doesn’t solve the problem, but it helps mitigate the losses.

In some cases, however, there is no simple or straightforward way to balance the economic and health risks. These businesses are thus left with no option other than temporarily suspending their activities. For example, in Portland, ChefStable a restaurant group behind some of the city’s best-known restaurants, closed all 20 of its bars and restaurants for at least four weeks. In what he called a “crisis of conscience,” owner Kurt Huffman concluded it would be impossible to maintain safe social distancing for customers and staff. McMenamins made a similar decision early in the coronavirus crisis.

Many businesses and consumers are working within the broad outlines of lockdowns deemed necessary by policymakers. As Oregon emerges from the crisis, the best policy would allow properly motivated firms and households themselves to balance the benefits, costs, and risks of transitioning to “business as usual.” Government may have a monopoly on power, but it doesn’t have a monopoly on knowledge.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Nature 1, Lockdown 0

John A. Charles, Jr.

Public officials are angry that thousands of Oregonians have been enjoying the good weather by engaging in outdoor recreation. They can’t understand why people are ignoring the government closure of parks, trails and beaches.

There is a simple reason: the closures are extreme and unnecessary.

People need exercise, and not everyone has a private backyard. While there are health risks associated with using public parks right now, individuals have strong incentives to maintain safe distances from each other.

Public officials would be better off focusing scarce resources on the most vulnerable segment of the population – people over the age of 70 living in crowded environments, such as nursing homes and retirement communities.

At her April 14th press conference, Gov. Brown stated that all decisions about re-opening the economy will be based on science.  If that’s the case, she can start by modifying the “stay at home” order she issued three weeks ago. Why are fitness centers and beaches closed, but liquor stores and cannabis shops still open? There’s not a lot of science behind that policy.

Oregonians love their parks, and right now they need them more than ever.

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

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As more people work remotely, a reliable grid is needed now more than ever

By Rachel Dawson

“The vast disparity between the rich and the poor is, in large part, designed by the disparity between those who have electricity and those who scrape by on small quantities of juice or none at all.”
– Robert Bryce

Electricity is at the epicenter of modern life, yet rarely does the average person consider the complexities behind the power grid when a light is turned on. The advent of technology, fueled by electricity, has created an era of human prosperity unseen throughout the history of mankind. We can pick up our smartphones and call friends from across the world, cook meals on a stovetop, and pay for goods and services with electronic banking without a second thought.

Electricity has proven to be especially important during the COVID-19 outbreak. Governor Kate Brown issued an executive order on March 23, 2020 that directs Oregonians to stay at home, closing many businesses and requiring social distancing measures. Many who did not suddenly find themselves out of a job were forced to work remotely. These workers rely on the grid to power their computers and connect them to distant coworkers via video conferencing websites. If communities in Oregon were to face a major electricity blackout that lasted 3-4 days, the state would be paralyzed.

We take for granted the access we have to the cheap and abundant electricity available here in the United States, especially in the Northwest with hydroelectric dams. While we can study, work, and play at all hours of the day, millions around the world continue to live in the dark. Their lack of electricity inhibits children’s abilities to study at night and further their education. It threatens people’s health due to unclean water and cooking on open fires in homes.

Unfortunately, our access to cheap and reliable energy in the Northwest is at risk. Oregon’s only coal-fired power plant, located at Boardman, will be decommissioned at the end of 2020 due to an environmental lawsuit settled a decade ago. A second coal plant located in Centralia, Washington will also go dark this year; and a total of 4,800 MW of coal power will be taken off the Western Interconnection (the power grid that connects most western states with British Columbia and Alberta) over the next several years. Unfortunately, utilities seem to have no real plans for replacing those megawatts with firm power.

Former Bonneville Power Administration (BPA) Administrator Steve Wright stated that this “is pretty much unprecedented” and that “we are quite concerned about whether we have enough time to address this issue.”

Wright himself has experience dealing with inadequate electricity resources. He was in charge of BPA during the 2001 energy crisis when a drought significantly reduced power from hydroelectric dams and threatened rolling blackouts in the Northwest. To conserve power, BPA took back electricity previously sold to the aluminum industry. In doing so, BPA essentially shut down the aluminum industry in Oregon, putting 5,000 aluminum employees out of work.

This isn’t a future problem for our region: Oregon’s grid is at risk right now. Frank Afranji, the President of the Northwest Power Pool, stated in an Oregon House Interim Committee on Energy and Environment that brownouts in Oregon could occur starting in 2020 and “we have an urgent situation because of the capacity deficit. We really need to move expeditiously and come up with a solution.”

Afranji also stated that battery storage technology cannot bridge the gap between supply and demand.

The Power Pool is a voluntary organization that includes electric utilities from the Pacific Northwest, Alberta, and British Columbia, and it is focused on power planning in the Northwest. The Power Pool published a report on resource adequacy in 2019 that concluded:

  1. The region may begin to experience power shortages as soon as this year.
  2. By the mid-2020s, the region may face a capacity deficit of thousands of megawatts which may result in both extreme price volatility and unacceptable loss-of-load, or blackouts.

With more employees currently working from home and communicating electronically, utilities must ensure that our region has enough reliable electricity to meet current and future demand. State policymakers and utilities can, and should, do a number of things to prevent another crisis, including:

  • Delaying the decommissioning of the Boardman Coal Plant until its principal owner, PGE, can replace the lost megawatts with reliable power; and
  • Removing the state moratorium on nuclear power to allow Oregon to invest in reliable and carbon-free power.

The Northwest Power and Conservation Council stated that the 2001 crisis developed largely unnoticed over a number of years before striking the region. It is imperative that we are not caught flat-footed again.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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ODOT Must Move Forward on the Rose Quarter I-5 Bottleneck

By Eric Fruits, Ph.D.

Last week, the Oregon Transportation Commission took a significant step in the process of widening I-5 through the Rose Quarter.

This stretch of freeway has been named one of the worst bottlenecks in the country by the American Transportation Research Institute.

ODOT forecasts the improvements will save more than 2.5 million hours of travel time each year and reduce crashes by up to 50 percent.

Despite these clear benefits, a small but noisy coalition calling themselves “No More Freeways” has tried to stymie the project at every step. Their spokesman, Metro Council candidate Chris Smith, is so upset that he has demanded the legislature strip the transportation commission of its power and hand it over to Metro, the regional government for which he is seeking a seat.

He points to Metro’s so-called success in planning for the SW Corridor light rail project. But, Metro’s light rail project will add to traffic congestion at more than 30 intersections and several freeway ramps. Ridership estimates are already down nearly 15% from earlier projections. And, the project has no guarantee of state, local, or federal funding to cover the costs. This isn’t success, it’s fumbling toward failure.

The Rose Quarter project has a plan, it has the money, and it’ll play a crucial role in relieving congestion at one of the country’s worst bottlenecks. It’s time to move forward on I-5 improvements.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Online charter school students were learning at home just fine, so why have their schools been taken away from them?

By Kathryn Hickok

If Oregon charter school students can stay at home and stay in school at the same time, shouldn’t they be able to?

Governor Kate Brown’s Executive Order 20-08, which closed all Oregon public schools due to COVID-19, has been interpreted to also close Oregon’s online charter schools. This means students who were enrolled as online charter students before COVID-19 have had their online schools closed, even though these students already learn at home and can safely comply with Oregon’s social distancing and stay-at-home norms. Like other public schools, online charter schools are permitted to offer “supplemental” educational materials, but not their full curriculum, according to Willamette Week.

Apparently, this decision isn’t about students; it’s about school funding. A memo from the Oregon Department of Education suggests that because online charter schools already have a curriculum for students to learn remotely, more parents may want to enroll their students in those programs now. And that would “impact school funding for districts across Oregon.”

The ODE’s logic in closing online charters seems to be that because all students can’t enroll in online charters, then no students should. So, thousands of kids who were learning online just fine three weeks ago have lost access to their programs.

Online charter school students should not be at a disadvantage compared with other children who are continuing to learn at home—those who are enrolled in private schools and home schools. The Oregon Department of Education should reverse its guidance and allow students who were already enrolled in virtual charter schools to stay in school.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization. She is also Director of Cascade’s Children’s Scholarship Fund-Oregon program, which has provided private scholarships to lower-income Oregon children to help them attend tuition-based elementary schools since 1999.

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Small Modular Reactors Are Not the 20th-Century Nuclear Plants We’re Familiar With

By Rachel Dawson

Oregon, it’s about time we talk about nuclear power.

No, I don’t mean major reactors like PGE’s decommissioned Trojan Nuclear Plant which shuttered in 1992. Rather, I’m talking about small modular reactors (SMRs) which are experiencing rapid development and receiving great international interest.

Countries around the world, such as Russia and Canada, are currently exploring this technology. The U.S. Nuclear Regulatory Commission has completed its first SMR certification review for a company called NuScale Power, which expects final approval by 2020. As it so happens, NuScale is headquartered right here in Portland.

NuScale is developing a new type of nuclear reactor that it claims is safer, smaller, and more affordable than traditional nuclear reactors.

NuScale’s major advancement is related to the circulation of water for the reactor’s safety system. Traditional nuclear reactors circulate water by using electricity. NuScale SMRs use natural circulation and thus don’t rely on power to cool the reactor down. According to a NuScale representative, the Fukushima nuclear disaster could never happen with an SMR. In Fukushima, the plant lost power to its safety system during an earthquake and tsunami, which caused the plant to melt down. SMRs can cool themselves without any intervention in the case of a major natural disaster.

SMRs are significantly smaller than traditional nuclear reactors. Because of this, the modules can be produced in a factory and shipped onsite. Doing so allows costs to come down and ensures that quality control is more evenly managed.

SMRs also have a unique business model. Instead of operating a single large reactor, SMR plants will consist of a single or multiple smaller modules. This allows for flexible operation, and a region can add more modules as its population grows.

NuScale expects its first SMR to come online in Idaho Falls in 2026. The line item estimates for the first NuScale plant will be approximately $65 per MWh, though a NuScale representative stated that costs are expected to come down with increased production. This initial cost places SMRs within the estimated cost range of a gas combined cycle plant according to Lazard’s Levelized Cost of Energy Analysis.

Though SMRs are carbon free, they aren’t considered to be a substitute for other renewable resources, such as solar or wind, by their developers. Rather, NuScale has emphasized that SMRs are competing against natural gas as a baseload power that will keep the grid reliable during times when the sun isn’t shining, or the wind isn’t blowing.

Of course, there’s the issue of what to do with nuclear waste produced by the reactors. The most efficient way to deal with nuclear waste is to recycle it. NuScale has more modern recycling technology than France (where nuclear power accounts for 72% of total electricity production and nuclear waste is recycled), but NuScale cannot take any action as it’s currently illegal to recycle nuclear waste in the United States. In lieu of recycling, NuScale plans to create onsite storage for nuclear waste, though disposal is left up to utilities.

Unfortunately, NuScale is not able to construct an SMR plant in Oregon even though the company is located here. Oregon passed a moratorium in 1980 that effectively banned the construction of any new nuclear plants in the state.

Wind and solar plants are not currently able to power the grid by themselves given their intermittency, and battery technology is not developed enough to be implemented at utility scale. The grid needs some kind of baseload power that is capable of backing up renewables when they fail to produce power. Right now, that role is being filled by natural gas and coal plants. If Oregon officials are serious about operating the grid with 100% renewable power, they need to bring SMRs into the discussion. Otherwise the reliability—and affordability—of the grid could be at stake.

Rachel Dawson is a Policy Analyst at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. She can be reached at rachel@cascadepolicy.org.

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The Upcoming PERS Crisis: The system is facing a $30 billion shortfall—radical reform is needed

By Eric Fruits, Ph.D.

Coronavirus has hit the economy hard. Nearly all the stock market gains from the past two or three years have been wiped out. While it’s painful for investors and retirees, it’s likely to fuel the third major PERS crisis since the dot-com bust.

PERS, the public employee retirement system, has two major sources of funds: investment returns and employer contributions. PERS investments are managed by the state treasurer, under guidance from the Oregon Investment Council. “Employers” are state and local governments whose employees are PERS members.

PERS charges these employers a rate equal to some percent of their payroll to fund the costs of their employees’ anticipated retirement benefits. Currently, the average rate is approximately 25% of payroll. For example, for a city employee with a salary of $60,000 a year, the city must pay an additional $15,000 to PERS.

One of the many factors that affect the employer rate is the unfunded actuarial liability, or UAL. The UAL is an estimate of how much money would be needed to pay off all existing beneficiaries if the system were liquidated. Think of it this way: If you sold everything you owned—house, car, checking, savings, retirement—would you have enough to pay everyone you owe? If you don’t, you have unfunded liabilities.

PERS currently has a UAL of $24.5 billion. If PERS liquidated all its assets to pay its existing members, the system would be $24.5 billion short. The employer rate is set to fill that gap over a period of approximately 20 years. So, if the UAL increases, the employer rate increases. Similarly, if the UAL decreases, so does the employer rate.

Here’s where investment returns come in.

Because of the way PERS benefits are calculated, the system’s investments must earn an average of at least 7.2% a year to stop the UAL from getting bigger. That’s a very aggressive, and optimistic, target.

In good times, when PERS investments earn above average returns, the money from the investments reduces the UAL, which in turn reduces the employer contribution rate. If, on the other hand, PERS investments tank, the UAL balloons, and state and local governments must make bigger contributions to fill the gap.

PERS investment returns are correlated with stock market returns. Generally speaking, in a bull market, PERS investments run with the bulls; when the market drops, PERS investments suffer as well.

The stock market is down more than 20% from the beginning of the year. That means PERS investments would be down by about 11%. Based on past experience, such a drop would add another $6 billion to PERS’ unfunded liabilities, for a total UAL of about $30 billion.

Let’s say the economy improves and the stock market recovers all its losses, ending the year unchanged from the beginning of the year. PERS investments would be up by about 5%, based on past experience. Even so, PERS unfunded liabilities would increase by about $3 billion for a total UAL of about $27 billion.

Based on these observations, it’s very possible that state and local governments would face an employer contribution rate for PERS of 30% or more. That $60,000 employee would now come with an $18,000 additional cost to pay for PERS.

Where will that additional money come from?

It’ll come from us. Legislators and local governments will be under tremendous pressure to raise taxes to pay for skyrocketing PERS costs. Along with that will come budget cuts, with fewer teachers, state police, foster care workers resulting in bigger class sizes, reduced law enforcement, and more children stranded in the foster system. It’s not just a financial crisis, it’s a human crisis.

PERS has been a ticking time bomb for two decades. Attempts at meaningful reform have been put off by timid politicians and thwarted by powerful public employee unions. In the first PERS crisis of 2002, the system’s unfunded liabilities were less than $4 billion. In the second crisis, beginning in 2008, the UAL ballooned to $16 billion. Today, we’re looking at a third crisis with a UAL of $30 billion or more, or nearly $19,000 per household.

We are entering an era in which PERS cannot be merely tweaked or reformed. We are entering a PERS crisis that will require a radical overhaul of the entire system. It can begin with some straightforward first steps:

  1. Move all new public employees into a 403(b) defined contribution plan. These are similar to the 401(k) plans held by many private sector employees. TriMet has already made the switch, and it saved the agency from insolvency.
  2. The PERS Board must change its assumed rate of return on PERS investments. Because of the mismatch between assumed and actual investment returns, PERS is accruing liabilities much faster than it’s growing its assets. Bad assumptions were unsustainable 20 years ago, and they’re disastrous now.

These are just first steps that can be handled quickly in an emergency session of the legislature and an emergency meeting of the PERS board. There’s never a good time to upset the public employee unions. Now that we’re in a crisis, it’s time for leadership and action to save the state from fiscal disaster.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Oregon Can Support Workers by Reducing Regulations

By Rachel Dawson

Businesses across Oregon are laying off employees and shuttering their doors, triggered by the COVID-19 outbreak and Kate Brown’s executive order requiring social distancing and closing specified businesses. Unemployment claims jumped by around 3,200% in Oregon last week and unemployment could reach 20% in the coming months.

Due to the outbreak and increased statewide demand, the state is relaxing requirements for some occupations. For example, the state will be expediting the licensing process for daycare providers and will “waive, suspend or amend existing administrative rules pertaining to child care while allowing for emergency child care to be established.”

Easing the burden and costs of licensing for daycare workers is a good first step, but the state can go farther to help more Oregonians access jobs they otherwise would be locked out of due to costly fees and lengthy processes. Oregon has the 8th most burdensome licensing laws in the nation and licenses 69 of 102 lower-income occupations identified by the Institute for Justice.

For instance, residents who are already certified as an EMT in another state must apply, pass a background check, and pay a fee to be granted a license in Oregon. Officials can reduce or waive these requirements to improve access to the health care industry, which may be especially important now if others fall ill while caring for sick Oregonians.

Oregon can support workers and help more people attain employment by cutting the red tape now and committing to reduced occupational regulations in the future.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free-market public policy research organization.

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Tax Relief Can Slow the Spread of COVID-19 Financial Panic

By Eric Fruits, Ph.D.

The coronavirus is already taking a toll on our pocketbooks. Families are facing layoffs. Businesses are closing—and some may never reopen. Our elected leaders are urging everyone to do their fair share. Property owners have been asked to give tenants a six-month grace period to pay their rents. They’re considering forcing small businesses to provide paid sick leave to their employees. That means property owners won’t have the money they need to pay their mortgages and property taxes. That means small businesses will be spending money on workers who aren’t working.

Oregon politicians have been silent on how government is going to do its fair share to relieve the burden of COVID-19. They need to do more than just promise more facemasks and testing kits.

People need cash, but they don’t want handouts. And that’s where state and local governments can help out. Now.

For years, Oregon politicians have been loading new and higher taxes on its people and businesses. They had a permanent prosperity mindset. They believed employment would always increase, wages would always grow, and the stock market would always rise. Year after year, more and more taxes were added—just the price of a latte a week, they’d tell us. But, it all adds up. Property taxes, gas taxes, business taxes, and payroll taxes are just a few of the nibbles that over time have added up to a big bite out of our wallets. It’s time to let us keep some of that money until this crisis passes.

First, the state and local governments must give everyone an automatic six-month extension to file—and pay—their income taxes. Families need that money more than the government.

Next, the Kicker. Oregonians are due for $1.5 billion in Kicker refunds this year. That’s about $350 for the average taxpayer. Instead of waiting to get a credit on this year’s tax return, the state should send out Kicker checks. That’s what the state used to do. Plus, it’s not new spending, it’s money that’s already owed to taxpayers.

As an emergency measure, the governor should order the Oregon Department of Revenue to delay implementation of the Corporate Activities Tax (CAT) for another year. The CAT’s implementation has been chaotic, and many businesses don’t know if they owe money or how much they owe. The first of the quarterly CAT payments are due April 30. Businesses struggling to survive the virus outbreak can’t afford to spend the time and money it takes to figure out this complex and uncertain tax.

Portland should suspend the Clean Energy Fund’s gross receipts tax on retailers. Portlanders need cash on hand now and businesses need to stay solvent. Solar panels can wait until the pandemic passes.

Now’s the time for Portland to kill its Arts Tax and stop its collection efforts. In this time of worry, the city can bring a small piece of relief to the region by ending its hated Arts Tax. The first mayoral candidate who promises to get rid of the Arts Tax has a good shot at being Portland’s next mayor.

Metro should pull its May 2020 ballot measure that would impose two new income taxes on families and businesses. Portland Public Schools should stop the clock on its $1.2 billion school construction bond. Multnomah County should realize the folly in raising taxes for free preschool when students across the state are on a near-permanent Spring Break.

The age of permanent prosperity has come to a quick and unexpected end. Who knows when prosperity will return? Our leaders need to adopt a crisis mentality and work hard to make sure citizens stay solvent and businesses survive. Providing tax relief isn’t “austerity;” it’s action. Action that informs voters that the politicians they vote for care about them when leadership is needed most.

Government is rarely the solution to a crisis, but it can take concrete steps to stop today’s health care scare from turning into a financial panic.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Kate Brown is out of touch if she thinks an executive order is needed to reduce emissions

By Rachel Dawson

Oregon’s Governor Kate Brown responded to the Republican walk-out and end of the 2020 legislative short session by saying that she “will be taking executive action to lower our greenhouse gas emissions.” Brown is also “open to calling a special session if we can ensure it will benefit Oregonians.”

Despite what Brown may believe, executive action is not necessary to lower our state’s greenhouse gas emissions. Oregon residents and businesses are way ahead of the governor and are already cutting emissions in their daily lives. And they’re doing it without heightened government regulation or a burdensome tax.

According to the Oregon Global Warming Commission, per capita emissions have decreased by 22.8% since 1990, and emissions per unit of GDP have dropped by 50.7%.

                      Source: Oregon Global Warming Commission, 2018 Biennial Report

Additionally, Oregon’s energy use per capita is the lowest it’s been since 1960; and Oregonians have decreased energy consumption per capita by 37% since it peaked in 1972.

                                Source: Oregon Department of Energy, 2018 Biennial Report

If these trends continue, aggregate GHG emissions will decrease in the future without placing an undue financial burden on rural and low-income residents.

Oregonians, and not Kate Brown, are doing what needs to be done to benefit Oregonians.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free-market public policy research organization.

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Cascade Policy Institute Asks the Federal Transit Administration to Enforce Light Rail Contracts with TriMet

March 9, 2020

FOR IMMEDIATE RELEASE

Media Contact:
John A. Charles, Jr.
(503) 242-0900
john@cascadepolicy.org

Portland, OR – Cascade Policy Institute has submitted a letter to the Federal Transit Administration (FTA) requesting that the agency enforce contracts with TriMet for three light rail projects: the Yellow Line, the Green Line, and the Orange Line. Each project received substantial federal funding, which came with contractual obligations to provide minimum levels of service. TriMet has not met those obligations.

For both the Yellow and Green Lines, TriMet is supposed to be providing 8 trains per hour during peak periods. Current service on those lines is 4 trains per hour.

For the Orange Line, TriMet is supposed to be providing 6 trains per peak-hour. Current service provides only 4.6 trains per hour.

All three lines are also traveling at slower speeds than promised, and ridership projections have been missed by large margins.

Under FTA policy, the agency is empowered to demand repayment of federal funding if grant recipients fail to meet the terms of funding contracts. In its letter, Cascade Policy Institute is asking that FTA require TriMet to begin operating light rail lines in accordance with grant agreements within six months or begin paying back the federal funding.

Cascade is also requesting that FTA embargo any future funding for the Southwest Corridor Project, until such time as previous light rail projects are in compliance with contracts.

According to John A. Charles, Jr., President of Cascade Policy Institute, “TriMet’s under-performance is not an aberration, it’s a pattern. Since FTA has funded more than half the cost of the total MAX system, FTA should hold TriMet accountable by requiring the district to provide the service that was promised.”

The letter can be read here.

About Cascade Policy Institute:

Founded in 1991, Cascade Policy Institute is a nonprofit, nonpartisan public policy research and educational organization that focuses on state and local issues in Oregon. Cascade’s mission is to develop and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity. For more information, visit cascadepolicy.org.

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Click here for PDF version of Cascade’s letter to the FTA:

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The Housing Crisis Isn’t a Portland Problem; It’s a UGB Problem

By Rachel Dawson

Portland’s housing crisis isn’t unique to the Metro region. Other areas of Oregon, such as Bend in Central Oregon, are also experiencing rising housing costs. But the high price of living isn’t the only similarity between these two areas: Both Portland and Bend have strict urban growth boundaries (UGB) and government regulations that artificially inflate the cost of building homes, and thus their prices to buyers.

Permits in Bend are low; twice as many building permits were pulled in 2005 compared to now. Given Bend’s population growth, this certainly isn’t due to a lack of demand.

So then why are homes in short supply when demand is only growing? There are two major factors driving this issue: land availability and regulatory fees.

Just like in Portland, Bend has a UGB and an influx of residents. This boundary restricts the amount of buildable land available for purchase, which in turn increases both the value and the cost of the land.

On top of artificially high land prices, regulatory fees to construct a home in Bend are around $30,000 before any shovel hits the dirt. Further, the new Corporate Activities Tax is “a huge devastating reality for the industry and will ultimately be passed on to the home buyer.”

To make housing more affordable, both Bend and Portland officials should make more land available to developers and cut back on regulatory fees. Doing so will help ease the housing crisis without increasing the burden placed on residents.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free-market public policy research organization.

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Metro’s Housing Tax Requires Serious Oversight

By Eric Fruits, Ph.D.

At the first—and likely only—public hearing on Metro’s “supportive housing” tax measure, one resident asked a question on everyone’s mind: “Our money isn’t being spent the way it should be now, so what assurances do we have that this will be any different?”

The question highlights the fact that trust in local government is at a low point. Among Portland areas voters who have an opinion of their local government, approximately one-third have an unfavorable opinion of Metro or county government and more than 40% have an unfavorable opinion of their city government, according to a survey by FM3 Research.

With more than a billion dollars a year in new taxes heading to the ballot in 2020, voters deserve assurances their hard-earned money won’t be wasted or soaked up in administrative costs. If all the measures pass, some households will pay thousands, literally thousands, more in taxes. That means fewer meals out, reduced back-to-school shopping, and “staycations” instead of vacations. If taxpayers are working more to pay their tax bills, they should feel confident local governments will ensure that money is well and wisely spent. Our local governments, however, do not instill much confidence.

When asked how the regional government’s supportive housing measure could be set up to have more accountability, Metro Council President Lynn Peterson responded, “Well, we’re going to be setting up an oversight committee.” In some ways this is an admission that Metro Council can’t be bothered to oversee the program and instead intends to farm out oversight to a group of unelected and hand-picked volunteers.

In other words, “oversight committee” is a politician’s way of saying, “Nothing to see here, move along.” Voters envision a group of serious citizens scrutinizing spreadsheets, pushing back on smoke-blowing bureaucrats, finding fraud and waste, and dropping the hammer on malfeasance. The reality is different from the vision, as seen in Metro’s “Parks and Nature” oversight committee.

The committee has overseen more than $250 million of taxpayer money spent on Metro’s parks and nature program. It has 12 members, serious citizens who do, in fact, scrutinize spreadsheets. But this group has become less serious over time. At one meeting last year, only two of the 12 members attended; at another only five members showed up. At the most recent meeting, one member complained, “My eyes glass-over a bit when reviewing” the program’s spreadsheets.

While there have been attempts to see through the haze of smoke-blowing bureaucrats, the committee has been stymied more often than it’s been successful. For example, the committee has been repeatedly rebuffed in attempts to review pending land purchases. By withholding important information until a deal has closed, the committee cannot provide effective oversight.

More recently, the committee has raised questions about the administrative costs of the parks and nature program, which Metro promised would not exceed 10% of total costs. In recent years, administrative costs have skyrocketed to 20% or more of total costs; and “indirect” administrative costs have more than tripled relative to the program’s first years. In response to these questions, the committee and Metro staff decided that the 10% cap should be applied over the life of the program, rather than year-by-year. In other words, they hope overspending this year can be offset by underspending is some previous or future year.

Even worse, on at least two occasions, Metro’s “Parks and Nature” oversight committee held meetings in violation of Oregon Public Meetings Law. Metro provided no public notice of meetings in September 2019 and February 2020. At both of these meetings, the committee discussed the program’s administrative costs and other issues of public interest. By withholding public notice, these meetings were effectively conducted in secret. This is serious business. The public meetings law specifies members of a governing body may be liable for attorney and court costs both as individuals or as members of a group if found in willful violation of the law.

As Metro is asking voters to approve $300 million a year in new taxes for supportive housing, oversight of spending must be transparent, energetic, and effective. Unfortunately, Metro’s experience with its parks and nature program calls into question how effective any oversight of the housing measure will be.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free-market public policy research organization. A version of this article was published by Pamplin Media on March 1, 2020.

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The Grid Is Not a Tinker Toy

By John A. Charles, Jr.

Rarely has Oregon’s lack of political leadership been as painfully obvious as it is now on the topic of grid reliability.

Most of us take for granted the miracle of electricity. We flip a switch and the lights come on. Computers, air conditioners, smartphones—all powered by the magic of the grid. We don’t care how electricity arrives; we just want it, every hour of the day.

One of the intriguing characteristics of the grid is that electricity must be consumed at the same time it is generated. It cannot be stockpiled the way water can be stored in a tank. As a consumer, you can’t go next door and borrow a cup of kilowatts.

Supply and demand on the grid must be in equilibrium at all times, to avoid blackouts. This makes power generation tricky. Utilities need electricity sources they can count on—known as “baseload” power. They typically use coal, natural gas, nuclear, and hydroelectric generators for this purpose. Those sources with the most operating flexibility—typically gas and hydro—are also used as “peakers,” to alter the power supply so it matches hourly changes in consumer demand.

The Oregon legislature declared war on reliable sources in 2007, when the first “Renewable Portfolio Standard” (RPS) law was passed. The RPS mandated that large utilities procure at least 25% of their power from politically-designated “renewable energy” sources by 2025. The most notable feature of this law was that it disallowed hydro dams built prior to 1995 to count as “renewable” energy—creating the legal fiction that the Columbia River hydropower system did not exist as a clean energy source. The point of this definition was to force utilities to switch to wind and solar.

Legislators doubled the RPS mandate to 50% (by 2040) in 2016. This was referred to by advocates as the “coal to clean” bill. They falsely promoted it as a means to eliminate coal-fired electricity. But the grid doesn’t work that way. Oregon is part of a multi-state network, in which thousands of power sources are being used at any given time. Once on the grid, electricity flows at the speed of light throughout the distribution system, powering millions of toasters, microwaves, and HVAC systems. Coal power is not physically isolated from solar or hydro.

In response to these political mandates, electric utilities are gradually shutting down coal plants in Oregon, Washington, Montana, and Wyoming. Unfortunately, they are proceeding without a clear plan for replacing baseload power. Wind and solar won’t cut it; as “intermittent” sources they fail to produce electricity about 70% of the time.

Oregon’s only coal-fired plant, located near Boardman, is owned by Portland General Electric (PGE). Due to an environmental lawsuit that was settled a decade ago, Boardman is scheduled to close by the end of this year. Electricity forecasters are predicting Northwest power shortages as early as 2020, and deficits of thousands of megawatts later in the decade.

PGE does not have a precise plan to replace Boardman. The utility expects to sign hydro contracts as a transition strategy. But any weather-related power source can disappear quickly, as happened in 2001 when the region experienced a low-water year. The result was a shortage of electricity, and the painful shutdown of the aluminum industry. Some 5,000 jobs in the Northwest disappeared.

PGE also expects to build or buy more wind and solar, coupled with battery storage. But the best utility-scale storage facility in the country can only deliver power for four hours.

We are on the brink of a blackout crisis. Instead of addressing a problem they created—the RPS law—state legislators have wasted the 2020 short session trying to prevent “global climate change” by placing limits on fossil fuel use in Oregon. Even if enacted, this would have no measurable effect on climate, so it is a waste of time and money.

Business leaders and civic groups should demand an end to this insanity. Here’s a short agenda:

First, investigate the possibility of extending the life of Boardman. The facility was designed to run for another 20 years. We should not shut it down unless all of its baseload power can be replaced by other reliable sources, at a reasonable cost.

Second, consider having the legislature refer out a referendum to re-legalize nuclear power. Some of the most cutting-edge research on smaller-scale nuclear energy is being done here in Oregon, but any commercialization will have to take place elsewhere. It’s time for a new conversation on this subject.

Finally, repeal the RPS statute. Operating the grid is complicated enough; mandating the types of power sources utilities can use is only making things worse.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research center. A version of this article appeared in the February 2020 edition of The Oregon Transformation Newsletter.

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Cap Taxes or You’ll Trade Business

By Miranda Bonifield

You may not be able to tax carbon out of existence, but you can tax agriculture out of business.

That’s the refrain of Timber Unity, the coalition which sees the resurrection of last year’s cap-and-trade bill as a threat to businesses which have called Oregon “home” for decades. One woman at the Timber Unity protest in Salem February 6 said she would see an additional $45,000 in taxes if SB 1530 passes. That’s a non-starter for small businesses whose profit margins are often in the single digits.

In other words, hardworking people will be put out of business if this bill passes: folks who brought their trucks from around the state before dawn to remind Salem what the voice of Oregon sounds like. The atmosphere among the thousands gathered wasn’t tense or angry. The thousands gathered were just ordinary people who care about the environment and want to make an honest living.

Timber Unity has proposed alternatives that could help continue the downward trend of carbon emissions, which are already at their lowest level per capita since 1960. But a bipartisan compromise or referring the issue to voters don’t seem to be options. (Perhaps that’s because we already know passing a carbon tax would be a hard sell at the ballot box.)

As Senator Betsy Johnson (D, Scappoose) said, “Real Oregonians are affected by what we do in this building. …This was a bad bill last session. It’s a bad bill this session.”

Miranda Bonifield is Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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TriMet Drops Ridership Estimate by 13% for Tigard Light Rail

By John A. Charles, Jr.

After eight years of bragging that the proposed light rail line to Tigard would result in average daily ridership of 43,000, TriMet has quietly dropped the estimate to 37,500.

This “bait-and-switch” was totally predictable. At the start of every rail planning process, TriMet creates a high ridership estimate to get local politicians excited. Once the politicians agree to help fund the project, ridership forecasts are revised downwards. Eventually construction begins, and just before opening day, ridership estimates are lowered again.

At that point, it’s too late for politicians to back out.

TriMet promised Milwaukie officials that there would be 19,450 average daily rides on the Orange line in 2020. The actual ridership today is 12,160—63% of the forecast.

For the Blue line, ridership today is only 50% of the 2020 forecast.

The worst performer is the Yellow line, where ridership is a paltry 38% of the 2020 forecast.

While ridership is always low, construction costs are always high. For the Tigard line, cost estimates have gone up by 58% just since 2016. The current estimate is $2.85 billion.

Tigard light rail will be the most wasteful project in state history, if it ever gets built. The time to pull the plug is now.

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

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Frustrated with Traffic? According to PBOT, That’s Your Problem

By Rachel Dawson

The Portland Bureau of Transportation (PBOT), the agency charged with building and maintaining the city’s transportation system, is shifting the responsibility of improving traffic congestion away from itself and onto individual residents.

This was made apparent in a recently released 2018 report provided by Bloom Communications that surveyed Portland residents’ attitudes and perceptions of the Bureau. The contents of the survey are unsurprisingly critical of PBOT and demonstrate Portlanders’ increasing frustration with the region’s transportation system.

Of the themes that emerged, survey participants were generally concerned with safety on public transit, potholes and degrading roads, increasing traffic congestion, and PBOT’s lack of vision.

People want safe and efficient commutes. 81% of participants said that driving their car was the safest way for them and their families to commute, as they have greater control over who they come in contact with and what happens to them. Another 64% said they would consider taking transit if they were sure they “could reliably get to [their] destination faster or in the same amount of time as driving [their] personal car.” However, the current transportation system is seen as an inconvenience for many participants, and it is quicker for them to drive their car due to the frequency at which the MAX and city buses make stops.

PBOT is charged with repairing potholes and maintaining roads in Portland, yet some participants voiced their frustration with potholes not being filled in and car lanes disappearing across the city, replaced by bike lanes.

When it comes to bike lanes, PBOT doesn’t seem to know what it wants. Various striping patterns around the city lack consistency and confuse bikers and drivers alike.

According to one PBOT stakeholder (emphasis added):

“…The average joe probably doesn’t want the bike lane; they just want the street maintained. These are not necessarily the vocal people that come in and drive the budget. It’s concerning to see most of our city policies focused around that vocal minority. Are we aligning with who the general people are? Or are we focused on the Biker’s Alliance?”

Despite this concern, it seems that PBOT will continue to turn a deaf ear to the majority of commuters who want improved roads and more efficient commutes. The report states that “Portlanders demand a solution to traffic congestion but are unwilling to alter the way they are used to commuting to make positive changes and ease the situation….[R]esidents will have to start changing how they commute.” PBOT has no desire to increase road capacity and is placing the responsibility for rising levels of traffic congestion on individual Portlanders.

Portland commissioner Chloe Eudaly will send Portland’s expiring 10 cent per gallon gas tax back to voters in May 2020. Gasoline-using vehicles pay for 100% of the tax but only receive 56% of the benefits. The other 44% is spent on pedestrian and bicycle safety. Portland’s auditor reported in a 2019 audit that the program was poorly managed and lacked realistic project schedules. Moreover, the program’s spending seems to highlight the concerns held by the above PBOT stakeholder, that city policies are focusing disproportionately on pet projects and the vocal biking minority instead of aligning with the general public.

Commuters want efficient and safe commutes on well-maintained roads. PBOT should be serving the public, not dictating how residents should commute. Voters should reject the 10-cent gas tax and demand that PBOT take responsibility for Portland’s increasing congestion. PBOT should try to reduce congestion, not make it worse. Portlanders deserve better.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Cascade Policy Institute Raises Concerns Metro Is Flouting Oregon Public Meetings Law

Transparency is critical as Metro asks voters to trust the agency with billions in new taxes

February 11, 2020

FOR IMMEDIATE RELEASE

Media Contact:
Eric Fruits, Ph.D.
503-242-0900
503-928-6635
eric@cascadepolicy.org

Cascade Policy Institute has raised concerns with Metro Council that the regional government’s Parks and Nature program may be violating Oregon’s Public Meetings Law.

In a letter to Metro President Lynn Peterson and Metro Council, Cascade Policy Institute has identified two meetings of the Parks and Nature Oversight Committee that were held without public notice.

One of these meetings was last Tuesday, February 4, 2020. At an afternoon work session, Councilor Sam Chase informed the rest of Council that he had met with the Oversight Committee earlier that day. At the meeting Councilor Chase and the committee discussed issues Cascade Policy Institute’s Eric Fruits had raised regarding the Parks and Nature program in testimony to council on January 23, 2020. Councilor Chase says he and the committee discussed the administrative costs of the Parks and Nature program, which skyrocketed last year. There was no public notice of the public meeting of the Oversight Committee.

The other meeting was September 24, 2019. There is no record of a public notice announcing this meeting of the Oversight Committee. According to minutes the committee discussed the program’s administrative costs, which at the time were running at 20% for the year, or double the amount Metro promised to voters. Other issues included the upcoming Parks and Nature ballot measure and land acquisitions.

As late as December 6, 2019, the Oversight Committee’s webpage had no record of the September 24, 2019, meeting according to an archived copy of the webpage.

After Dr. Fruits’ testimony to Metro Council regarding the Oversight Committee, it appears Metro created a backdated webpage to give the appearance that it provided public notice of the September 24, 2019 meeting. For example, the page says, “The Sept. 24 meeting will include a tour of Killin Wetlands Nature Park” (emphasis added).

A review of the source code for the webpage reveals that the page was published on January 24, 2020, one day after Cascade Policy Institute’s testimony to Metro Council.

Oregon Public Meetings Law requires that public notice be given of the time and place of meetings and that the time must be “reasonably calculated to give actual notice to interested persons.”

Metro provided no notice of its most recent meeting of the Parks and Nature Oversight Committee. Even worse, it appears Metro created backdated notice to cover its failure to notify the public of its September 2019 meeting of the Oversight Committee.

Oregon’s Public Meetings Law indicates members of a governing body may be liable for attorney and court costs both as individuals or as members of a group if found in willful violation of the Public Meetings Law. To reduce the risk of such consequences, Metro Council must perform a thorough review of the relevant law regarding its public meetings and take whatever actions necessary to ensure Metro abide by both the letter and the spirit of the law.

As Metro is asking voters to approve billions of dollars in new taxes for housing services and transportation, transparency encouraging citizen oversight of the regional government’s spending is more important than ever. Proper notice of public meetings is not just the law, it’s the right thing to do.

A copy of the letter and documentation is available here.

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They Always Want More: Voters Face at Least a Half Dozen New Taxes in 2020

By Eric Fruits, Ph.D.

With this year’s “short” session of the legislature, the $700 million a year cap-and-trade bill is on everyone’s mind.

As they say on the infomercials: “Wait, there’s more.” Way more. Way more taxes. This year, Portland area voters are facing at least six new tax measures.

First, we have Metro’s transportation package that will amount to more than $400 million a year in new taxes.

This week, Metro is also looking to move forward with another set of taxes for homeless services. That’s expected to cost about $300 million a year.

Then, we’ve got Portland Public Schools’ billion dollar plus school construction bond, where $200 million will be used to pay for cost overruns from the last bond measure.

Wait, there’s more.

In November, Portland voters will be asked to renew the city’s 10-cents per gallon gas tax.

In the Portland area alone, voters will see at least six new taxes totaling more than a billion dollars a year.

Also in November, ballots will go out for a $2 per pack increase in Oregon’s cigarette tax plus a massive new tax on vaping products.

Wait, there’s one more.

In response to House Speaker Tina Kotek’s call for a housing emergency in Oregon, Governor Kate Brown is pressing for a new tax on home sales. That’s right, the state with a housing affordability crisis is looking at a tax to make homes more expensive.

No matter how much they spend, they always want more. It’s time for Oregon voters to pick up their ballot and tell their politicians, “Enough is enough.”

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Supreme Court Espinoza Case Debates Parents’ Freedom to Choose Religious Schools

By Miranda Bonifield

When Kendra Espinoza’s husband suddenly left their small family, her two daughters’ lives were thrown into chaos. Separation is never easy on kids. But on top of all the normal anxieties of the situation, Naomi and Sarah went from homeschooling with a stay-at-home mom to enrollment in the local public school while their mom worked. While this might be a smooth transition for some kids, Naomi was bullied and Sarah struggled in her classes.

Kendra knew it wasn’t the right option for them. So, the Montana mother took a second job and pursued every financial avenue she could to send them to a Christian private school. There, her daughters flourished in an environment where Kendra felt they were learning good values.

Tuition became more burdensome when in 2017 Montana ended the tax credit scholarship that helped stabilize Naomi and Sarah’s lives. The small program had allowed Montana taxpayers to deduct up to $150 from their taxes when they voluntarily donated to scholarship organizations that helped kids like the Espinozas.

Montana’s tax credit scholarships could be used at any school, whether secular or religious, until the Montana Department of Revenue chose to interpret the state’s prohibition against aid to religious organizations to include participation in this program. Though a trial court found in favor of families’ free exercise, the Montana Supreme Court struck down the entire scholarship tax credit to avoid either benefiting or discriminating against religious schools. On January 22, the Supreme Court heard oral arguments in the case Espinoza v. Montana Department of Revenue.

Ending a scholarship program which helped families across the state solely to prevent religious schools from benefiting is arguably a violation of the free exercise and equal protection clauses of the U.S. Constitution. Previous Supreme Court cases like Trinity Lutheran v. Comer (2017) established that a church’s status as a religious organization may not be used to deny it benefits from an otherwise secular aid program.

Montana has argued, tenuously, that the precedent set in Locke v. Davey allows a state educational funding program to refuse funding explicitly religious options such as pastoral degrees. But even the scholarship program in Locke included religious schools and religious classes, drawing the line only at explicitly religious purposes.

Montana’s tax credit scholarship, which originally assisted school-aged children to attend any participating private school, could have legally and Constitutionally continued to help Kendra Espinoza and her kids without providing undue support to religious organizations. In fact, out of 29 states with a total of 62 school choice programs, Montana’s is the only program which chose to explicitly remove support for religious schools on the basis of their religion.

While school choice programs may allow funding to be directed to a variety of schools, the real beneficiaries are the families who can choose schools which help their unique children. The real beneficiaries are kids like Naomi and Sarah. Espinoza v. Montana is less a question about public funding for private schools and more an issue of equal access to education for American families. While striking down Montana’s tax credit scholarship program removed options for all children, it disproportionately impacted the children of low-income families for whom private school tuition is at best a major sacrifice and at worst an impossibility.

For moms like Kendra, school choice isn’t a distant political ideal. It’s an immediate practical reality which means the difference between watching your child struggle through a one-size-fits-all system and choosing a school that can nurture your child’s growth. This month’s arguments in Espinoza v. Montana should become an important precedent for defending a family’s right to choose an education consistent with their values, bringing a fairer understanding of what it means to provide equal access to education.

A favorable ruling in Espinoza v. Montana could help empower families who otherwise would be unable to attend private schools—a boon both to public schools which would benefit from increased competition and to students who could thrive with the education that best fits them.

Miranda Bonifield is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization. She is also the Program Assistant for the Children’s Scholarship Fund-Oregon program, which helps lower-income Oregon children attend private and parochial elementary schools through partial-tuition scholarships.

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Oregon is meeting its 2020 GHG emissions goals, depending on how you measure it

By Rachel Dawson

Is Oregon meeting its 2020 greenhouse gas (GHG) emission reduction goals? It depends on how you measure emissions.

The Oregon Legislature established GHG reduction goals in 2007 through HB 3543. The law called for reducing GHGs to 10% below 1990 levels by 2020, and 75% below 1990 levels by 2050.

However, the statute does not say whether GHGs should be measured in the aggregate or on a per capita basis. This is an important distinction given Oregon’s population growth since 2007.

The Oregon Global Warming Commission (OGWC), a group created by HB 3543, insists on measuring total GHG emissions. Using this metric, Oregon produced 13% more total emissions in 2017 compared to 1990 levels, and thus appears to be failing.

When measured on a per capita basis, Oregon GHG emissions in 2017 were actually 21% lower than 1990 levels. We have more than doubled the 10% emissions reduction goal, three years ahead of the deadline.

In fact, Oregon has improved its energy efficiency so much that per capita energy use in 2016 was the lowest it’s been since 1960, declining 37% since it peaked in 1972. Oregon has the lowest per capita energy use in the entire Northwest.

Unfortunately, you won’t see any celebration from the Global Warming Commission, because good news doesn’t sell. More importantly, the Commission needs the perception of a crisis in order to justify Governor Brown’s climate change agenda. Oregon legislators should remember this when the Governor’s cap-and-trade bill is debated in February.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Oregon and Washington Need to Think Bigger on I-5 Bridge Project

By Eric Fruits, Ph.D.

“It’s time to get this done!” Governor Kate Brown told the crowd at this year’s Oregon Leadership Summit, referring to a replacement for the Interstate 5 bridge over the Columbia River. The statement ended with an exclamation point, but it should have ended with a question mark. Despite the urgency, it’s not clear what the governor means by “this” or when “this” should be completed.

Last month Governor Brown met with Washington Governor Jay Inslee and inked a deal to begin the process of replacing the I-5 bridge connecting the two states. The two states have allocated $44 million to open an office for the I-5 bridge project. Governors Brown and Inslee hope to pick up some of the pieces of the Columbia River Crossing project that fell apart in 2013 after a dozen years of planning, costing taxpayers more than $200 million.

But what is “this” bridge replacement? Will there be more lanes than we have now, or fewer? Will lanes be set aside for buses or light rail? Will bicyclists and pedestrians get their own lane? These are all different ways of asking the same question: Will the replacement have more lanes for cars and trucks?

If the answer is “yes,” there will be more lanes to relieve traffic congestion, then the governor should push to get as much done as possible before her term is over. If the answer is “no,” there won’t be new through-lane capacity, then she should admit the project is an expensive no-growth policy and be upfront with Oregonians about it.

Since the beginning of the original CRC planning in 2001, the region’s population has grown by nearly 30%. Over that time congestion has worsened, commuting times have lengthened, and the bridge has become one of the worst freight bottlenecks in the country, according to the American Transportation Research Institute.

At this point there are no clear plans for how the I-5 bridge replacement will relieve pressure on this key pinch point. The current bridge has three northbound and three southbound lanes. At the time the CRC project imploded, there were no clear plans to add through lanes for cars and trucks—just added lanes for bikes, pedestrians, and public transit.

Opponents of the bridge replacement come from all sides. Environmentalists and active transportation advocates argue that relieving traffic congestion will trigger “induced demand” for travel that will make congestion worse and increase carbon emissions. Commuters and freight haulers complain the set-aside for bikes, pedestrians, and public transit is a wasteful use of lane capacity. Good government folks question spending billions of dollars on a project that would do little or nothing to relieve one of the nation’s worst traffic bottlenecks. Another group of good government folks—mostly from Washington and Clark counties—are clamoring for a third bridge that would allow Westsiders to avoid slogging through US Highway 26 and I-5 through Portland.

Opponents of the original CRC noted that improving traffic flows crossing the Columbia on I-5 would not solve any congestion problems. Instead, they argued, the new bridge would shift the bottleneck further south to the Rose Quarter. Things have changed, and that argument will soon lose its relevance.

In particular, the Oregon Department of Transportation is in the middle of a project to widen I-5 through the Rose Quarter. The addition of lane capacity alone will do much to relieve congestion in this choke point. But, there’s more.

Along with the addition of lane capacity, the legislature directed ODOT to experiment with congestion pricing along the improved stretch—an experiment supported by Governor Brown. The money raised from congestion pricing should be used to improve and expand roads for the people paying the tolls. If the governor doesn’t want to use the funds to expand highway capacity, she owes the people of Oregon a clear vision of where she thinks it should go.

Transportation is a crucial element of economic development. With transportation improvements, trade between regions increases. With easier commutes, employment opportunities open up. Increased trade and improved employment drive economic growth and prosperity. An I-5 replacement that does nothing to improve the flow of goods and people is a waste of money. A replacement that adds capacity and reduces congestion is an investment in shared prosperity for Oregon, Washington, and the West Coast.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute and an adjunct professor at Portland State University, where he teaches courses in urban economics and regulation. He can be reached at eric@cascadepolicy.org.

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Miss Virginia: A Trailblazer for Educational Opportunity for Today’s Kids

By Kathryn Hickok and Miranda Bonifield

Virginia Walden Ford is a Washington, D.C. mom whose extraordinary sacrifice and determination changed not just her own child’s life, but the lives of thousands of low-income and minority students. Her story is now told through the new movie Miss Virginia, starring Orange Is the New Black’s Uzo Aduba.

Virginia’s experience as an African American student integrating Little Rock high schools in the 1960s gave her a strong personal understanding of how important education is to a child’s success. When, years later, her own son William began slipping through the cracks of a D.C. public school where his teacher didn’t even know his name, she fought for a better option. Virginia’s answer came in the form of a private school scholarship. William went from skipping school to being a joyful, enthusiastic student known by friends and teachers.

Virginia Walden Ford believes every child should have that same chance to succeed in school and in life. Her persistent work on behalf of low-income students in Washington, D.C. led to the creation of the Opportunity Scholarship Program (OSP). The OSP is a congressionally funded scholarship program which has given thousands of District kids the chance to attend private elementary and high schools chosen by their parents or guardians. Virginia says, “We knew that if we raised our voices, we could win for our children. We did. And now our kids are winning as a result.”

January 26-February 1 is National School Choice Week, the world’s largest celebration of parental choice and effective educational options for all children. To celebrate National School Choice Week, Cascade Policy Institute will host a special screening of the film Miss Virginia in Lake Oswego on Thursday evening, January 30, at 6:30 pm. (Admission is free, but reservations are required due to space limitations. For theater information and to reserve tickets, call Cascade Policy Institute at (503) 242-0900.)

As Virginia Walden Ford and her son William knew too well, choices in education are widespread in America, unless families are poor. Parents with the financial means to do so will buy homes near public schools they like, pay tuition for private schools, or supplement the classroom experience with enrichment opportunities. But low-income families generally find themselves trapped with only one option: a public school assigned to them based on their address, which too often fails to meet their children’s educational and personal needs.

All families deserve better.

The landscape of options to meet students’ unique learning needs is more diverse today than ever. These options include traditional public schools, charter schools, private and parochial schools, homeschooling, magnet schools, online learning, and more. Today, more than half the states in the U.S. provide parents with flexibility in their children’s learning options through 61 different educational choice programs such as privately or publicly funded scholarships, education tax credits, and Education Savings Accounts (which can function like restricted-use debit cards for a child’s education expenses).

Every child has one chance to grow up, and each year is precious. Parents know it: The right educational environment can change a student’s life. Empowering parents to give their children the education that’s right for their talents and needs unlocks the unique potential of every child. Virginia Walden Ford’s experiences and advocacy on behalf of Washington, D.C. students demonstrate how important school choice policies are to the future of low-income children in America. She also shows us what a difference one dedicated and courageous parent makes, not only for her own child, but for thousands of others as well.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute and director of Cascade’s Children’s Scholarship Fund-Oregon program. Miranda Bonifield is CSF-Oregon’s Program Assistant. CSF-Oregon has provided scholarships worth more than $3.3 million to lower-income Oregon children to help them attend private or parochial elementary schools since 1999.

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Eric Fruits, Vice President of Research of Cascade Policy Institute submitted testimony to Metro Council regarding the lax oversight of Metro’s Parks and Nature Program

Press Release: Eric Fruits, Vice President of Research of Cascade Policy Institute submitted testimony to Metro Council regarding the lax oversight of Metro’s Parks and Nature Program.

January 23, 2020

FOR IMMEDIATE RELEASE

Media Contact:
Eric Fruits, Ph.D.
(503) 242-0900
eric@cascadepolicy.org

Thursday, Metro Council will be receiving from staff an annual report on Metro’s Parks and Nature program. Cascade Policy Institute urges the Council reject the Annual Report and demand a revised report that includes details of the program’s skyrocketing administrative costs. In addition, the Council should replace the current members of the Oversight Committee with individuals who have the time, energy, and expertise to provide adequate oversight to the nearly billion dollar Parks and Nature program and Council should provide the new Oversight Committee with the information and staff support necessary for them monitor the Parks and Nature program.

REJECT THE PARKS & NATURE ANNUAL REPORT

In the last fiscal year, Metro spent $42 million on its Parks and Nature program. Yet the annual report provided to Metro Council is only four pages and runs less than 1,400 words with high-res photos making up about one-third of the report. What little information is presented raises more questions than it answers, in particular:

  • The Annual Report provides no explanation for skyrocketing administrative costs, which last year account for 30% of total program expenditures. Metro promised taxpayers that administrative costs would be no higher than 10%.
  • The Annual Report provides no useful information regarding how many acres were purchased in the past year, where they were purchased, or how much was paid. Previous annual reports provide at least some of this information. Metro Councilors and Metro voters deserve to know how much of their tax dollars are being used to buy land outside of Metro’s jurisdiction and/or outside the Urban Growth Boundary.
  • In April 2019, the Oversight Committee requested the Annual Report include information regarding “extra resources (bond proceeds and grants) that helped pay for capital projects at Chehalem, River Island, etc.” The only mention of capital projects in the Annual Report are forward looking promises regarding the proceeds from the 2019 bond measure. The Annual Report has no discussion of Chehalem Ridge nor River Island. The omission of these items specifically requested by the committee demonstrates the Oversight Committee has no sway over Metro staff.

REPLACE THE MEMBERS OF THE PARKS & NATURE OVERSIGHT COMMITTEE

Metro council and staff frequently repeat the tired phrase “promises made, promises kept” with respect to their Parks and Nature program—it even makes its way into the most recent Annual Report. One promise made to voters in every Parks and Nature ballot measure since 2006 has been vigorous oversight of the program by a citizen Oversight Committee.

  • Beginning with their earliest meetings, Metro staff made clear the committee would be denied key information required and requested to provide oversight. For example, the committee has repeatedly been rebuffed in its efforts to provide oversight on pending land purchases.
  • Over the past year, the already weakened Oversight Committee has become a farce. The last time the Oversight Committee met was April 5, 2019, or nearly 10 months ago. This is the longest gap between meetings of the Oversight Committee. At the last meeting only 2 of the 12 committee members were in attendance.
  • The Oversight Committee was expected to meet in Summer 2019, with a discussion of the Annual Report to be an agenda item. That meeting was never held and there is no record of the Oversight Committee meeting to review the 2018-19 Annual Report.

The members of the current Oversight Committee should be replaced by individuals who have the time, enthusiasm, and expertise to serve. The newly formed committee must be provided the power—and support from Metro Council and staff—to exercise effective oversight of this billion dollar program.

For more details on Cascade Policy Institute’s recommendations to Metro Council, please read the complete letter below.

Click here for PDF version:

Testimony to Metro-Letter 200123a

 

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National School Choice Week Celebrates All the Ways Kids Learn

By Kathryn Hickok

January 26-February 1 is National School Choice Week, the world’s largest celebration of parental choice and effective education options for all children. Since 2011, more than 180,000 independent NSCW events and activities have been planned in local communities across the country.

The landscape of options to meet the learning needs of today’s students is more diverse than ever. These options include traditional public schools, charter schools, private and parochial schools, homeschooling, magnet schools, online learning, and more.

Empowering parents to choose among these options can unlock the unique potential of every child. More than half the states in the U.S. now help families to have more flexibility with their children’s education through educational choice programs like privately or publicly funded scholarships, education tax credits, and Education Savings Accounts.

To celebrate National School Choice Week, Cascade Policy Institute will host a screening of the new feature film Miss Virginia in Lake Oswego on Thursday evening, January 30, at 6:30 pm. Admission is free, but reservations are required due to space limitations. For more information about the event and to reserve tickets, call Cascade Policy Institute at (503) 242-0900.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization. She is also Director of Cascade’s Children’s Scholarship Fund-Oregon program, which has provided private scholarships worth more than $3.3 million to lower-income Oregon children to help them attend tuition-based elementary schools since 1999.

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Why are rural, low-income residents subsidizing Teslas for Oregon’s urban elite?

By Rachel Dawson

Oregon state officials recently celebrated helping the state reach 25,000 registered electric vehicles (EVs) through local incentives and the Clean Vehicle Rebate Program. This celebration, however, is a punch in the gut to the state’s low-income and rural residents whose taxes fund the rebates and incentives used to purchase the EVs by predominantly wealthy and urban Oregon residents.

Programs include two rebate programs through the Oregon Department of Environmental Quality, a federal tax credit, and local utility rebates (though local utility rebates generally tend to target businesses and the 2019 Nissan LEAF). For example, a consumer could use between $7,500 and $10,000 taxpayer dollars to purchase a new 2020 Tesla Model 3, which currently sells for $39,999. In fact, 24% of the EVs registered in Oregon are Teslas.

These incentive programs may shave a couple thousand dollars off the consumer cost of EVs and plug-in hybrids, but their prices will likely still be too high for those with lower incomes. Purchasing an EV also isn’t a viable option for many residents living in rural counties due to a lack of EV infrastructure.

The three counties with the largest number of EV purchases, Washington, Multnomah, and Clackamas, are all coincidentally located in the Portland metro area. They also happen to be the three most wealthy counties in the state, so it’s no wonder their residents purchase 75% of the state’s registered EVs.

David Larson, Jaguar Land Rover’s general manager of product development, told ABC news that EVs “still cost a lot more than ICE [internal combustion engine] cars and charging takes a long time … For a rancher in Montana, EVs are not the solution. These cars are for people who live in urban areas and don’t travel more than 100 miles or more a week.” The same logic could be applied to people living in Eastern and Southern Oregon.

EVs are being promoted due to their supposed environmental benefits, but in reality, the emissions are simply being shifted from urban cities to rural areas. The electricity powering the vehicles comes from a mix of coal, hydro, wind, solar, and gas power plants. You won’t see any of these plants in Portland as most of them are located in other areas of the state, such as Eastern Oregon, where utilities can purchase and construct facilities on large plots of land.

Oregon officials are very vocal when it comes to “environmental benefits,” but seem to have tight lips when it comes to the range of issues EVs experience.

The vehicles use lithium ion batteries which are sensitive to temperature changes. Larson says that cold weather can cut range by up to one third. These issues make EVs a suitable option for warm, urban areas—a big reason why the largest markets for EVs in the US are located in California, Texas, and Florida. This may not be an issue in warmer climates, but EVs will experience a variety of problems during Oregon’s cold winters. The battery can also be significantly drained depending on how fast one drives, heating or cooling the vehicle, and radio usage.

Portland also has one of the milder climates in the state, so it is no surprise that the state has seen a surge of EV purchases in the urban metro area.

But even in an urban environment, relying on an EV can prove costly and inefficient. Recent electricity blackouts in California have left thousands without power, leaving EV owners stranded unless they own a gasoline powered generator to charge their vehicle or have access to other means of transportation.

Officials’ environmental concerns should be eased by the fact that vehicle emissions in Oregon are decreasing despite a growing population and are projected by ODOT to decrease to 20% below 1990 levels by 2050. This is due in part to older vehicles being retired and replaced by more efficient cars.

Multiple legislative concepts related to EV infrastructure will be discussed in the legislative short session this year. LC 222 would amend building code requirements to create an EV infrastructure requirement for the construction of certain buildings, such as privately-owned commercial buildings and residential and mixed-use buildings with five or more “dwelling units.” LC 224 would authorize the Public Utility Commission to allow utilities to recover the costs of EV infrastructure from all ratepayers.

The passage of these potential bills would further disperse the cost of EVs to those who do not own one through increased power bills and housing prices. Oregon taxpayers from across various counties and income levels should not be subsidizing EV purchases that tend to be used by wealthier residents living in urban environments. Given that EVs are already decreasing in price as new vehicles enter the market and technology improves, state officials should not move forward with the above legislative concepts and should eliminate the unjust EV rebates.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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New Year, New Tax: What You Need to Know About Oregon’s Gross Receipts Tax

By Katie Eyre, CPA

The 2019 Oregon Legislature established a new tax affecting all firms that do business in Oregon. While it is called by its misnomer the “Corporate Activity Tax,” the CAT actually applies to most types of organizational entities such as partnerships, individuals, limited liability companies, and trusts that have commercial activity generated in Oregon in the regular course of their trade or business. It is a tax paid annually for the privilege of doing business in Oregon. Initial expectations are that it will raise about $1 billion in new revenue annually. These funds are to be set aside for exclusive use for education and school purposes.

By now, every business in Oregon should have received a generic letter from the Oregon Department of Revenue alerting them to this new tax. This letter is a helpful primer on the CAT, but is not incredibly useful in figuring out the impact on each business’s specific situation. As is usual with all tax law, the devil is in the details.

How did the Corporate Activity Tax come about? In May 2019, the Oregon Legislature passed HB 3427. In this bill, it established the CAT as the primary mechanism to fund the new Fund for Student Success. Then in June 2019, the Legislature passed HB 2164 which provided technical corrections to HB 3427. As a follow up, the Department of Revenue held informational and listening sessions around the state through the last half of 2019. In December 2019, the Department of Revenue issued 12 temporary rules related to this new tax. The agency intends to release additional temporary guidance through March 2020. Any time there is a new tax put in place, there is much ambiguity, and so as a tax practitioner, we appreciate any guidance that is issued, especially since the effective date is January 1, 2020 and the first estimated tax payment is due April 30, 2020 (more on that later).

Who is subject to the CAT? That tax is imposed upon enterprises with a trade or business and “substantial nexus” in Oregon, who also meet certain specific thresholds. We’ll drill down on some of the definitions, but here is a quick threshold listing:

  • Any business with Oregon “commercial activity” in excess of $750,000 will need to register,
  • Any business with Oregon “commercial activity” in excess of $1,000,000 will need to file, and
  • Any business with Oregon taxable “commercial activity” in excess of $1,000,000 will need to pay the CAT.

How much is the CAT? It is 0.57% of a firm’s Oregon taxable commercial activity in excess of $1,000,000 plus $250. If a business does not have Oregon taxable commercial activity in excess of $1,000,000, then it will not owe any tax, including the $250 minimum tax.

What is a “substantial nexus”? HB 3427 states that a business has a substantial nexus if it:

  • Owns or uses a part or all of its capital in this state,
  • Holds a certificate of existence or authorization issued by the Secretary of State’s office,
  • Has a “brightline presence” in Oregon, defined as:
    • Owns property in Oregon with an aggregate value of at least $50,000, or
    • Has Oregon payroll of at least $50,000, or
    • Has commercial activity in the state of at least $750,000, or
    • At least 25% of the total property, payroll, or commercial activity is in Oregon, or
    • Is a resident or domiciled in Oregon for commercial, corporate, or other business purposes.

The Department of Revenue provides an example of a hypothetical out-of-state firm that would be subject to CAT regulations:

Atlas Company (Atlas Co.), headquartered in Maryland, operates a website supporting internet sales, primarily to European country customers. Atlas Co. made approximately 10,000 sales at $99.00 per sale, to residents of Oregon during the year, realizing $990,000 of commercial activity. Atlas Co. contracts with an Oregon mailing service to deliver the merchandise in Oregon. While the amount of commercial activity realized by Atlas Co. is below the threshold to file a corporate activity tax return and pay tax, Atlas Co. does have substantial nexus in Oregon, and must register with the department when commercial activity exceeds $750,000.

What is commercial activity? HB 3427 introduced many new terms that require definitions. Fortunately, the law provided some definitions that will add partial clarity. The definition of commercial activity is the total amount realized by a subject taxpayer, arising from transactions and activity in the regular course of the taxpayer’s trade or business, without deduction for expenses incurred by the trade or business. For the most part, many businesses will think of this as their gross sales. For the most part, that is accurate. However, HB 3427 and HB 2164, list 47 exceptions to the calculation of commercial activity. They fall in to two categories:

  • “Excluded persons” like non-profits and some health care providers, for example. There are many others.
  • “Gross receipt exemptions” like non-trade interest income, excise taxes collected from customers, or wages received as an employee, for example. There are many others.

The CAT also introduces a “use tax” concept which will be unfamiliar to most Oregon businesses. If a business purchased equipment/property out of state, then brings it in to Oregon within one year of purchase, the value of the property is included in “commercial activity” unless the buyer can show that it wasn’t purchased out of state to avoid the CAT. This now requires the taxpayer and the state of Oregon to consider an Oregon business’s motivation in purchasing equipment/property from out of state suppliers and puts the CAT burden of the “gross receipts” tax on the buyer rather than the seller for this transaction.

What is Oregon taxable commercial activity income? We have discussed what “commercial activity” is, but not what the Oregon taxable commercial activity is. The CAT is only assessed against the Oregon taxable commercial activity. It is broken down as follows:

Commercial activity apportioned to Oregon

minus

35% of the greater of

  • Oregon cost inputs (as defined by the Internal Revenue Code Sec 471) or
  • Oregon labor costs
  • Note: This subtraction is limited to 95% of the Oregon commercial activity

What this means is that of the included commercial activity, only Oregon commercial activity is included. Non-Oregon activity is excluded. From there, a taxpayer can subtract out 35% of certain costs that are apportioned or sourced to Oregon.

What if a taxpayer has more than one business? The Oregon CAT requires a taxpayer to look at their businesses as a “unitary business” rather than separate businesses. This concept was designed for the situation where on a separate business basis, some of the businesses would not be subject to the CAT. But if aggregated into a unitary business, then they would meet the thresholds and therefore be subject to the CAT. A unitary business must file their CAT returns on a unitary basis, even though they are separate taxpayers for other purposes. This is one of the most complicated areas of the new law. The draft regulations provide the general rule that “if the activities of one business either contribute to the activities of another business, or are dependent upon the activities of another business, those businesses are part of a unitary business.” HB 3427 also discusses common ownership, centralized management, common executive force, among other things.

What are some of the administration aspects of the CAT? The Department of Revenue is still working out some kinks, but here in a nutshell is what we know to date:

  • The effect start date is January 1, 2020.
  • All CAT filings must be done on a calendar year basis, regardless of any fiscal year end for the taxpayer.
  • A taxpayer must register if their commercial activity is at least $750,000. (If not previously required to register, the taxpayer must register within 30 days of reaching the $750,000 threshold or face per month penalties).
  • Estimated taxes are required to be paid quarterly if the CAT will be greater than $5,000 for the year.
    • Due April 30, July 31, October 31, and January 31 for the previous quarter.
    • Note the first quarterly estimated payment will be due April 30, 2020.
    • All estimated tax payments must be paid electronically.
  • The annual tax return is due April 15 of the following year.
    • Note the first annual return filing will not be due until April 15, 2021 for the 2020 tax year.
    • A 6-month filing extension may be granted only for “good cause.” Extensions do not appear to be automatically granted.
  • Unitary groups must file as a single taxpayer. Each member will be jointly and severally liable for the filing and payment of the estimated taxes and the annual filing and taxes.

What can a business do now? This is just a general discussion of the new CAT and should not be relied upon for your unique situation. Because this is a new and complex tax, both the Oregon Department of Revenue and tax advisors are trying to understand as much as possible. The information is still evolving. Any Oregon business should consult with their tax advisor immediately so that they can understand how this new tax will impact their specific business. If subject to the tax, the business will need to budget for it and be prepared to register, as well as be prepared to file and pay the quarterly estimated tax. If you have a financial review or audit, talk with your certified public accountant to find out if it should be included in your tax provision analysis. And because of the definition of “cost inputs” for subtractions, you may want to talk with your tax advisor to see if you can enhance what is currently put into your cost of goods sold.

What kind of money are we talking about? Per the revenue impact of HB 3427, each of the next biennia will generate $1.6 billion to $3.1 billion for the Fund for Student Success. However, $423 million to $762 million will be sent to the general fund, an amount totaling approximately 25% of the new tax. In addition to collected taxes from businesses, the government will also add employees. Per the fiscal impact statement of HB 3427, government will also grow. In the first biennium, 87.62 FTEs will be needed to administer the various accounts within the Fund for Student Success and for the Department of Revenue to administer the CAT.

In addition to discussing with your tax advisor, you can find more information online at:

Oregon.gov/DOR/programs/businesses/pages/corporate-activity-tax.aspx

Katie Eyre, a Certified Public Accountant, is a Tax Partner at Fordham & Co LLP in Hillsboro. She is a former Oregon state legislator and served on the Hillsboro Planning Commission for more than ten years. She is a board member of Cascade Policy Institute.

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Espinoza and Equal Opportunity in Education

By Miranda Bonifield

In 1926, an Oregon school controversy made it all the way to the nation’s Supreme Court. But the issue on the table wasn’t teacher pay, proper curriculum, or student safety. Oregon had outlawed private schools in a discriminatory effort to remove Catholic education. But in the landmark ruling Pierce v. Society of Sisters, the Court recognized that “The fundamental theory of liberty… excludes any general power of the State to standardize its children by forcing them to accept instruction from public teachers only.” Families have a right to choose how they educate their children.

Later this month, the Court will consider another landmark education case, Espinoza v. Montana. Montana’s tax credit scholarship program, which enabled families to send children to the private schools of their choice, was struck down because some participating students attended religious schools. That decision removed options for all children, but disproportionately affects the children of low income families for whom private school tuition is at best a major sacrifice and at worst an impossibility.

A favorable ruling in Espinoza vs. Montana could help empower rather than exclude families who would otherwise be unable to attend private school—a boon to both the public schools which would benefit from increased competition and the students who could thrive with the education that best fits them.

Miranda Bonifield is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization. She is also the Program Assistant for the Children’s Scholarship Fund-Oregon program, which helps lower-income Oregon children attend private and parochial elementary schools through partial-tuition scholarships.

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New Portland Design Guideline Will Place Responsibility for Homeless Crisis on Private Property Owners

By Rachel Dawson

There is a homeless crisis in Portland. According to a recent count by Portland State University, the number of people found living in “unfit” conditions, such as in a tent outdoors, under a bridge or overpass, or in their car, has increased by 20% between 2017 and 2019.

Instead of providing sound and beneficial policies to help get homeless individuals on their feet and off the streets, Portland officials are pushing the issue onto private businesses.

The Portland Planning Commission recently affirmed a proposal submitted by Commissioner Oriana Magnera that would require new private downtown buildings, including stores and apartment complexes, to have a space where Portlanders can “rest,” including pitching tents and sleeping. She stated in a November meeting that current buildings may have “benches but not a lot of place to pitch a tent.”

Magnera blames the current homeless crisis in part on a housing shortage. It would thus make sense to provide shelter to those living on the streets and reduce restrictive city codes and laws that make it difficult to build homes in the Metro region. One such change could include enlarging the current Urban Growth Boundary that limits the amount of land available for new homes and artificially raises prices.

Portland officials should not place the responsibility for the homeless crisis on developers and private property owners. They should remove this new design guideline language and create policies that will tackle the root of the homeless crisis.

Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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