Author: kathryn hickok

Press Release: Report shows ride-hailing services would be a viable solution for TriMet’s high-cost bus lines

FOR IMMEDIATE RELEASE

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

PORTLAND, Ore. – Today Cascade Policy Institute released a report that recommends TriMet pursue a one-year pilot program which replaces one or more high-cost and low-ridership bus lines with ride-hailing services. The program would be supported by a subsidy funded by the costs saved by eliminating the bus line.

The report, Ride-Hailing as a Solution for TriMet’s High Cost Bus Lines: A Proposal for a Pilot Project, was authored by Eric Fruits, Ph.D., an Oregon based economist and Portland State University adjunct professor.

The proposed pilot program would offer riders point to point service from ride-hailing companies like Uber and Lyft within a ride-hail zone, when and where within the zone would be most convenient to the rider. The two high-cost bus lines suggested by Fruits include lines 97 (Tualatin-Sherwood Rd) and 63 (Washington Park/Arlington Hts). These lines intersect other bus lines and MAX stops, so the proof of the transaction should be used as a 2.5-hour TriMet pass. Doing so would allow passengers to connect to other buses or light rail in the area.

Cascade President and CEO John A. Charles, Jr. stated, “TriMet should embrace the benefits ride-hailing services offer instead of viewing them as a threat. Pairing services like Uber and Lyft with TriMet’s bus services would give riders a convenient and affordable way to commute while saving TriMet considerable money.” Indeed, the cost of subsidizing 75% of a user’s ride-share fare would be 55% lower than the current cost of operating proposed bus lines 97 and 63.

This proposal comes with its own set of challenges in the form of barriers to access. Services such as Uber and Lyft are hailed through an app on an individual’s smartphone and paid for by linking an individual’s bank account to the app. Some TriMet users do not own either a smartphone or a bank account. Jurisdictions which have adopted similar programs have handled this challenge by creating call centers available to riders without smartphones and by giving unbanked riders prepaid gift cards.

Ride-hailing services also contract out wheelchair accessible rides to third-party companies which would allow disabled riders to continue to commute in the corridor.

Similar pilot projects have been implemented in cities across the United States as transit authorities have recognized and taken advantage of the benefits ride-hailing services offer. TriMet should follow suit and engage in a low-stakes, one-year pilot project in order to cut costs that are rising due to declining ridership in certain areas. Doing so will serve riders, TriMet, and taxpayers alike.

The full report, Ride-Hailing as a Solution for TriMet’s High Cost Bus Lines: A Proposal for a Pilot Project, can be downloaded here.

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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A Proposal To Generate Adequate Returns From Common School Trust Lands

By Eric Fruits, Ph.D.

Summary of Conclusions

Across the Western States, approximately 80 percent of Trust Lands are managed for the benefit of the states’ “common schools”—public primary and secondary (K-12) schools. In most Western States, a Land Board is required to act as a prudent investor and obtain market value from the sale, rental, or use of trust lands. Generally, revenues generated from Trust Lands are deposited into a common schools fund managed by the state’s treasurer, an investment board, or a combination of the two. Rather than running the risk of mismanagement of Trust Land and/or reliance on global commodity prices, states could sell the Trust Lands and place the proceeds in a fund managed by the state’s investment managers, with payments to beneficiaries under the states’ current distribution approach. This report uses a Monte Carlo approach to analyze the impacts of such a proposal. The analysis indicates that most of the states analyzed would benefit from a sale of their Trust Lands.

 

READ THE FULL REPORT HERE.

Eric Fruits, Ph.D. is president and chief economist at Economics International Corp., an Oregon based consulting firm specializing in economics, finance, and statistics. He is also an adjunct professor at Portland State University, where he teaches in the economics department and edits the university’s quarterly real estate report. His economic analysis has been widely cited and has been published in The Economist, the Wall Street Journal, and USA Today.

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Too Late to Fix PERS by Fooling Oregonians

By Scott Shepard

Governor Kate Brown’s task force, assigned to find ways to cut Oregon’s yawning unfunded PERS pension liability, is approaching its November 1 reporting deadline. Governor Brown is relatively new at her job, so perhaps she can be forgiven for hoping her PERS task force can produce magical founts of free money. But it can’t.

The Governor wants proposals to cut the admitted pension deficit of about $25 billion by 20 percent ($5 billion). Even if the task force managed this feat, the recognized debt would only return to its 2015 level, before the PERS Board started inching the assumed rate of return down from its long-standing eight percent figure toward more plausible figures. If the Board shifted to an assumed rate that matched risk with the certainty of payment obligations, unfunded pension liabilities would approach $50 billion.

Oregon taxpayers simply cannot—and will not—pay this tab. Oregon is not wealthy or highly populous. Raising an extra $50 billion—or even 25—is likely impossible. Taxes would have to rise and services decline to the point that businesses and families would begin to flee the state. This would spark a vicious cycle. Fewer taxpayers would be taxed even more to pay a fixed, unpayable bill, creating more incentives for emigration, until the state inevitably declared defeat. While this might sound apocalyptic, it’s not far-fetched: Puerto Rico has already slid into this vortex, and Illinois may become the first American state to fall into default and possible federal receivership.

Governor Brown’s task force efforts cannot thwart this process. She has charged it to find “out-of-the-box solutions” for raising these $5 billion. But no such ideas, out of any box whatever, can come without cost to taxpayers. Some ideas recently floated include increased “sin” (e.g., alcohol and tobacco) taxes. Those who don’t drink or smoke might think themselves off the hook, but they’re not. These increases, if not dedicated to PERS payments, could (and probably would) go to other purposes, like funding the state’s perennial non-pension budget deficit.

The same is true of all proposals floated. Money spent one way can’t be spent in others. Raiding the rainy day fund would force tax increases during the next economic downturn, increasing the pain of the next recession. Raiding the workers’ compensation fund would increase fees to employers, which would increase the costs of goods and services and decrease wages. Selling government property for pensions would mean that property is not available for public use or to sell for other purposes.

Governor Brown knows this. When she seeks “out-of-the-box” funding increases, the constraint she seeks to escape is really our knowledge that taxes are rising, public assets are shrinking, services are being curtailed, and our options are closing around us.

The only viable answer to Oregon’s pension and budget crisis is to reduce pension benefits for government workers. They enjoy more generous wages and benefits than those of comparable private-sector workers. Older government workers also earn benefits for every hour of work that are far higher than those earned by their younger peers.

The legislature first must shift all government workers, for work not yet performed, to the lower benefit structure that serves as a permanent cap for newer public employees. A 2015 Oregon Supreme Court opinion* fixed a long-term Court error by recognizing that the state can take this basic, equitable step to put all employees on the same basis for work not yet completed.

Then it must make use of another implication of that 2015 decision: that the Supreme Court has wrongly suppressed a set of amendments added to the Oregon Constitution in 1994 that, if followed, would have averted this crisis. The legislature should pass legislation to facilitate the equitable adjustment of excessive pension payments made for more than 20 years on the basis of the Court’s error, and fast-track review of the legislation to the Court.

Finally, the legislature should move all government employees into the type of 401(k), defined-contribution retirement plans that are the only sort available to most taxpayers.

It is far too late for panels tasked with finding ways to fool the public. Oregon’s pension crisis requires fair but real pension payment adjustments. Nothing else can succeed.


* Moro v. State, 357 Or. 167 (2015).

Measure 8 (1994), incorporated at OR. CONST. art. IX, § 10–13.


Scott Shepard is a Salem lawyer and law professor and author of an academic study on Oregon state pensions published August 1, 2017 by the Mercatus Center at George Mason University. He is also an Academic Advisor to Cascade Policy Institute in Portland. A version of this article appeared in The Portland Tribune on September 28, 2017.

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On 25th Anniversary, Charter Schools Have Much to Celebrate

By Kathryn Hickok

America’s charter school movement celebrates its 25th anniversary this month. Since the first charter school opened in St. Paul, Minnesota in 1992, the number of charters nationwide has grown to about 7,000, serving three million students.

Charter schools are public schools that operate according to a charter granted by a sponsoring agency (like a school district, a university, or a department of education). In exchange for independence from many regulations applicable to traditional public schools and unionized school staff, charters agree to standards of accountability for student achievement. This allows charters to focus on innovative ways to meet students’ educational needs.

In a recent commentary for The Wall Street Journal (“Charter Schools Are Flourishing on Their Silver Anniversary,” Sept. 7), the Progressive Policy Institute’s David Osborne noted that “[t]he American cities that have most improved their schools are those that have embraced charters wholeheartedly.”

“New Orleans,” he wrote, “which will be 100% charters next year, is America’s fastest-improving city when it comes to education….The city’s schools have doubled or tripled their effectiveness in the decade since the state began turning them over to charter operators….New Orleans became the first high-poverty city to outperform its overall state in 2015 and 2016.”

Given charter schools’ increasingly recognized ability to use innovative means to raise students’ achievement levels, Oregon lawmakers, school districts, and education professionals should note what’s working both here in Oregon and across the country, and make it easier for Oregon’s charter schools to build on these successes.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Oregon program at Cascade Policy Institute, Oregon’s free market public policy research organization.

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You Can Stop New Health Care Taxes

By Steve Buckstein

The Oregon Health Authority has finally removed nearly 55,000 people from its Medicaid program because an audit found they no longer qualified or failed to complete an eligibility check. At $430 a month per person, this can save taxpayers some $550 million a biennium.

This tremendous savings means that there is even less reason to let some $320 million in new health care taxes go into effect next year.

Why should some Oregonians have to pay a new tax on their health insurance premiums, and why should many hospitals have to pay a new tax on their income that will be passed on to patients?

If you are a registered Oregon voter, you can sign the petition to put these new taxes on the ballot by going to StopOregonHealthCareTaxes.com. Signatures should be returned in the mail no later than October 1, which is less than two weeks away.

Assuming enough signatures are gathered, the Referendum will appear on a special election ballot in January. You will then have a chance to undo what the legislature and the Governor tried to do, which is make health insurance and health care even more expensive than they are now.

So sign the petition, and then vote against these new health care taxes.


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

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Governor Brown Wants Oregonians to “Take One for the Global Team” over CO2

By John A. Charles, Jr.

Oregon Governor Kate Brown has announced her intention to pass legislation in the short session of 2018 to place a regulatory limit on emissions of carbon dioxide by large industrial sources. Once a company exceeds the annual limit, it will have to purchase allowances for additional emissions.

Proponents estimate that the regulations will cost businesses $1.4 billion per biennium. These costs will be passed on to consumers.

Such regulations might be appropriate if there were known environmental or health benefits to reducing carbon dioxide. Unfortunately, such a clear link does not exist. Not only are benefits speculative, but they are global in nature and very long term—possibly centuries in the future.

The costs, however, are very clear. They will be known, immediate, and local. Prices of cement, steel, and millions of consumer products will have to go up.

In essence, the Governor is asking Oregonians to “take one for the global team” in the hope that somebody, somewhere will benefit in the misty future.

This is not likely to be embraced by voters who already feel immense strain from the high cost of housing, health insurance, and public employee pensions.

State legislators have many problems to worry about. Regulating CO2 should not be one of them.


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

 

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Whose Money Is Your Oregon Kicker Refund?

By Steve Buckstein and Kathryn Hickok

State economists have confirmed that individual Oregon income taxpayers will receive kicker refunds next year. Based on the May revenue forecast, more than $463 million will be returned to taxpayers as a credit on their 2018 tax bills, with the average refund being $227.

But with the news that the coming refunds will reduce our tax liabilities, some are criticizing the way the kicker law works, while others argue the money really belongs to the state, not the taxpayers. They argue that as long as any group of Oregonians—or any state government budget item—has a “need” for that money, then the money should go to them instead of back to the individuals who earned it.

Whether the kicker law is good or bad public policy doesn’t change the answer to a more fundamental question: Whose money is it? Is the kicker a rebate for overpaying your taxes or is it somehow the State of Oregon’s money, better left in government coffers? If we can find a better way to restrain runaway government spending, we should do so. But until that day arrives, Oregon’s kicker law is one defense against those who argue that some of the money you earned belongs to someone else just because they “need” it.


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

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“Worker’s Choice” Would End the Unions’ “Forced-Rider” Problem

By Kathryn Hickok and Steve Buckstein

This is National Employee Freedom Week (August 20-26), a national effort to inform union members about their freedom to opt out of union membership if they choose and to make decisions about labor representation and the use of their union dues.

National Employee Freedom Week (NEFW) conducts surveys of union members and households. One significant finding is that a strong majority of union members nationwide agree that if members opt out of paying union dues and fees, they should represent themselves in negotiations with employers. Union leaders argue labor laws require them to continue representing workers even after they stop paying dues. “Worker’s Choice” would end this so-called free-rider problem (which is really a forced-rider problem).

The Mackinac Center for Public Policy explains: “Without requiring a complete overhaul of collective bargaining laws, [Worker’s Choice] can free unions from having to provide services to employees who do not support them, and allow individual employees to represent themselves and negotiate independently with their employers.”

According to the NEFW survey, two-thirds (66.9%) of Oregon union members agree that workers should be able to represent themselves, and they don’t want to force unions to represent non-dues payers. It remains for future court decisions, or other political efforts, to end union compulsion in Oregon. Until that happens, Worker’s Choice should continue to be brought to the attention of union members and the public.


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

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Time to Stop Forcing Union Membership

By Steve Buckstein and Kathryn Hickok

This week (August 20-26) is National Employee Freedom Week, a national effort to inform union members about their freedom to opt out of union membership if they choose and to make decisions about labor representation and the use of their union dues. The effort “empowers union employees with information to make the decision about union membership that’s best for them, including identifying non-union alternatives that better suit their needs.” An interactive map at employeefreedomweek.com lets workers in Oregon and other states find links to information helpful to those wanting more employee freedom. More than 100 organizations across the country, including Cascade Policy Institute in Portland, are affiliated with the annual campaign.

“Right to Work” states are states in which union membership may not be enforced as a condition of employment. Workers may choose to join a union or not, without fear of losing employment, salary, benefits, or seniority. Workers in the 22 states that are not yet Right to Work, such as Oregon, do not have full freedom to opt out of union membership. However, they do have the right to become agency fee payers, to identify as religious/conscientious objectors, or to require that their dues not be used for political purposes. According to National Employee Freedom Week’s website, “many employees are thrilled to learn that alternative professional associations provide better benefits and professional development opportunities for a fraction of the cost of union membership.”

Last year a survey of union members and union households found that about two-thirds nationwide agree that if members opt out of paying all union dues and fees, they should represent themselves in negotiations with their employer, an option known as “Worker’s Choice.” By the same margin (66.9% to 33.1%), Oregonian union members support Worker’s Choice, too. Worker’s Choice would end the so-called free-rider problem (really a forced-rider problem) commonly touted by union leaders, who argue that labor laws require them to continue representing workers even after they stop paying all dues and fees.

Oregon labor law is similar to that of many states that don’t allow individual workers to represent themselves if a union has organized their workplace. But now we know that most Oregon union members want this to change. They want workers to be able to represent themselves, and they don’t want to force unions to represent these non-dues-payers.

You would think the unions would be all over the Worker’s Choice solution, but they aren’t. Unions want to be forced to represent all workers because under current labor law, states like Oregon that don’t have Right to Work require that non-union members still contribute the non-political portion of dues to their unions to cover bargaining and representation costs. The unions want the money, pure and simple. Of course, they also wanted compulsory political dues, but in 1988 the U.S. Supreme Court Beck decision gave all workers the right to opt out of those, thanks to now-Oregonian Harry Beck’s decades-long battle to preserve his free speech rights. He tells his story at oregonemployeechoice.com.

A case heard by the U.S. Supreme Court last year (Friedrichs v. California Teachers Association) could have freed all public sector workers nationwide from paying compulsory union dues based on the argument that such compulsion violates their First Amendment rights to free speech and free association. Before the case could be decided, Justice Antonin Scalia died, leaving a four-four tie vote in the Court. This resulted in upholding a lower court decision denying ten California public school teachers their rights to be free of union compulsion.

This union compulsion brings to mind the well-known statement by Thomas Jefferson:

“To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.”

That is what the Supreme Court left in place—the right of public sector unions to compel workers to fund the propagation of ideas they disbelieve. It remains for future court decisions, or other political efforts, to end union compulsion in Oregon and nationwide. Until that happens, National Employee Freedom Week will continue to bring this injustice to the attention of union members and the public.


Steve Buckstein is Senior Policy Analyst and Founder at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. Kathryn Hickok is Publications Director at Cascade. A version of this article originally appeared in The Portland Tribune on August 24, 2017.

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The Right to Choose or Reject Union Representation Respects Workers

By Kathryn Hickok

Why do many workers choose to opt out of union membership? Some believe they can make better use of their money than giving it to a union. Others “vote with their feet” against what they perceive to be poor union service or negotiating results. Still others leave because they oppose their unions’ political positions. They simply don’t want to support an organization that promotes different political beliefs from their own.

August 20-26, 2017 is National Employee Freedom Week, a national effort to inform union members about their freedom to opt out of union membership if they choose and to make decisions about labor representation and the use of their union dues.

Many recent scientific surveys have been conducted to see how the public and members of union households think about these issues. In 2015, National Employee Freedom Week asked members of union households this question:

“Are you aware that you can opt-out of union membership and of paying a portion of your union dues without losing your job or any other penalty?” 

Surprisingly, over 27 percent of Oregon union household members surveyed that year answered No. This implies that a large number of Oregon’s current union membership of 228,000 may not realize that membership and some dues are optional.

The right to work without third-party interference is more than an economic issue; it is a profoundly moral one as well. In America, no one should be compelled to join a union or to pay union dues in order to hold a job. For more information about how employee choice can benefit Oregon workers, visit oregonemployeechoice.com.


Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Oregon Takes a Big Step to Battle Opioid Overdoses

By Steve Buckstein

For a variety of reasons, many Americans are becoming addicted to both legal and illegal opioid drugs, risking overdose and death.*

Oregon just made it easier for friends and family members of those at risk to save their lives by administering what is known as the “overdose drug” naloxone. It “counteracts the potentially lethal effects of heroin, oxycodone and other abused narcotics.” It has become relatively easy to use in the form of a nasal mist and does not require a physician prescription.

Passed overwhelmingly in both the Oregon House and Senate, House Bill 3440 was signed into law by the Governor last week. Among other provisions, the law shields persons “acting in good faith, if the act does not constitute wanton misconduct” from “civil liability for any act or omission of an act committed during the course of distributing and administering naloxone….”

Adoption of such so-called “good Samaritan” laws in a number of states has been found to reduce opioid-related deaths.

Some critics believe that such laws encourage drug use and hamper law enforcement efforts. But, if fighting the drug war comes at the expense of lives that could readily be saved, Oregonians should reject that war, and celebrate laws that make it easier to help those harmed by dangerous drugs.

* The Wall Street Journal just editorialized on the opioid epidemic on August 15, noting that overdose deaths are rising much faster in certain states like Oregon that opted into ObamaCare’s Medicaid expansion.


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

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Portland’s latest attempt to centrally plan transportation patterns is backfiring

By Jessica Miller

Portland has a longstanding history of attempting to socially engineer people’s transportation patterns, and the “Better Naito” project is no different.

In 2015, a group of students from Portland State University created the idea of “Better Naito” as their capstone project. From April 28th until September 30th each year, Portland planners intend to enhance the lives of pedestrians and bikers along the Waterfront by reducing car capacity from two lanes to one on SW Naito Parkway and transforming one lane into an open area for walkers and bikers. The project was implemented and paid for by the Portland Bureau of Transportation (PBOT), Portland State University (PSU), Better Block PDX, and $350,000 from the Portland City Council.

Advocates of “Better Naito” claim that “[f]eedback from the public was very positive,” but there is more to the story. After receiving copious amounts of negative feedback from business owners who see fewer shoppers, employees who experience longer commutes, and shoppers who can’t reach desired downtown destinations, the Portland Businesses Alliance created a petition to the Portland City Council in opposition to “Better Naito.” They claim the project is “harmful to our city’s economy and extremely disruptive to commuters.”

It’s no surprise Portland’s latest attempt to centrally plan commuters’ lives is backfiring, but that hasn’t stopped advocates from making the project annual. To voice your opinion on “Better Naito,” visit the Portland Business Alliance’s online petition.


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

 

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Cascade Policy Institute Endorses Referendum 301 to Stop New Health Care Taxes on Oregonians

August 2, 2017

FOR IMMEDIATE RELEASE

Media Contact:
Steve Buckstein
(503) 242-0900
steven@cascadepolicy.org

PORTLAND, Ore. – The Cascade Policy Institute Board of Directors has voted to support State Referendum 301 which seeks to refer certain taxes approved in House Bill 2391 to the November 6, 2018 General Election ballot (unless the date is changed to January 23rd by an Act of the legislature).

The Referendum primarily seeks to refer some $333 million in new taxes, in the form of a 1.5 percent tax on health insurance premiums and a new 0.7 percent tax on certain hospitals. The Referendum does not affect the rest of HB 2391 which specifies how the state collects money to pay for the Oregon Health Plan, the state’s version of Medicaid, through assessments and taxes on health care providers.

Signatures must be filed with the Secretary of State’s office no later than October 5, 2017. The petitioners request that all signatures be returned to them no later than October 1.

Cascade Senior Policy Analyst and Founder Steve Buckstein has written in favor of the Referendum and now makes the following statements about why the Institute believes that Oregon voters should sign it:

• The Oregon legislature passed, and the Governor signed, a bill designed to generate some $550 million in new taxes on health care, hospitals, and health insurance premiums. Ostensibly, this money is needed to help balance the budget, even after strong revenue growth, and to help maintain the controversial Medicaid expansion.

• Since the bill’s passage, it has become clear that that nearly half the Medicaid recipients checked in recent months no longer qualify for benefits. This alone eviscerates the supposed need for most or all of these new tax revenues.

• Referendum 301 only targets the most egregious of the taxes in HB 2391. It allows Oregon voters a say in whether or not they want to slap a sales tax on health care.

• According to an Oregonian editorial, when word got out that someone might refer these new taxes to the ballot, legislative leaders showed “how they’re willing to protect that new revenue at all cost—even hijacking the referendum process at the core of Oregon’s identity.”

• The Oregonial editorial went on to say, “Worse, however, the bill tosses aside the usual process requiring impartial groups to describe the measure on the ballot and in the voter’s pamphlet. Instead, [they gave] all that power to a committee made up of four Democrats and two Republicans.” They also moved the referendum vote up from November 2018 to a January special election that will cost taxpayers more than $3 million. As of August 2, the Governor has not yet signed this referendum hijacking” bill, but is expected to do so.*

Petitions can be downloaded from StopHealthCareTaxes.com. They should be properly signed by registered Oregon voters and returned no later than October 1 to:

Stop Healthcare Taxes
29030 SW Town Center Loop E, Suite 202, #514
Wilsonville, OR 97070

Questions to the petitioners can be addressed to info@stophealthcaretaxes.com.

* The  Governor did sign the bill changing the election date. The Referendum did collect enough signatures, and is now Ballot Measure 101 on the January 23, 2018 Oregon ballot. A No vote will keep these taxes from going into effect.

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Cascade Policy Institute is a 501(c)(3) non-partisan, non-profit public policy research organization. Its mission is to promote public policies that foster individual liberty, personal responsibility and economic opportunity in Oregon.

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Oregon’s New Health Care Taxes Are Unjustifiable

By Lydia White

Soon after the Oregon Legislature passed a bill expected to generate $550 million of tax revenue to help pay for Medicaid, the state found nearly 45% of all Medicaid recipients are currently ineligible to receive health care benefits.

The bill imposes a sales tax on health insurance premiums and hospital revenue that will be borne by Oregonians. For example, 217,000 people in the individual market and over 11,000 college students who buy their own health insurance are among the hundreds of thousands of Oregonians who will pay. Local Oregon school districts will pay some $25 million and community colleges will likely be forced to raise tuition costs, all because of these new taxes.

If the state hadn’t awarded Medicaid benefits to over 37,000 unqualified people, costing $191,000,000, wasted over $300,000,000 on the failed Cover Oregon insurance exchange website, or spent an additional $166,700,000 on another failed IT system, even proponents of these new sales taxes would have had a hard time justifying them.

Fortunately, Rep. Julie Parrish (R) and two other state legislators are gathering signatures to refer these taxes to the ballot at what might be a January special election. They need almost 59,000 voter signatures by October 5th to qualify for the ballot.

To help hold Oregon’s political leaders and health care bureaucracies responsible, download and sign a petition at StopHealthCareTaxes.com.*

* The Referendum did collect enough signatures, and is now Ballot Measure 101 on the January 23, 2018 Oregon ballot. A No vote will keep these taxes from going into effect.


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

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Let Parents Wield School Spending Power

By Kathryn Hickok

Are we missing the trees for the forest in Oregon school funding and education reform debates?

Media reports, school districts, and political leaders usually focus on the big picture: reaching a 100% high school graduation rate so all children have the best chance in life. That’s a great goal. Frequently lost, however, is the fact that every child is an individual. The focus of real-life Oregon parents is helping their kids reach their potential in light of their specific needs and gifts.

These two perspectives shouldn’t be at odds. In fact, the second could drive the first―if more parents were empowered to make meaningful choices for their children’s education.

According to the National Education Association’s Rankings and Estimates report for 2016 and 2017, counting local, state, and federal funding, current expenditures per Oregon student in Average Daily Attendance are estimated to be $13,230, more than 33 other states. Adding in spending for capital outlays and interest payments, that number increases to $14,911 per student.

Yet, the National Association of Education Progress reports that only 34% of Oregon fourth-graders tested “proficient” in reading in 2015; and Oregon has the third-worst high school graduation rate in the country.

No one disputes the need for improvements to public schools. But children who need help today—first to learn the basics (like reading and math) and then to graduate from high school—should get the help they need now. What we ought to do is give Oregon students the power of choice to find their own paths to success.

For lower-income parents, the stakes are high. Nearly half the children born into poverty will stay in poverty as adults. Key to changing that outcome is an education that leads to high school graduation and future employment. Unlike parents with greater means, who can move to another neighborhood or pay out-of-pocket for private schools, lower-income parents often find their children trapped in public schools that do not meet their kids’ needs. Education Savings Accounts could change that.

Six years ago, Arizona became the first state to pass an Education Savings Account (ESA) law for some K-12 students, and it recently expanded eligibility to eventually include all Arizona children. Florida, Mississippi, and Tennessee also have ESA programs limited to certain students, such as those with special needs.

An ESA is analogous to a limited-use debit card for qualifying education expenses. It gives parents who want to opt out of a public school a portion of the per-student state funding to spend on their child’s education in other ways. ESAs can fund a wide variety of education-related expenses, including tuition, tutoring, and supplemental materials. Money not used in one year can be rolled over for future education expenses, even college.

But if ESAs let parents spend education funds outside the public school system, would ESAs drain money from public schools? Not necessarily. Schools are funded by local, state, and federal money. ESAs would be funded by only part of the state component. The amount of the ESA deposits is negotiable and would be the biggest driver of their fiscal impact.

Legislators can design an ESA program so that it would be revenue neutral to public schools, or even create a net increase per student who remained in the system. If students leaving public schools took less funding with them than would have been spent if they had remained, schools could reduce their class sizes without a negative impact on per-student funding.

No one can craft a school system that meets every child’s needs. Statistical data analysis and bureaucratic goal-setting can’t ensure that any particular child makes it to high school graduation or excels in a career. But most parents are keenly aware of their own children’s needs. Giving parents power to find the right fit for their kids would make a world of difference, as any parent knows.

Focusing on the forest (the public school system), Oregon is missing the trees (kids). We should expand the role of parents in achieving better educational outcomes for their children. We’ve tried everything else. Parental choice is the future of education reform, and Education Savings Accounts are a fiscally responsible policy solution that can give all kids options now.


Kathryn Hickok is Publications Director 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, partial tuition scholarships to Oregon elementary students from lower-income families. A version of this article originally appeared in The Portland Tribune on July 18, 2017.

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Moving Beyond Symbolism

By John A. Charles, Jr.

Last week Governor Kate Brown gave a speech to Portland activists promising to secure carbon-pricing legislation in next year’s one-month legislative session. A few days later, she met with Interior Secretary Ryan Zinke and urged him to maintain or expand the Cascade-Siskiyou National Monument in Southern Oregon.

Clearly, the Governor is getting bad advice about environmental priorities. Carbon dioxide is not a pollutant; it’s a beneficial gas that is essential for plant growth. If the Governor continues Oregon’s “war on carbon,” she will impose great costs on the economy with no offsetting benefits.

Similarly, there was no need for the Governor to lobby on behalf of national monument expansion when Oregon already has plenty of federal land in protected status. She should have used her time with Secretary Zinke to argue for improved management of BLM lands in Oregon, including forest thinning and increased timber harvesting. Without active management, all public lands—including parks, wilderness areas and national monuments—will continue to be threatened by Oregon’s top environmental risk: catastrophic wildfires.

Holding photo ops to tell her supporters exactly what they want to hear is not leadership. The Governor needs to get serious about environmental problems.


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

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Oregon’s new minimum wage law will hurt the people it aims to help

By Lydia White

Just prior to Oregon’s July 1 minimum wage* increase from $9.75 to $11.25 (Portland Metro Area), a team of researchers from the University of Washington produced a study, published by the National Bureau of Economic Research, that measures the effects of Seattle’s $13 minimum wage. In just nine months, Seattle wages rose substantially, from $9.47 in 2014, to $11 in 2015, to $13 in 2016 (an increase of 37.3%), and again to $15 on the first of this year.†

Unique to this study is a data set collected by Washington’s Employment Security Department which tracks hours worked in addition to earnings, making this particular study the first of its kind. Washington and Oregon are among four states that track these data.

The study‡ found that the city’s mandates resulted in 5,000 fewer jobs around Seattle. The average low-wage employee saw 3% higher hourly wages, but 9% fewer hours worked, resulting in a net loss of $125 per month. For low-income households especially, an annual loss of $1,500 is significant.

Jacob Vigdor, one of the study’s authors, said, “Traditionally, a high proportion of workers in the low-wage market are not experienced at all: teens with their first jobs, immigrants with their first jobs here.”

Wages are prices, or market signals, that indicate the value of labor productivity employees create. Low-skilled, low-paying jobs provide the opportunity to acquire knowledge and experience they were previously without, setting up workers for their next, potentially higher paying jobs. Henry Hazlitt, author of Economics in One Lesson, wrote:

“The more the individual produces, the more his services are worth to consumers, and hence to employers. And the more he is worth to employers, the more he will be paid. Real wages come out of production, not out of government decrees.”

The least skilled are further disadvantaged when artificially high price floors are implemented. As described in the UW study, when the cost of employing a worker exceeds the value that worker creates, employers are forced to reduce hours or eliminate positions within their business by laying off employees, who are often replaced by automation. These alternatives harm low-wage employees.

Additionally, employers are less likely to take a chance by hiring an unskilled worker and instead will search for only the most qualified candidates. Since teenagers are naturally less skilled due to lack of work experience, these policies create higher youth unemployment. A study last December by Cascade Policy Institute examined these and other “unintended consequences” of the minimum wage on youth.

Instead of, or in addition to, cutting costs of labor, employers increase prices of their goods or services. Consumers may choose to forgo such products or reduce their levels of consumption, in turn decreasing the need for labor. When the price of goods inevitably catches up to the employee’s higher wages, they find the purchasing power of their earnings has diminished.

Furthermore, large businesses can more easily absorb wage increases by operating within thinner profit margins or relocating to a region with a lower minimum wage. Local mom-and-pop stores don’t enjoy that same flexibility and must close their doors. With less competition, larger businesses have more power to raise prices.

When economists warn against the costs associated with the minimum wage, it’s not to protect greedy capitalists; it’s to protect both the worker and the small business owner from being priced out of the market.

For the benefit of all Oregonians, political leaders should learn from our northern neighbors and create an environment that doesn’t punish low-wage workers and the businesses that employ them. They can start by repealing the state’s onerous minimum wage law.


*Oregon’s and Washington’s minimum wages vary depending on region, population, benefits, tips, and business size. The minimum wages discussed here refer to those of Seattle and the Portland Metro Area.

†The latest 2017 increase was not included due to incomplete data.

‡The study used a “relatively conservative” $19 per hour low-wage threshold to account for the spillover effect of “miscoding jobs lost when they have really been promoted to higher wage levels….”


Lydia White is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in The Coos Bay World on July 10, 2017.

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Stop Health Care Taxes dot com

By Steve Buckstein

The Oregon legislature just passed, and the Governor signed, a bill designed to generate some $550 million in new taxes on health care, hospitals, and health insurance premiums. Ostensibly, this money is needed to help balance the budget, even after strong revenue growth, and to help maintain the controversial Medicaid expansion.

According to an Oregonian editorial, when word got out that someone might refer these new taxes to the ballot, legislative leaders showed “how they’re willing to protect that new revenue at all cost—even hijacking the referendum process at the core of Oregon’s identity.”

“Worse, however, the bill tosses aside the usual process requiring impartial groups to describe the measure on the ballot and in the voter’s pamphlet. Instead, [they gave] all that power to a committee made up of four Democrats and two Republicans.”

They also moved the referendum vote up from November 2018 to a January special election that will cost taxpayers more than $3 million.

The petitioners have just 90 days to collect nearly 59,000 valid voter signatures to refer the most egregious of these new taxes to the ballot.

These allow insurance companies to pass on to many of us, their policyholders, a new 1.5 percent tax on health insurance premiums in the state, at a time when premiums are rising out of sight already.

If you want to vote on the new premium taxes, go to StopHealthCareTaxes.com, download, sign and return a Petition sheet today.*

* The Referendum did collect enough signatures, and is now Ballot Measure 101 on the January 23, 2018 Oregon ballot. A No vote will keep these taxes from going into effect.


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

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Floor Memo Regarding Bond Funding for the Elliott State Forest

TO: Members of the Oregon Legislature

FM: John Charles for Cascade Policy Institute

RE: SB 5505/Elliott State Forest Bonds

DT: July 5, 2017 

SB 5505 includes bond funding for many worthy projects. Unfortunately, it also includes authorization for the sale of $101 million in Certificates of Participation for the purpose of “buying out” part of the Elliott State Forest (ESF), which we already own.

The State Land Board chose this option in May rather than taking a cash offer of $220.8 million to sell most of the ESF, which is losing money for schools.  While this “feel good” measure appeased many environmental interests, what has never been discussed publicly is the long-term opportunity cost of borrowing $101 million and paying $199 million in debt service over 25 years, instead of investing $220.8 million of new money into the Common School Fund.

The graphic below attempts to do that over a 50-year period, using an average total return rate of 5.58% (the actual rate over the past 10 years). The gap between the blue and red lines is the estimated loss to schools in the annual payouts from the CSF. Note that the gap widens over time and can never be made up. Over the lifetime of the Fund – which is infinity – your approval of the bond sale will result in many billions of dollars lost to Oregon schools.

READ MORE HERE

 

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When Government Gets It Backwards, Reread Jefferson

By Steve Buckstein

Two hundred and forty-one years ago this July 4, the world was gifted with one of the most significant political documents ever written. When Thomas Jefferson authored the Declaration of Independence, he boldly stated:

“We hold these truths to be self-evident; that all men are created equal, that they are endowed by their Creator with certain inalienable rights, among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.”

Jefferson realized that government and society are not synonymous. He argued that government’s purpose is to protect the inalienable rights of the individuals that make up society. He understood that such rights are not granted by government; and that any rights government does claim to grant are really claims on someone else’s right to life, liberty, or property. What would he think of today’s politicians in Washington, D.C. and Salem, Oregon who propose law after law ordaining right after right?

Jefferson also understood that he wasn’t elected President in 1801 to “run the country.” He was elected President to run the executive branch of a limited, constitutional government that coincidentally he helped to create. To reinforce these concepts, why not read the Declaration again this Independence Day and consider the power it had—and still has—to change our world for the better.


Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization. He was the 2016 recipient of the Thomas Jefferson Award by the Taxpayer Association of Oregon and the Oregon Executive Club.

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Are Smartphones in Class a Problem or an Opportunity?

By Steve Buckstein

To hear some teachers talk, you would think before smartphones became ubiquitous in their classrooms that every student sat politely and paid attention every minute of the day. Of course, anyone who was ever a student knows the messy truth about this assertion. So, a little perspective may be in order, both about the evolution of the telephone and what should be the evolution of our educational system.

It wasn’t too long ago that if our parents or grandparents wanted to make a phone call from home, they would pick up the receiver and ask the monopoly “phone company” operator to place their calls. Later, how glorious it was that we could use our rotary phones to spin out our own calls, even long-distance ones if we could afford the high per-minute costs. Then came digital phones, and finally cell phones became affordable to the masses. But even the early cell phones had limited uses.

You may not remember, but none of us had any cell phone apps before 2008, because there weren’t any. None. Imagine: All you could do on your cell phone before 2008 was make calls, maybe text, and maybe connect to the World Wide Web on a slow Internet connection.
Just nine years later, more than two billion people worldwide use apps on their smartphones. You may have dozens of apps on your phone today and, even if you only use a handful of them regularly, that’s a world away from what it was like before 2008. Lots of things are a world away from what they were like before 2008—except for public education.

Consider the children in our schools today. Many of them have never known a world without smartphones and their apps. Rotary telephones, even landlines, are likely just historical oddities to them. Much of their world is new, except the way we adults try to educate them. First, we assign them to a school based on their ZIP code; then we sit them down in rows, in a classroom with kids their same age, all in front of one teacher lecturing about some subject they may or may not find interesting and relevant to their lives.

We say that we want our kids to learn how to take advantage of technology, take STEM courses, and be prepared for the new careers awaiting them. So why do we see their use of that technology every day in school as a problem? They’re not paying attention to the teacher! They’re watching their screens instead of sitting politely in rows listening to the math lesson at 10 am, or the history lesson at 2 pm. The very technology that we want them to be able to use in their careers is enabling them to tune out the lessons we think they need to learn now before entering those careers.

We know that they’ll likely find value in many of these subjects later in life; but if they can’t learn those lessons in ways that are relevant to them now, they may never learn them at all; or they may learn them too late to avoid painful life experiences between now and then.

As the nation’s largest teachers union recently documented, taxpayers pay nearly $15,000 every year for all the costs associated with each student attending Oregon public schools—more than in 33 other states. Rather than let a smartphone costing a few hundred dollars get in the way of any student’s $15,000 education, we need to find ways to let it supplement or enhance their learning experience.

As one high school teacher put it in an Atlantic magazine article on this subject last year,

“If educators do not find ways to leverage mobile technology in all learning environments, for all students, then we are failing our kids by not adequately preparing them to make the connection between their world outside of school and their world inside school.”

One systemic way to think about how smartphone technology can enhance learning is through Education Savings Accounts. Unlike school vouchers that act more like the rotary telephones of the school choice world, ESAs act more like the smartphones of that world, complete with countless apps that can help students learn virtually any subject, often at a fraction of the cost associated with traditional brick and mortar schools.*

While vouchers only let parents pay for private school tuition, ESA funds may also be used for other approved educational expenses, such as online learning programs, private tutoring, community college costs, and other customized learning services and materials.

Also, while voucher funds all go to private school tuition or are lost to the families, funds remaining in ESA accounts each year may be “rolled over” for use in subsequent years, even into college. This creates incentives for families to “shop” for the best educational experiences at the lowest cost, as well as incentives for schools and educational programs to price their services as low as possible, not as high as possible as might be done under a voucher program.

The bottom line is that, while smartphones in school can be a distraction, they can also pave the way to better, more efficient use of educational resources. It is up to us as adults to harness their power for good instead of just bemoaning their power to distract.


* To see how Oregon’s former State Treasurer sees smartphones undercutting the entire economic model of higher education (and by inference K-12 education), watch this 59-second video.


Steve Buckstein is Senior Policy Analyst and Founder of Cascade Policy Institute, Oregon’s free market public policy research organization. This Commentary is adapted from a portion of the author’s written and oral testimony at the Oregon State Senate Education Committee’s Informational Hearing on Education Savings Account bill SB 437 on June 13, 2017.

 

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Critiquing Minimum Wage Laws Is About Protecting the Working Man (or Woman)

By Lydia White

A team of researchers from the University of Washington produced a study, published by the National Bureau of Economic Research, that measures the effects of Seattle’s minimum wage requirement of $13 per hour.

The study* found that the city’s mandates resulted in 3% higher hourly wages, but 9% fewer hours worked. As a result, the average low-wage employee lost around $125 per month. For low-income households especially, an annual loss of $1,500 is significant.

Jacob Vigdor, one of the study’s authors and a professor at UW, said, “Traditionally, a high proportion of workers in the low-wage market are not experienced at all: teens with their first jobs, immigrants with their first jobs here.”

Low-skilled, low-paying jobs provide the opportunity to acquire knowledge and experience, setting up workers for their next, potentially higher-paying jobs. The least skilled are further disadvantaged when artificially high price floors are implemented. Employers instead search for only the most qualified candidates, leaving more teens jobless, as Cascade Policy Institute’s study on the effects of the minimum wage on youth reported last December.

When economists warn against the costs associated with the minimum wage, it’s not to protect greedy capitalists; it’s to protect the worker from being priced out of the market.

For the benefit of all Oregonians, political leaders should learn from our northern neighbors and repeal the state’s onerous three-tiered minimum wage law.

*The study used a “relatively conservative” $19 per hour low-wage threshold to account for the spillover effect of “miscoding jobs lost when they have really been promoted to higher wage levels….”


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

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Trump’s apprenticeship message to young adults: “There is dignity in every honest job”

By Kathryn Hickok

President Donald Trump stressed the dignity of work in a speech last Friday promoting his Apprenticeship Initiative for young workers. “Today, this is the message I want every young American to hear: there is dignity in every honest job, and there is nobility in every honest worker,” Trump said.

This is a timely message. According to a recent report by the American Enterprise Institute, the workforce participation rate for men 25-54 has dropped from 96% in 1967 to about 88% in 2016, an all-time low. Young men, especially with less education, are increasingly opting out of the workforce, and not just due to a weak economy. Other causes of unemployment among men include “a lack of postsecondary education, dependence on benefit programs, opioid dependency, the rising prevalence of criminal records, a lack of available jobs in economically distressed areas, and weakening cultural norms [that expect able-bodied men to be working].”

Public policies and government regulations should make it easier—not harder—for young people to develop marketable skills and experience. When young adults at the point of entry to work lose the belief that earning a paycheck is better than the ease of drawing a benefit check, the human cost is significant. Renewing a moral sense of the value of labor can refocus policy makers onto solutions promoting gainful employment, the pride of accomplishment, and financial self-sufficiency over dependence on government programs.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Oregon program at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Freedom in Film: Shane (1953)

By Kathryn Hickok

“That’s the trouble with this country. There ain’t a marshal within a hundred-mile ride.”

Considered by many to be the greatest Western of all time, Shane (1953) is a Father’s Day-worthy classic about a young boy’s relationships with his father and a mysterious gunslinger. A tale of the era of cattle drivers, the open range, and gunfighters settling disputes, the visually stunning Shane was filmed on location near Jackson Hole, Wyoming.

Alan Ladd plays Shane, a man with a past who works as a farm hand for Joe Starrett (Van Heflin) and his wife Marian (Jean Arthur). Starrett is the unofficial leader of seven homesteading families, who want to put down roots and create something bigger than themselves―a future built from hard work and devotion to each other. They want to build a town, with “a church and a school,” a place where people can come and raise families.

The settlers’ vision of civilization conflicts with the desires of the cattle barons, who want to keep the range open. The barons reject the settlers’ claims to private property, stampeding through plowed fields and fences to terrorize people into giving up and leaving. When the barons resort to lawless violence, the homesteaders’ last chance of winning is Shane.

Starrett and Shane are each men of courage, self-restraint, and high ideals. They seek prudent, honorable solutions to the settlers’ problems; and in different ways they need to work together to survive. Shane celebrates individual initiative, creativity, free enterprise, and the classic opportunity of the American West.

But it is also clear that no one succeeds alone. Joe and Marian Starrett are a team. Their farm is only possible because they have each other, as Joe points out with loving pride. Their family also needs neighbors. The farmers rely on each other for moral and physical support and protection. The rights of individuals are only secure as long as honest people defend them. And the whole community needs the act of selfless courage that only Shane can pull off.

The lawless days gradually give way to civilization; but only through the courage of homesteading families determined to turn the Wild West into a peaceful, self-sufficient, hard-working community. The Starretts’ young son Joey idolizes Shane, but Shane steers him away from the false glamour of the lone ranger. When Shane rides off into the sunset, he tells Joey, “You go home to your mother and father and grow up to be strong and straight.” As Shane exits, the day of the gunfighter is over. The family now guards the range.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Oregon program at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article was originally published in August 2013.

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Who says Oregon pays public school teachers more than other states? The National Education Association, that’s who!

By Steve Buckstein

As Oregon legislators wrestle with how much money to spend on public education, advocates claim that we spend too little compared to other states. They demand that legislators spend more, and raise taxes to do it. But, according to the nation’s largest teachers union, the reality is quite different.

As I noted recently, in its Rankings & Estimates report for 2016 and 2017, the National Education Association says that Oregon spends more per student than 33 other states: $13,320 per Average Daily Attendee versus $12,572 nationally.

Another interesting finding in the NEA report is how much Oregon pays its public school teachers. In 2015-16 it shows the average teacher salary in the country was $58,343, compared to $60,459 here in Oregon. We spend three percent more on teacher salaries than the national average.*

But, the report also shows that our per capita personal income is nine percent less than the national average: $48,783 versus $43,783.

So, while we pay our teachers three percent more, we do that out of incomes that are nine percent less than the average American. Add those two numbers together, and it’s clear that based on our ability to pay we compensate Oregon teachers very well.

All this data add weight to the argument that we don’t need new taxes to better fund public education. We fund it very well already.


*“Where applicable, ‘average teacher salary’ includes the contract amount plus 6 percent for the employer portion of retirement contributions.” Page 146 of the NEA report.


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

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Testimony in Favor of SB 437 – The Educational Opportunity Act: “The Power of Choice”

By Kathryn Hickok

Director, Children’s Scholarship Fund-Oregon

Dear Chairman Roblan and Members of the Senate Education Committee:

My name is Kathryn Hickok, and I am director of the Children’s Scholarship Fund-Oregon. For almost twenty years our nonprofit program has provided privately funded partial-tuition elementary scholarships to children from lower-income Oregon families. As CSF-Portland, we originally served Washington, Multnomah, and Clackamas counties. Our program area now includes the entire state of Oregon. We are currently sponsoring students from Beaverton to Bend and Albany to Medford.

The Children’s Scholarship Fund-Oregon is a permanent program of Cascade Policy Institute and part of the Children’s Scholarship Fund national network of scholarship granting organizations (www.scholarshipfund.org). CSF and its partner programs are committed to empowering families in need with the ability to choose the K-8 schools that best meet their children’s needs, regardless of their ability to pay or the neighborhoods where they live. To be eligible for a scholarship, families must demonstrate financial need according to standards similar to the Federal free and reduced price lunch program. Our scholarships are financed through the generosity of local Oregon donors and matching grants from the national Children’s Scholarship Fund.

Our experience with the educational choices made by the lower-income Oregon families participating in our program demonstrates several key points relevant to this bill:

First, lower-income parents want to take charge of their children’s futures through educational opportunity; and when they are given a real choice, they do so. While their financial means are limited, our parents are knowledgeable about their options and determined to make any sacrifice to raise their children to be well-educated, responsible, and successful adults. Parents in our program value high-quality education as the way out of poverty for their children and make the commitment and sacrifice of paying a substantial portion of their tuition themselves.

Second, demand for broader educational opportunities in Oregon is real. When our program began in 1999, the parents of more than 6,000 children applied for only 550 available scholarships. Weekly, parents call and email me because they want to find the right educational fit for their children. It could be a specialized program or school tailored to their learning or physical needs, or they could be looking for educational opportunities not available in the public school assigned to them by their home address. Senate Bill 437 would give Oregon families greater power to choose among the broad range of educational choices and learning opportunities currently available, or available in the future, using money the state already allocates for their children’s education.

Third, it does not take a lot of money to change a child’s life. Our scholarships average about $1,500. That small amount can make the difference in allowing children to attend schools they love, that motivate them to do their best, and that foster their individual talents. Education Savings Accounts would make an even greater, empowering difference for parents in where they send their children to school and how they tailor their kids’ entire educational experience to their unique needs and talents.

The benefits of an Education Savings Account program for Oregon families are not theoretical for us. As a charitable scholarship program, CSF-Oregon helps parents to choose the schools best suited to their children’s needs. This bill extends educational options to more children in our communities. It will make a real and immediate difference in thousands of lives, just when they need it the most.

Respectfully,

Kathryn Hickok

Director

Children’s Scholarship Fund-Oregon

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Education Savings Account Informational Hearing Testimony in Favor of SB 437

Before the Senate Education Committee

By Steve Buckstein
Cascade Policy Institute

Chair Roblan and members of the Committee, my name is Steve Buckstein. I’m Senior Policy Analyst and Founder at Cascade Policy Institute, a public policy research organization based in Portland.

I want to share some thoughts about the value of Education Savings Accounts in general, and SB 437 in particular, which we’ve branded the Educational Opportunity Act: The Power of Choice.

Next, Professor Eric Fruits will briefly discuss the Fiscal Impacts of the bill.

Finally, you’ll hear from Oregon’s 2012 Mother of the Year, Bobbie Jager, about the importance of providing different educational options for different children.

School Choice programs allow students to choose schools or other educational resources and pay for them with a portion of the tax funding that otherwise would go to the public school assigned to them by their ZIP code.

While school choice is popular with large segments of the public, opponents worry that specific programs like vouchers or Education Savings Accounts may drain funds from the public school system.*

What these concerns overlook is that public funding for K-12 education should actually help educate students, not simply fund schools whether or not they meet specific student needs.

The latest and most versatile school choice programs being enacted across the country are Education Savings Accounts. Unlike vouchers, which only let parents pay for private school tuition, ESA funds may also be used for other approved educational expenses, such as online learning programs, private tutoring, community college costs, and other customized learning services and materials.

Also, while voucher funds all go to private school tuition or are lost to the families, funds remaining in ESA accounts each year may be “rolled over” for use in subsequent years, even into college. This creates incentives for families to “shop” for the best educational experiences at the lowest cost, as well as incentives for schools and educational programs to price their services as low as possible, not as high as possible as might be done under a voucher program.

Five states already have limited ESA programs. Nevada passed a near-universal ESA program in 2015, but its legislature has yet to fund it. In November 2015 your Committee heard from the author of that bill, 16-year public school teacher and state senator Scott Hammond. He told you that he viewed vouchers as the rotary telephones of the school choice world, and that ESAs are the smartphones of that world.

Vouchers just let parents choose a different school, but ESAs offer the equivalent of apps on your smartphone. You can use ESA funds for tuition at a private school, to pay for online courses, pay for tutors, pay for a Sylvan Learning type program, and/or pay for other approved educational options. A student is free to spend part-time at their local public school, and the rest of the time making other educational choices with the proportional share of their ESA funding.

In 2008, Cascade Policy Institute sponsored a School Choice Video Contest in which we asked parents and students to tell us what school choice meant to them. I want to show you one of my favorite entries. It’s from a 15-year-old homeschooled student in Southern Oregon.

[Shoes video]

If the Shoe Fits, Wear It! This legislature is about to allocate at least $8.2 billion taxpayer dollars to an education budget that may, in effect, fund shoes that aren’t a good fit for many of our children. ESAs would help some of those families find better-fitting shoes for their kids.

In addition to funding concerns, some critics of ESAs argue that they violate the principle of church/state separation. In Oregon, they might think that SB 437 violates Article 1, section 5 in our state constitution, which basically prevents the state from spending money for the benefit of any religious institution.

But it won’t! The public interest law firm Institute for Justice has studied the bill and concluded that it doesn’t violate either the Oregon or the U.S. Constitution. You have their complete legal analysis on OLIS.

Briefly, at the federal level, the 2002 Zelman Case before the Supreme Court found that as long as it’s the parents, not the state, deciding where a school choice program’s funds go, it doesn’t matter if the parents choose religious schools because it’s the parents, not the state, making those choices.

At least two state supreme courts, in Arizona and Nevada, have found the same thing with regard to ESAs and those state constitutional provisions, which are similar to Oregon’s so-called Blaine Amendment.

Now, let me give you a feel for how much more flexibility ESAs offer over the old voucher plans, and why they’ve sprung up so recently.

It wasn’t too long ago that if our parents or grandparents wanted to make a phone call they would pick up the receiver and ask a phone company operator to place their calls. Later, how glorious it was that we could use our rotary phones to spin out our own calls, even long-distance ones if we could afford the high per-minute costs. Then came digital phones, and finally cell phones became affordable to the masses. But even the early cell phones had limited uses.

You may not remember, but none of us had any cell phone apps before 2008, because there weren’t any. None. Imagine: All you could do on your cell phones before 2008 was make phone calls, maybe text, and maybe connect to the World Wide Web on a slow internet connection.

Just nine years later, over 2 billion people worldwide use apps on their smartphones. You may have dozens of apps on your phone today, and even if you only use a handful of them regularly, that’s a world away from what it was like before 2008. Lots of things are a world away from what they were like before 2008 — except for public education.

Consider the children in our schools today. Many of them have never known a world without smartphones and their apps. Rotary telephones, even landlines, are likely just historical oddities to them. Much of their world is new, except the way we adults try to educate them by sitting them down in rows, in a classroom with kids who are the same age, all in front of one teacher lecturing about some subject they may or may not find interesting and relevant to their lives.

Yet, many teachers see kids’ smartphones as a problem, right? They’re watching their screens instead of sitting politely in rows listening to the math lesson at 10, or the history lesson at 2.

We say that we want our kids to learn how to take advantage of technology, take STEM courses, and be prepared for the new careers awaiting them. So why do we see their use of that technology every day as a problem! They’re not paying attention to the teacher! They’re bored with school. The Shoes we make them wear aren’t good fits for many of them.

We know that they’ll likely find value in many of these subjects later in life, but if they can’t learn those lessons in ways that are relevant to them now, they may never learn them at all; or they may learn them too late to avoid painful life experiences between now and then.

In 2007, the House Subcommittee on Education Innovation, chaired by Representative Betty Komp, heard compelling testimony about some of those kids during a hearing on an earlier school choice bill, HB 2010. It was given by Black Portlander Jomo Greenidge, who describes himself as an educator and technologist.

Jomo can’t be here to talk with you today, but he hopes you’ll watch his earlier testimony and think about how Education Savings Accounts could help kids like these today.

[Jomo Greenidge video testimony]

Since Jomo gave that testimony in 2007, smartphone apps emerged, followed by Education Savings Accounts, which act much like smartphones of the school choice world. Many students in our schools today, and all the kids entering our schools tomorrow, will grow up in a world with modern communication and app technology.

It’s time we recognize that much of the money we tax and spend on their educations might not be meeting their educational needs. It’s time that we consider the Education Savings Account approach to let their families have some control over how that money is spent so it better meets their needs.

Other states have debated, and some are adopting, ESA programs this year. The pressure to pass more such bills will only grow.

We know that SB 437 won’t pass this year. While we’re thankful for this Informational Hearing, many Oregon families want more. Many Oregon families can’t wait for years to get their kids into better fitting Educational Shoes.

We can debate the details, but please take this issue seriously and help these families by passing an ESA bill soon, hopefully in the 2018 session.

Thank you.


* A 2009 scientific survey showed us that 87 percent of Oregon families with school-aged children want the ability to choose other than their local public school. And the results were similar for Republicans, Democrats, and Independents. So why do some 90 percent of them still send their kids to their local public school? You know why. It’s because they can’t afford to pay federal, state, and local taxes to fund that local school and pay for private school tuition at the same time. ESAs will give them the financial ability to make some other choices if they want to.

And, if 20 percent of Portland public school teachers send their kids to private schools, why would we think that 20 percent of their neighbors might not want to do the same, if they could afford it?

Based on data from the 2000 US Census, a report was published looking at where public school teachers sent their own kids to school in the nation’s 50 largest cities. It found that public school teachers send their own kids to private schools at much higher rates than their neighbors.

In Portland, 12.7 percent of parents sent their kids to private schools, but 20 percent of public school teachers who lived in Portland sent their kids to private schools. Doing some basic grade school math shows that teachers in the largest cities were 23 percent more likely to send their children to private schools, but in Portland they were 57 percent more likely to do so.

So, will SB 437 bill drain funds from public schools, or will it leave them harmless while allowing many students to make different choices? The answers depend on several assumptions which have now been evaluated by Eric Fruits, Ph.D. in a new review and evaluation of a universal ESA program for Oregon. The amount of the ESA deposits is the biggest driver of fiscal impacts.

As introduced, SB 437 would provide participating students with disabilities and in low-income households $8,781 per year (current state funding) in their ESAs. All other participating students would receive $7,903 (90% of current state funding). As Introduced, based on the assumptions below, the Fiscal Impact on the state and local school districts could be in the range of $200 million annually based on the following assumptions:

■ 90 percent of 61,000 students currently enrolled in non-public education would participate in the program.

■ Seven percent of 563,000 students currently enrolled in public schools would participate.

Based on these assumptions, the program has a fiscal “break even” for state and local school districts combined at an ESA annual amount of $6,000 for each participating student with disabilities and/or in a low-income household and $4,500 for all other students.

These are the dollar amounts proposed in the -1 Amendment to the bill. If fiscal impact were the only measure by which to evaluate this ESA program, the analysis shows that the program is “optimized” at an amount of $3,000 for each participating student with disabilities and/or in a low-income household and $2,250 for all other students. Once fully implemented, the program would save state and local governments $53 million a year.

Of course, fiscal impact is not and should not be the primary measure of this, or any well-designed school choice program. But, it is a political reality that such a program should not impose a fiscal burden on the state at a time that all budgets are under pressure.

The primary measure of this ESA program should be that it offers Oregon families as much choice as possible in how their children take advantage of educational opportunities funded by the state. The full report is here: Education Savings Accounts: Review and Evaluation of a Universal ESA in Oregon

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The Paris Agreement Was Symbolism over Substance, Leaving Was the Right Call

By John A. Charles, Jr.

President Trump made the right call last Thursday when he terminated participation by the U.S. in the Paris Climate Agreement.

The central problem with the Paris agreement was that the alleged benefits were speculative, long-term, and global; yet the costs to Americans would be real, immediate, and local. It was a terrible deal for American taxpayers who would have been required to send billions of dollars to an international green slush fund, with no accountability.

Pulling out of the Paris agreement does not mean that the climate change apocalypse is upon us. The carbon intensity of the U.S. economy has dropped by 50% since 1980 simply through technological innovation and the dynamic market process. If reducing carbon dioxide is a worthy policy goal—which is just an assumption—the United States already has an impressive track record of reducing emissions.

The Paris agreement was always a triumph of symbolism over substance.

The man who predicted that the U.S. would pull out of the Paris Climate Agreement is coming to Portland this Friday, June 9. Myron Ebell is director of the Competitive Enterprise Institute’s Center for Energy and Environment. He led the Trump Presidential Transition’s agency action team for the EPA and will give a unique perspective on the new administration’s environmental agenda.

Visit cascadepolicy.org for tickets to our Friday, June 9th luncheon. Reservations are required.

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

 

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Testimony on SB 847 Regarding Management of Common School Trust Lands

Testimony of John A. Charles, Jr.

President and CEO, Cascade Policy Institute 

Regarding SB 847

June 5, 2017

My name is John Charles and I have been closely following the management of Common School Trust Lands since 1996.

Sadly, the Trust Lands have been steadily losing value as an endowment asset during that entire period. For example, the Elliott State Forest was estimated to be worth over $800 million in 1995; it is currently a liability for the Common School Trust Fund.

The 620,000 acres of rangelands had net operating income of -$1.2 million in 2016.

SB 847 offers a pathway for the disposal of underperforming lands, but it’s difficult to see how a proposed transfer to other public bodies would be compliant with the fiduciary duty that Land Board members have to CSF beneficiaries.

Funds that the legislature might appropriate to “buy out” Trust Lands have to be paid by taxpayers. A large subset of that group will include beneficiaries of the CSF, including public school parents, school board members, public school teachers, and other school employees. Taxing them with debt service on bonds, as is now being proposed by the Governor for the Elliott, would be taking money away from them.

The Trust Land portfolio includes 1,540,000 acres of lands, as displayed in the attached summary from the most recent DSL status report. The estimated return on asset value for 2016 was 0.4%, which is an inflated number due the unknown market value of 767,100 acres of “Mineral and Energy Resource” lands and 13,200 acres of “Special Stewardship Lands.” They have minimal value to the CSF as an endowment asset, and that will not change.

The only way to carry out the fiduciary duty to CSF beneficiaries is to inject new, private capital into the picture. The state should sell the remaining Trust Lands – which could be worth more than $700 million — and invest the net proceeds in the Common School Fund, where annual total returns of 5%-8% could be expected for centuries to come.

[Click Download the PDF to view exhibits]
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Testimony in Opposition to HB 2720 A Regarding Virtual Charter Schools

By Steve Buckstein

Co-Chairs Monroe and Smith Warner and members of the Joint Committee on Ways and Means Subcommittee on Education:

I’m Steve Buckstein, Senior Policy Analyst and Founder of Cascade Policy Institute, a public policy research center based in Portland. I’m writing in opposition to HB 2720 A which would require the Oregon Department of Education (ODE) to conduct a study on virtual public charter schools.

My major points of opposition second those of Dr. David Gray, Executive Director of the Metro East Web Academy. He “…served in traditional public education for over 30 years as a state department executive, superintendent, assistant superintendent, National Blue Ribbon School Principal, and a state and nationally recognized teacher.”  In his written testimony submitted on March 3rd he stated, in part:

“I share your passion for public education. Unfortunately, the traditional education system is broken….Traditional systems are effective for some students but not all and many of those succeed in spite of the good intentions of professional educators This is why we must not limit options for students.

“Although HB 2720’s purpose seems innocuous as some would perceive it to just be a study; it is actually one more study to examine a system of virtual schools that have been studied over and over throughout the United States. In fact, the study purports to use the same data points that are readily available on the ODE website, which will undoubtedly include metrics such as graduation rates, state assessment results, and attendance data. I can not think of a bigger waste of taxpayer dollars, especially in a year when resources are scarce and legislators are scrambling to create an adequate educational budget.

“Ultimately, if it is important to study virtual schools – why don’t we do a study on all of our high schools to determine why students are leaving traditional high schools and coming to charter schools? Why are there so many at-risk students? Do traditional brick and mortar schools add value to a student’s education? Do we know the answers to these questions?” [emphasis added]

In light of these well-stated concerns, HB 2720 A seems a costly distraction that could keep the legislature, ODE and all Oregonians from focusing on the real problems facing our public education system.

I urge you to oppose HB 2720 A.

Thank you,

Steve Buckstein
Senior Policy Analyst and Founder

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Statement regarding President Trump’s decision to withdraw the U.S. from the Paris accord on climate change

FOR IMMEDIATE RELEASE

Media Contact:

John A. Charles, Jr.

(503) 242-0900 

PORTLAND, Ore. – Today Cascade Policy Institute’s President and CEO John A. Charles, Jr. released the following statement on President Donald Trump’s decision to withdraw the United States from the Paris accord on climate change:

“President Trump made the right call today in terminating participation by the U.S. in the Paris climate change agreement.

“The central problem with the accord was that the alleged benefits were speculative, long-term, and global; yet the costs to Americans would be real, immediate and local. It was a terrible deal for American taxpayers who would have been required to send many billions of dollars to an international green slush fund, with no accountability.

“Pulling out of the Paris agreement does not mean that the climate change apocalypse is upon us. The carbon intensity of the U.S. economy has dropped by 50% since 1980 simply through technological innovation and the dynamic market process. If reducing carbon dioxide is a worthy policy goal—which is just an assumption—the United States already has an impressive track record of reducing emissions.

“The Paris accord was always a triumph of symbolism over substance. Now that American participation has ended, we can appropriately move on to issues of real significance.”

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.

###

 

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The Case of the Missing Transit Money

By John A. Charles, Jr.

Last week the TriMet Board adopted a budget for fiscal year 2018, which begins on July 1.

As usual, the budget shows no correlation between the levels of subsidies given to TriMet and the amount of service provided to customers.

For example, in 2008, TriMet had a total of $397 million to pay for operations of bus and rail service. In 2018, the agency predicts it will have $600 million, a 51% increase. Yet bus service—which carries two-thirds of all passengers—has barely improved.

In 2008 the “revenue-miles” of bus service (those miles where buses were in operation) totaled 22,574,030. If service increases in 2018 as planned, the total is likely to be 22,597,927—only a 0.1% increase.

Where did all the money go?

TriMet claims that increased light rail service made up the difference, but between 2008 and 2016 the revenue-miles of MAX only went up 14%. No service increase in 2018 will make up the difference between 14% and 51%.

Moreover, ridership is not growing along with the increased funding. In fact it is shrinking. During 2008 the total number of “originating rides” (which excludes transfers) was 77.6 million. Ridership peaked in 2012 at 80 million, and then dropped to 77.2 million in 2016.

TriMet is also losing market share, especially at peak hours. According to the Portland city auditor, in 2008 an estimated 15% of all Portland commuters used TriMet. By 2016, that had dropped to just 10%.

The steady rise in TriMet’s revenue is almost entirely due to tax subsidies, not passenger fares. In fact, next year passenger fares will only account for 10% of TriMet’s all-funds budget—likely the lowest level of passenger support in TriMet history.

Nonetheless, the Oregon legislature is considering a bill that would authorize a new, statewide employer tax that would generate even more subsidies for transit. The Portland experience shows that this is a bad idea. The more we subsidize monopoly transit, the more the employees divert funds for their own use.

Last year TriMet spent $1.23 on employee benefits for every $1.00 expended in wages. That largely explains why service levels have been stagnant.

In 1969 the Portland City Council put Rose City Transit out of business because Councilors believed that a government-run monopoly would be much more efficient than a private-for-profit company. The TriMet experience has shown that the City Council was wrong.


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

 

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Oregon Legislature Should Give Kids a “Ticket to the Future” Today

By Kathryn Hickok and Steve Buckstein

Derrell Bradford has spent his adult life passionately advocating for education reform through parental choice. Bradford grew up in poverty in southwest Baltimore and received a scholarship that allowed him to attend a private high school, preparing him for college and a successful career. Better than anyone, he knows the power of educational choice to unleash a child’s potential.

“A scholarship is not a five-year plan or a Power Point…,” Bradford explained recently. “It’s a ticket to the future, granted today, for a child trying to shape his or her own destiny in the here and now….”

Choices in education are widespread in America, unless you are poor. Affluent families can move to different neighborhoods, send their children to private schools, and supplement schooling with enrichment opportunities. Lower- and middle-income families, however, are too often trapped with one option: a school in need of improvement assigned to them based on their ZIP Codes. Families deserve better.

Six years ago, Arizona became the first state to pass an Education Savings Account (ESA) law for some K-12 students. In April, lawmakers there passed a new ESA bill which expands the program eligibility to eventually include all Arizona children. Florida, Mississippi, and Tennessee also have ESA programs limited to certain students, such as those with special needs. Nevada also passed a near-universal ESA bill, but it is yet to be funded.

An Education Savings Account is analogous to a debit card for qualifying education expenses. It gives parents who want to opt out of a public school that is not meeting their child’s needs a portion of the per-student state funding to spend on their child’s education in other ways.

Now, Oregon has a chance to put parents in the educational “driver’s seat” with Senate Bill 437, known as the “Educational Opportunity Act: The Power of Choice.” This bill would allow parents to spend a portion of the per-student state funding for their child on the schools or education services that are best for them as individuals. Options could include private or home schools, tutors, online courses, and therapy. Funds not used by the student in a given year could be rolled over for future years, even into college.

Critics might ask if this bill would drain funds from public schools, or would it leave them harmless while allowing many students to make different choices? The answers depend on several assumptions which have been evaluated in a new review of a universal Oregon ESA program.

The amount of the ESA deposits is the biggest driver of fiscal impacts. Based on the assumptions in the study, the program would have a fiscal “break even” for state and local school districts combined at an annual ESA amount of $6,000 for each participating student with disabilities and/or in a low-income household and $4,500 for all other students. These are the dollar amounts proposed in an Amendment to the bill and represent a reduction from the current state allocation which averages $8,781 for all students.

Of course, fiscal impact is not and should not be the primary measure of this or any well-designed school choice program. But it is a political reality that such a program should not impose a fiscal burden on the state at a time when all budgets are under pressure. SB 437 would offer Oregon families as much choice as possible in how their children take advantage of educational opportunities funded by the state, while not harming public schools.

The Senate Education Committee will hold an informational hearing on SB 437 on Tuesday, June 13, at 3 pm at the Oregon State Capitol. You can make a statement in favor of school choice by attending the hearing and/or submitting written testimony on the bill.

Children have different needs and learn in different ways. The landscape of educational options available to meet those needs is more diverse today than ever. Education Savings Accounts for Oregon parents are a life-changing education solution whose time has come. Families have had enough five-year-plans and Power Points, as Derrell Bradford put it. To give Oregon kids a ticket to the future—today—the Legislature should enact Senate Bill 437.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Oregon program at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. Steve Buckstein is Cascade’s Senior Policy Analyst and Founder. A version of this article originally appeared in The Portland Tribune on May 25, 2017.

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Who says Oregon spends $13,230 per public school student? The National Education Association, that’s who!

By Steve Buckstein

Ever since Oregon’s property tax limitation Measure 5 shifted the bulk of education funding from local sources to the state general fund in 1990, public education advocates have claimed that our schools are severely underfunded, spending less than most other states. They want the legislature to raise taxes now to rectify this supposed crisis.

Ask a knowledgeable Oregonian how much money is spent per student in our public schools and they might say the number is about $8,781, which is what the state currently gives school districts per student.

But, ask the nation’s largest teachers union, the National Education Association, and you’ll get a much different answer. According to the NEA’s just-released Rankings & Estimates report for 2016 and 2017, when you count local, state, and federal funding, current expenditures per Oregon student in Average Daily Attendance are estimated to be $13,230. That puts us five percent above the national average of $12,572. Oregon spends more than 33 other states.*

Add in spending for capital outlays and interest payments, and that $13,230 number goes up to total expenditures per student of $14,911.**

Even at the lower number, public schools spend over $396,000 a year for each 30-student classroom. Subtract the average teacher salary plus benefits of some $85,000, and Oregonians should ask where the additional $300,000-plus is going before even thinking about raising taxes on anyone.


* There are several ways to calculate current expenditures per student. The NEA computes two of those ways in this report. Definitions are given in the report Glossary. Oregon’s 2017 Average Daily Attendance (ADA) of pupils “under the guidance and direction of teachers” is estimated in Table I-3 to be 531,434. Oregon’s 2017 Fall Enrollment of pupils registered in the fall of the 2017 school year is estimated in Table I-6 to be 578,176. Because there are more pupils registered in school districts than actually in class on an average day, current expenditures per ADA of $13,230 (Table J-9) is higher than current expenditures per Fall Enrollment, which is $12,161 (Table J-10). Oregon spends more than 33 other states under both these methods.

** Under the two ways of calculating expenditures per student explained above, the author’s calculation of estimated 2017 total expenditures based on Average Daily Attendance of $14,911 is higher than that based on estimated Fall Enrollment, which is $13,705.


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

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Kicker Envy 2017

By Steve Buckstein

Individual Oregon income taxpayers may receive kicker refunds when they file their 2017 tax returns based on a percentage of the state income tax they paid in 2016. Based on the May revenue forecast, $408 million could be coming back to taxpayers, with the average refund being $210. A final determination of whether the kicker will “kick” and how big it will be should be announced on August 23.

But even before those potential refunds reduce our 2017 tax liability, some are questioning whose money it is, and others seem envious that the “rich” will get much bigger refunds than the rest of us. So, whether the kicker law is good or bad public policy, let’s think a little about who this money really belongs to. Is it a rebate for overpaying your taxes, or is it somehow “our” money that is better left in government coffers?

How the kicker works 

First, the mechanics of the kicker law: Oregon state government is highly dependent on the personal income tax for its General Fund budget. With a fairly flat tax structure, most wage earners are in the nine percent income tax bracket, while the highest income earners are in the top 9.9 percent bracket. Therefore, state revenue can be quite volatile, going up and down as the economy cycles between boom and bust.

The legislature first passed the kicker law in 1979, and voters added it to the state constitution in 2000. It mandates that state economists estimate what income tax revenue will be over the following two-year budget period. The legislature then must balance the budget by not allocating more money than the estimate. If the estimate is low by two percent or more, then the entire surplus must be returned to taxpayers. The kicker law actually is composed of two parts, dealing with personal income taxes and corporate income taxes differently. In 2012 voters decided that any corporate kickers would be returned to the state general fund to provide additional funding for K-12 public schools.

Some people argue that the way the kicker “kicks” makes little sense. They correctly note that projecting state revenue two years out to within a two percent margin is terribly difficult, and has been done only rarely. Others defend the kicker law as an important brake on runaway government spending, especially since voters have rejected other tax and expenditure limitations at the polls.

Whose money is it? 

Whether the kicker law is good or bad public policy doesn’t change the answer to a more fundamental question: Whose money is it?

Some argue that the kicker money really belongs to the state. After all, they say, it’s in the state’s coffers because individuals paid what the tax law said they owed on their tax returns. As long as any Oregonian has a “need” for that money—be they school children, the elderly, the disabled, etc.—then the money should go to them instead of back to the individuals who earned it.

How much is that latte? 

Of course, this is the Marxist “from each according to his ability, to each according to his need” justification. Taken further, not only would the kicker money remain with the state, but the state could retroactively come after even more of your previous income if, in the wisdom of government officials, anyone still “needed” those funds.

One way to look at this argument is to think about walking into a coffee shop today and ordering a $3 latte. The price is posted on the wall, but the person behind the counter asks you a question before accepting your order. “Did you get a raise last year?” “Yes,” you tell her proudly, “I was very productive last year and my boss gave me a 10 percent raise.” “That’s great,” she replies. “The $3 latte will cost you $3.30.” “Why?” you wonder. “Because your ability allows me to better meet my needs.”

You wouldn’t accept this argument from your barista, and you shouldn’t accept it from your government.

Next, some argue that the kicker “lavishes a windfall on those who don’t need it.” They point to the top one percent of taxpayers with adjusted gross incomes over about $386,000 who would receive more than $4,500 each, while the average taxpayer would only get back $210. What is often unstated in this argument is that those “lucky” top taxpayers paid way more income tax than the rest of us, and they will get back exactly the same percentage of their tax payments as everyone else does.

Envy is a powerful emotion, but it should not trump reason. If we can find a better way to restrain runaway government spending, we should do so. But until that day arrives, the kicker law is one defense against those who argue that some of the money you earned belongs to someone else just because they “need” it.


Oregon Income Tax Calculator: https://smartasset.com/taxes/oregon-tax-calculator


Steve Buckstein is Senior Policy Analyst and Founder of Cascade Policy Institute, Oregon’s free market public policy research organization. An earlier version of this Cascade Commentary was published in November 2007.

 

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Overtaxed and Underbuilt

By John A. Charles, Jr.

An Oregon Legislative committee is proposing a massive series of tax increases to pay for various transportation projects.

The proposal calls for higher taxes on vehicle registration, increased gas taxes, a new sales tax on motor vehicle purchases, a statewide employee tax to subsidize transit, and a new bicycle sales tax.

While there are many bad ideas on this list, perhaps the most offensive is the sales tax on vehicle purchases. It is being crafted so that most of the money would be diverted from highway maintenance into something called the “congestion relief and carbon reduction fund.”

Anything that includes “carbon reduction” in the title is guaranteed to be a boondoggle.

Before this proposal goes any further, legislators should consider a bill simply focusing on improving the road system. We all benefit from better roads.

In addition, they should try to charge people based on actual road use, not the mere ownership of vehicles. The gas tax is a good surrogate for this, so it would make sense to increase the gas tax rate while lowering vehicle registration fees. This would be fair to motorists, while still raising the funds needed for road improvements.


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

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President Trump’s Environmental Agenda: An Insider’s Perspective

Cascade Policy Institute Hosts Lunch with Special Guest Speaker Myron Ebell

President Trump’s Environmental Agenda: An Insider’s Perspective

President Trump’s administration has begun to implement a long list of campaign promises on energy, climate, and environmental policy. Taken together, these policies represent the most ambitious attempt to deregulate energy production and consumption ever undertaken.

But is deregulation possible?

Myron Ebell will speak at Cascade Policy Institute’s June 9 luncheon event

at Ernesto’s Italian Restaurant in Portland.

Ebell led the Trump Presidential Transition’s agency action team for the Environmental Protection Agency. He will discuss how the President’s deregulatory agenda is proceeding and its prospects for getting the economy going again after a decade of stagnation.

Reservations are required. Get yours today!


Myron Ebell is director of the Competitive Enterprise Institute’s Center for Energy and Environment, which is one of the most effective advocates for Free Market Environmentalism. He also chairs the Cooler Heads Coalition, an ad hoc coalition of 28 nonprofit free market and conservative groups that question global warming alarmism and oppose energy-rationing policies. CEI and the Cooler Heads Coalition led the successful decade-long fight to defeat cap-and-trade legislation.

From September 2016 to January 20, 2017, Mr. Ebell led the Trump Presidential Transition’s agency action team for the EPA. His involvement in the transition led to public protests and marches in several cities in America and Europe. In one of countless fundraising emails and letters from environmental pressure groups, Michael Brune, president of the Sierra Club, wrote that “Myron Ebell is…one of the single greatest threats our planet has ever faced.”

A native of Baker County, Oregon, where he grew up on a cattle ranch, Mr. Ebell earned degrees at Colorado College and the London School of Economics (where he was a student of the renowned political philosopher Michael Oakeshott) and did graduate work at the University of California, San Diego, and at Peterhouse, Cambridge University in philosophy, history, and political theory.

For complete information and to reserve your tickets, click here.

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Education Savings Accounts Treat Kids Like the Individuals They Are

By Kathryn Hickok

Six years ago, Arizona became the first state to pass an Education Savings Account law for some K-12 students. In April, lawmakers there passed a new ESA bill which expands the program eligibility to include all Arizona children. Florida, Mississippi, and Tennessee also have ESA programs limited to certain students, such as those with special needs. Nevada also passed a near-universal ESA bill, but it is yet to be funded.

Education Savings Accounts put parents in the educational “driver’s seat.” An ESA is analogous to a debit card for qualifying education expenses. It gives parents who want to opt out of a public school that is not meeting their child’s needs a portion of the per-student state funding for spending on their child’s education in other ways. Funds not used by the student in a given year can be rolled over for future years.

To really empower Oregon families, the Legislature should enact Senate Bill 437. This ESA bill would allow parents to choose the education that meets their child’s needs, such as private or home schools, tutors, online courses, and therapy.

Children learn in different ways, and the landscape of educational options is more diverse today than ever. Education Savings Accounts for Oregon parents are a life-changing education solution whose time has come.


The Senate Education Committee will hold an informational hearing on SB 437 on Tuesday, June 13, from 3-5 pm at the Oregon State Capitol. You can make a statement in favor of school choice by attending the hearing and/or submitting written testimony on the bill.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Oregon program at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Testimony Before the Oregon State Land Board Regarding the Potential Sale of the Elliott State Forest

By John A. Charles. Jr.

The decision before you today is simply one of exercising your fiduciary duty. You have an offer on the table of $220.8 million in private funds. If you accept the offer, the money will be deposited in the CSF, where it will immediately begin earning income for schools.

Alternatively, the various public ownership options require: (1) persuading the legislature to approve the sale of $100 million in state bonds so that taxpayers can “buy” an asset they already own; and (2) paying debt service on the bonds. Those costs (presently unknown) will be paid in part by public school parents, teachers, and other CSF beneficiaries. Therefore, debt service has to be subtracted from earnings on the invested $100 million.

Additionally, a new HCP will need to be negotiated. Since DSL has failed to do this for over 15 years, this is a highly speculative “benefit.” It’s also possible that even with a new HCP, timber harvesting would result in continued losses to the CSF.

As the chart below indicates, over a 100-year horizon, the difference between the Lone Rock offer and the public ownership option is roughly $1.08 billion in earnings. There is no plausible scenario in which continued public ownership can make up that loss. As fiduciaries, this is not even a close call: you should take the offer in hand.

CSF Financial Projections for New Revenue Derived from the Elliott State Forest 

Lone Rock Offer vs. Continued Public Ownership

Cumulative CSF Payouts to Schools @4% of Annual Earnings

Assumes total annual return of 5.58% (CSF average for 2000-2015)

  Add timber harvest revenue Subtract cost of debt service payments Cumulative payout to schools – first 10 years Cumulative payout to schools – first 100 years
L. Rock – $220.7 M invested 6/1/17 N/A N/A $99,107,680 $1,956,775,945
Bond sale – $100 M invested 9/1/17

 

Requires new HCP; could also result in annual losses ??? $44,300,595 $874,668,232
Difference ??? (???) ($54,807,085) (1,082,107,713)

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

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Oregon Land Board Should Take the Deal

By Lydia White

At a time when Legislators threaten to slash government services to cover a $1.6 billion budget shortfall, Governor Kate Brown and Treasurer Tobias Read plan to make things worse.

Next week, the State Land Board will meet to consider selling 84,000 acres of the Elliott State Forest to Lone Rock Timber Management for $221 million. If the sale is approved, all the money would be invested in the Common School Fund, generating billions of dollars in earnings for K-12 schools.

Governor Brown, who supported the sale in 2015, now wants the state to buy out the Elliott for $100 million by issuing bonds. Taxpayers would pay back the principal and interest for the next 25 years, at a cost of $120 million or more.

But the Land Board has a constitutional obligation to produce revenue for Oregon schools by either managing the Elliott for a profit or selling off dead assets. Forcing taxpayers to buy an asset they already own, plus forgoing $121 million in additional funds from a willing buyer and millions more when factoring in compound interest, would violate the Board’s fiduciary trust.

Fortunately, the Oregon School Boards Association, one beneficiary of the Common School Funds, expressed intent to sue if the Land Board refuses to “fulfill its fiduciary duties.”

The Board has a firm offer of $221 million. They should accept it.


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

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Challenges to Free Expression and Academic Integrity on Campus

Join Cascade Policy Institute for an evening with special guest Dr. Jacqueline Pfeffer Merrill,

Monday, May 8, 2017 at the Crowne Plaza Portland-Lake Oswego, from 6:00-7:30 pm.

 

With a constant stream of headlines about campus disruptions and lightweight curricula, alumni are rightly concerned about the erosion of academic freedom and the decline of academic standards on American college campuses.  The evening’s presentation will spell out why the trends are so worrying and ways in which some intrepid college leaders, college trustees, and alumni donors are showing how to stand up for academic excellence and intellectual openness that the public demands.

Dr. Merrill is executive director of the Fund for Academic Renewal, a program of the American Council of Trustees and Alumni, which works with donors to create and monitor high-impact gifts to colleges and universities. ACTA is an independent, nonprofit organization committed to academic freedom, excellence, and accountability at America’s colleges and universities.

A dessert buffet with coffee and tea will be served.

There is no charge for this event, but reservations are required in advance.

If you have friends, family, or colleagues who may be interested in learning more about Cascade, please invite them as our guests.

For more information, and to reserve tickets, please click here.

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Oregon Politicians Support Better Roads, Just Not Here

By John A. Charles, Jr.

Recently the Oregon Legislature held a hearing on HB 3231, a bill promoted by Rep. Rich Vial (R-Scholls) that would authorize the formation of special districts for the purpose of constructing and operating limited-access highways.

Opponents made many of the same arguments they’ve been using for decades: new highways threaten farmland; increased driving will undermine Oregon’s “climate change” goals; and we can’t “build our way out of congestion.”

Perhaps the most comical opposition argument was made by Marion County, which sent all three of its Commissioners in a show of force. The Commission Chair concluded his remarks by saying, “We understand progress; we just want that progress to go somewhere else.”

Oregon stopped building new highways in 1983 after I-205 was completed. Elected officials came to believe that our needs for mobility could be met through increased urban densities, massive subsidies for public transit, and various forms of “demand management” to entice or even force people out of their cars.

The new approach didn’t work.

It turns out that manipulating urban form through land-use controls has very little influence on driving. Sure, you can regulate suburbia out of existence through density mandates, as Metro is doing. You can also reduce the parking supply and bring light rail right to someone’s front door.

But no matter how much some people fantasize about using alternatives to cars, it’s not very practical. Midday meetings, post-work errands, childcare obligations, and countless other demands lead people to rationally opt for driving for most trips.

That’s why, after a 20-year spending binge of $3.67 billion for new rail lines, TriMet’s share of daily commuting in Portland actually dropped from 12% in 1997 to 10% in 2016.

Auto-mobility is a wonderful thing, and there is no reason to feel guilty about new roads. For one thing, driving is strongly associated with economic growth. According to ODOT, for every job created in Oregon, we can expect an additional 15,500 miles of auto travel each year. If you’re in favor of new job creation, you have to accept increased driving as a logical consequence.

Moreover, the emissions associated with driving are now so minor that the real concern should be reducing air pollution from congestion. Vehicles sitting in gridlock have per-mile emissions of infinity; getting those vehicles into free-flowing conditions will improve local air quality.

Autos generally have the lowest emission rates when traveling at steady speeds of around 50 MPH. This is also a driving speed that makes most drivers happy, especially at rush hour. The way to accomplish both goals is through the construction of new highways when needed, coupled with the use of variable toll rates (also known as “dynamic pricing”). This could happen under HB 3231.

Across the country, dozens of impressive new highways are being built, many with private financing. Dynamic pricing is being be used to pay off bonds and eliminate congestion. This is the progress that most commuters dream about.

Unfortunately, it probably won’t happen here. Oregon politicians only support progress somewhere else.


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in the Portland Tribune on April 25, 2017.

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The Greatest Challenge to Traffic Safety? It’s Not Residential Speed Limits

By John A. Charles, Jr.

Earlier this week the Oregon House of Representatives passed HB 2682, which will allow Portland to lower traffic speeds on residential streets from 25 MPH to 20 MPH. This was hailed as an important step towards reaching the city’s goal of zero traffic fatalities by 2025, but in reality the bill is mostly symbolic.

First, HB 2682 only affects residential streets. Most traffic fatalities occur on higher-speed arterials.

Second, reducing travel speed is just one of many factors in traffic safety, and not always the most important. According to the 2015 Portland Traffic Safety Report, 54% of fatal crashes involve alcohol or drugs. When pedestrians are involved, 30% of fatalities involve either an intoxicated walker or driver.

Traffic speed is a factor, but 80% of Portland’s fatalities and serious injuries occur on the 19% of roadways that are posted at 30 MPH or higher. None of those roads will be affected by HB 2682.

The ubiquitous use of digital devices by motorists, cyclists, and pedestrians represents the greatest new challenge to traffic safety. Unfortunately, people who would rather text than watch the road are unlikely to be helped by a law that reduces speeds in quiet neighborhoods from slow to slower.


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

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Oregon Legislature Should Make It Easier for Individuals to Enter the Landscaping Business

Below is a letter being distributed to all members of the Oregon House of Representatives prior to their voting on House Bill 3337 in the 2017 Oregon Legislative Session, which would make it easier for individuals to enter into the landscaping business in this state.


April 20, 2017

Floor Letter in support of HB 3337

Cascade Policy Institute supports passage of HB 3337 which creates a limited landscape construction professional license. This bill is in line with the framework for policymakers on occupational licensing issued by the Obama White House in 2015 which found…

“…the current [occupational] licensing regime in the United States…creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job. There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across state lines.”  And…

“There is ample evidence that States and other jurisdictions should review current licensing practices with an aim toward rationalizing these regulations and lowering barriers to employment.”

The White House report also argues that reducing barriers to employment is especially helpful for “marginalized persons such as young people, minorities and individuals with felony convictions.” It notes a 2012 report by the Institute for Justice, License to Work, which found that Oregon is the third most broadly and onerously licensed state, placing it in the top tier just below Arizona and California. Oregon licenses 59 of the 102 low-to-moderate-income occupations studied. Surprisingly, only ten states even licensed landscape contractors. Oregon is one of them.

There is growing awareness on both ends of the political spectrum that many state occupational licensing laws actually stifle economic opportunity and make it particularly hard for lower-income people to move their way up the economic ladder and use their entrepreneurial talents for their own benefit and the benefit of all Oregonians. Licensing can also marginalize consumers who suffer the most when goods and services they need cost more by keeping more people from vying for their business.

HB 3337 is a step in the right direction for those Oregonians who want to work and start landscaping businesses without the burden of excessive occupational licensing restrictions. We urge its passage.

Sincerely,
Steve Buckstein, Senior Policy Analyst and Founder, Cascade Policy Institute


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

 

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Proposed Oregon ESA Law Would Offer Students Choices While Breaking Even for Public Schools

By Steve Buckstein

Senate Bill 437, under consideration this legislative session, would offer Oregon K-12 students the flexibility to choose the educational options that best meet their individual needs through a universal Education Savings Account program. ESAs deposit a percentage of the funds that the state otherwise would spend to educate a student in a public school into accounts associated with the student’s family. The family may use the funds for approved educational expenses such as tuition, tutors, online courses, and other services and materials.

The fiscal impact of a universal ESA program for Oregon has been evaluated in an analysis released by Cascade Policy Institute. The fiscal “break even” for state and local school districts would be reached at an annual amount of $6,000 for each participating student with disabilities and/or in a low-income household and $4,500 for all other students. These dollar amounts are proposed in an amendment to the bill.

Of course, fiscal impact should not be the primary measure of this or any well-designed school choice program; but it is a political reality that a fiscal burden should not be imposed on the state at a time that all budgets are under pressure. An ESA program would offer Oregon families as much choice as possible in how their children take advantage of educational opportunities funded by the state. For more about the Educational Opportunity Act: The Power of Choice, visit schoolchoicefororegon.com.


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

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Education Savings Accounts Can Help Students Without Hurting Public Schools

By Steve Buckstein

School choice programs allow students to choose schools or other educational resources and pay for them with a portion of the tax funding that otherwise would go to the public school assigned to them by their ZIP code.

While school choice is popular with large segments of the public, opponents often claim specific programs like vouchers or Education Savings Accounts (ESAs) drain funds from the public school system, and so must be rejected.

What opponents overlook is that public funding for K-12 education should actually help educate students, not simply fund specific schools whether or not they meet specific student needs.

The latest and most versatile school choice programs sweeping the country are Education Savings Accounts. ESAs deposit a percentage of the funds that the state otherwise would spend to educate a student in a public school into accounts associated with the student’s family. The family may use the funds for private school tuition or other approved educational expenses such as online learning programs, private tutoring, community college costs, higher education expenses, and other customized learning services and materials. Funds remaining in the account each year after expenses may be “rolled over” for use in subsequent years, even into college.

Here in Oregon, this school choice debate will center upon the latest proposal to offer all K-12 students many more educational options: a universal Education Savings Account program contained in Senate Bill 437. SB 437 is also known as the Educational Opportunity Act: The Power of Choice.

So, will this bill drain funds from public schools, or will it leave them harmless while allowing many students to make different choices? The answers depend on several assumptions which have now been evaluated in a new review and evaluation of a universal ESA program for Oregon.

The amount of the ESA deposits is the biggest driver of fiscal impacts. As introduced, SB 437 would provide participating students with disabilities and in low-income households $8,781 per year (current state funding) in their ESAs. All other participating students would receive $7,903 (90% of current state funding).

As Introduced, based on the assumptions below, the Fiscal Impact on the state and local school districts could be in the range of $200 million annually based on the following assumptions:

■ 90 percent of 61,000 students currently enrolled in non-public education would participate in the program.
■ Seven percent of 563,000 students currently enrolled in public schools would participate.

Based on these assumptions, the program has a fiscal “break even” for state and local school districts combined at an ESA annual amount of $6,000 for each participating student with disabilities and/or in a low-income household and $4,500 for all other students. These are the dollar amounts proposed in the -1 Amendment to the bill.

The Figure below shows the net fiscal impact on state and local budgets across a range of ESA amounts, again based on the assumptions above. 

If fiscal impact were the only measure by which to evaluate this ESA program, the Figure shows that the program is “optimized” at an amount of $3,000 for each participating student with disabilities and/or in a low-income household and $2,250 for all other students. Once fully implemented, the program would save state and local governments $53 million a year.

Figure:

ESA_FIGURE

Of course, fiscal impact is not and should not be the primary measure of this or any well-designed school choice program; but it is a political reality that such a program should not impose a fiscal burden on the state at a time that all budgets are under pressure.

The primary measure of this ESA program should be that it offers Oregon families as much choice as possible in how their children take advantage of educational opportunities funded by the state.

The full report, Education Savings Accounts: Review and Evaluation of a Universal ESA in Oregon, can be found online here.


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

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New Report Analyzes Fiscal Impact of Proposed Oregon Educational Opportunity Act

— Education Savings Account (ESA) program awaits Senate action

April 13, 2017

Media Release

FOR IMMEDIATE RELEASE

Media Contact:
Steve Buckstein
503-242-0900
steven@cascadepolicy.org 

PORTLAND, Ore. – Cascade Policy Institute today released a review and evaluation of a universal Education Savings Account (ESA) program for Oregon. Senate Bill 437 would cover all K-12 students and is awaiting a hearing in the Senate Education Committee. SB 437 is also known as the Educational Opportunity Act: The Power of Choice.

ESAs deposit a percentage of the funds that the state otherwise would spend to educate a student in a public school into accounts associated with the student’s family. The family may use the funds for private school tuition or other approved educational expenses such as online learning programs, private tutoring, community college costs, higher education expenses, and other customized learning services and materials. Funds remaining in the account after expenses may be “rolled over” for use in subsequent years, even into college.

Empirical research on private school choice finds evidence that private school choice delivers benefits to participating students—particularly in the area of educational attainment.

Currently, Arizona, Florida, Mississippi, and Tennessee have active ESA programs that are limited to particular groups of students such as those with special needs. Nevada passed a near-universal ESA bill in 2015, but it is yet to be funded. Last week, Arizona lawmakers passed a new ESA bill that will open their state’s ESA program to all Arizona children, phased in over the next few years.

A fiscal analysis of Oregon’s SB 437, as introduced, finds that it would have a net fiscal impact on the state and local school districts of approximately $200 million. This net impact can be reduced—and turned into a net cost saving to state and local governments—by adjusting the annual amount deposited into the ESAs. The program would “break even” at an amount of $6,000 for each participating student with disabilities and/or in a low-income household and $4,500 for all other students. These are the dollar amounts suggested in an Amendment to SB 437.

Cascade founder Steve Buckstein notes, “While vouchers may be considered the rotary telephones of the school choice world, Education Savings Accounts are the smartphones of that world. They offer many more opportunities for families and students, and introduce competitive forces into education finance, which may help keep costs down.”

The full report, Education Savings Accounts: Review and Evaluation of a Universal ESA in Oregon, can be found online here.

Founded in 1991, Cascade Policy Institute is Oregon’s premier 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 and schoolchoicefororegon.com.

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Arizona’s Universal Education Savings Account Law: A “Breakthrough” in Education Financing for Students Today

By Kathryn Hickok

Six years ago, Arizona became the first state to pass an Education Savings Account law for some K-12 students. Last week, Arizona lawmakers passed a new ESA bill which expands the program eligibility to include all Arizona children, phased in over the next few years.

The Heritage Foundation’s education policy fellow Lindsay Burke explains:

Education savings accounts represent a breakthrough in public education financing. Instead of sending funding directly to district schools, and then assigning children to those schools based on where their parents live, parents receive 90 percent of what the state would have spent on their child in their district school, with funds being deposited directly into a parent-controlled account.

Parents can spend the money on the educational services that best meet their children’s individual needs, such as private or home schools, tutors, online courses, and therapy. Funds not used by the student in a given year can be rolled over for future years.

Florida, Mississippi, and Tennessee also have ESA programs limited to particular groups of students, such as those with special needs. Nevada passed a near-universal ESA bill in 2015, but it is yet to be funded.

“When parents have more choices, kids win,” said Arizona Governor Doug Ducey. It’s time for Oregon parents to have those choices, too. For more information about Oregon’s Education Savings Account bill, under consideration this legislative session, visit schoolchoicefororegon.com.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Oregon program at Cascade Policy Institute, Oregon’s free market public policy research organization.

 

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Testimony Regarding Senate Bills 432, 602, 608, 612 and 618

Testimony of John A. Charles, Jr.

President & CEO, Cascade Policy Institute

Regarding Senate Bills 432, 602, 608, 612 and 618

April 6, 2017

Advocates of land-use planning strongly believe that the benefits of planning always outweigh the costs.

But no regulatory system is perfect. Certainly the Oregon program can be improved, if we have the will.

The most obvious problem is that land-use regulation imposes a static vision on a dynamic economy. Oregon demands “urban containment” as the top priority, enforced through urban growth boundaries and rural exclusionary zoning. This has to result in an imbalance between housing supply and demand, leading to rapid price escalation. There is no other logical outcome unless planning advocates have invented a new economic theory that only they understand.

The bills under discussion today may not be the perfect responses to current problems, but surely at least one of them could be used by the Committee as a vehicle for modest reform.

I encourage the Committee to pick one flaw in the Oregon system and address it going forward.

You could focus on the dysfunctional urban growth boundary management process, the punitive “Transportation Planning Rule,” or perhaps farmland preservation requirements that are disconnected from economic reality.

It doesn’t matter which problem you address, but to say that no flaws exist and all reform bills must be killed year after year is not plausible.

Failure to address obvious problems will undermine public confidence in the legislative process. Please use the remaining time in this session to solve at least one problem related to zoning.


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

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Testimony Regarding Senate Bills 432, 602, 608, 612 and 618

Testimony of John A. Charles, Jr.

President & CEO, Cascade Policy Institute

Regarding Senate Bills 432, 602, 608, 612 and 618

April 6, 2017

Advocates of land-use planning strongly believe that the benefits of planning always outweigh the costs.

But no regulatory system is perfect. Certainly the Oregon program can be improved, if we have the will.

The most obvious problem is that land-use regulation imposes a static vision on a dynamic economy. Oregon demands “urban containment” as the top priority, enforced through urban growth boundaries and rural exclusionary zoning. This has to result in an imbalance between housing supply and demand, leading to rapid price escalation. There is no other logical outcome unless planning advocates have invented a new economic theory that only they understand.

The bills under discussion today may not be the perfect responses to current problems, but surely at least one of them could be used by the Committee as a vehicle for modest reform.

I encourage the Committee to pick one flaw in the Oregon system and address it going forward.

You could focus on the dysfunctional urban growth boundary management process, the punitive “Transportation Planning Rule,” or perhaps farmland preservation requirements that are disconnected from economic reality.

It doesn’t matter which problem you address, but to say that no flaws exist and all reform bills must be killed year after year is not plausible.

Failure to address obvious problems will undermine public confidence in the legislative process. Please use the remaining time in this session to solve at least one problem related to zoning.


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

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Educational Choice: An Economic Development Catalyst for Urban Neighborhoods

By Kathryn Hickok

A case study on urban renewal suggests that private and charter schools can act as positive drivers of economic development and neighborhood stability. The report, Renewing Our Cities, was produced by EdChoice, a nonprofit, nonpartisan organization promoting educational choice for all families.

The report’s authors state:

We find that the school is a strong relocation attractor, and families gravitate toward the school after their children enroll. To the extent public charter schools and/or other parental-choice options influence family relocation decisions, continued growth in these programs may provide a useful policy tool informing urban design and revitalization initiatives in areas where economic growth is otherwise stunted by inferior assigned schools.

These findings are meaningful. A common argument against school choice for low-income children is that neighborhoods and schools would be worse off if families left their assigned public school for a school they thought better met their children’s needs.

This viewpoint doesn’t recognize that private and charter schools are part of the neighborhood, too. When parents have educational options within their communities that are helping their children succeed, they have an incentive to remain part of their neighborhoods and even to move closer to those schools. This supports economic development and a more vibrant civic life in those areas.

Urban economic development is one more way educational choice can be good for both kids and their communities.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Oregon program at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Testimony Before the Senate Business and Transportation Committee in Support of SB 656, SB 657, and SB 659

Testimony of John A. Charles, Jr.

President & CEO, Cascade Policy Institute

Before the Senate Business and Transportation Committee

In support of SB 656, SB 657, and SB 659

April 3, 2017

The Public Purpose Charge (PPC) was originally authorized by the legislature to run for 10 years: from March 2002-March 2012. It was anticipated that subsidies for conservation, renewables, and market transformation would no longer be necessary after that time.

The chart below shows that the original forecast was correct. PPC administrators are running out of things to do. The low-hanging fruit for retrofits has been picked, and newer homes have been built to stringent energy codes. The mission has largely been accomplished.

Therefore reducing the PPC from 3% to 2%, as called for in SB 657, is appropriate. In 2019 you should drop it by another percent, and then phase it out entirely in 2021.

Keep in mind that the Energy Trust receives additional ratepayer funding through the “increment” allowed under SB 838. During 2017, that increment will more than double the amount of money that ETO will receive from the basic PPC. Therefore, the Trust would continue to have significant funding regardless of what you do with these bills.

Ratio of Energy Benefits (kWh saved or generated) to Expenditures

All PPC Administrators

2003-2004 2005-2006 2007-2008 2009-2010 2011-2012 2013-2014 2015-6/2016 % change, 2003-6/2016
ETO Conservation 5.7 6.6 6.7 4.4 4.5 5.3 3.4 -40%
ETO Renewables 13.8 4.0 33.5 1.6 1.4 2.0 1.6 -88%
School   districts 0.8 0.6 1.0 0.5 0.5 0.3 0.4 -50%
OHCS low-income 1.3 0.9 0.7 0.5 0.8 0.4 0.6 -54%
Self-direct (conservation) 7.2 3.2 4.3 5.2 3.0 2.5 3.8 -47%

Source: Biennial reports to the Legislative Assembly on PPC expenditures, all years. 

Since the PPC was first authorized in 1999, it has escaped scrutiny by the legislature. The oversight called for in these bills is long overdue and I encourage your support.


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

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Selling Bonds to Buy the Elliott State Forest Would Be a Breach of Fiduciary Trust

By John A. Charles, Jr.

State Treasurer Tobias Read has announced that he is now prepared to support a plan being developed by Gov. Kate Brown to sell bonds that would “buy out” the Elliott State Forest from the Common School Trust Land portfolio and keep it in public ownership.

Unfortunately, this would saddle taxpayers with debt service on the bonds, thereby reducing or even eliminating the financial benefits of adding the bond proceeds to the corpus of the Common School Fund. This would be a breach of fiduciary trust on the part of the State Land Board.

Members of the public may not understand that bond sales don’t create “free” money; the face amount must be repaid over some designated period of time, with interest.

For example, if the legislature authorizes the sale of $100 million in general obligation bonds, total principal and interest will likely exceed $150 million over several decades.  All Oregon taxpayers will be legally obligated to pay off that debt.

Another option might be the sale of bonds backed by future earnings on the Oregon Lottery. But lottery revenues are essentially the same as General Fund revenues. Paying debt service on lottery-backed bonds will inevitably take money from public schools.

The Governor’s proposal to have the public buy a forest it already owns is akin to someone losing money in an IRA, then transferring funds into the account from a 401(k) to make up for the loss. If both accounts are owned by the same individual, there is no net gain; the loss is just disguised.

As the state’s elected Treasurer, Tobias Read should know better. The only way to decouple the Elliott State Forest from the Common School Fund is to sell it to private parties with no taxpayer financing involved.

Such an offer is sitting in front of the Board today. The Board should accept the offer of $220.8 million from the Lone Rock Timber consortium, place the net proceeds into the Common School Fund, and let the money begin immediately working for public school students.


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

 

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How Portland’s Inclusionary Zoning Policy Makes Development Less Affordable

By Lydia White

The City of Portland’s inclusionary zoning* requirements have turned a once-gushing housing development market into sludge. This was predicted by nearly everyone outside the central planning bureaucratic bubble.

In a rush to beat a February 1st deadline, developers submitted permits for 7,000 units in less than two months. Since then, that number has dropped by 1033%. Combined with other onerous mandates, inclusionary zoning has pushed developers to build in Portland’s surrounding suburbs. Developers aren’t doing so out of greed; they cannot feasibly finance projects within city limits.

Incentives provided by the city aren’t enough to supplement the costs of inclusionary zoning units. Portland-based Urban Development + Partners estimates that an “affordable rate” building costs over $300,000 more than its value, which is the primary number banks and investors use to determine a project’s viability. Eric Cress, a principal with Urban Development + Partners, says, “You can’t finance that [inclusionary zoning projects]. The financing world does not accept anything that costs more than its value.”

The unfortunate, yet not unforeseen, consequence of inclusionary zoning is that some low-income households benefit, while the policy serves as an informal gentrification program suffered by other residents. If Portland’s city planners want to help people afford housing, they should repeal inclusionary zoning requirements and let developers increase housing supply in a free and open housing market.

*Portland’s inclusionary zoning policy requires developers with 20 units or more to make 20% of units “affordable” at 80% of median family income, or 10% “affordable” at 60% median family income.


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

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Let’s Build Some Highways

By John A. Charles, Jr.

Oregon stopped building new highways in 1983 when I-205 was completed. Top planning officials began espousing a philosophy of spending money on rail transit rather than roads. The government also used the power of zoning to crowd more people into urban centers, in the belief that high density would lead to less reliance on cars.

The new strategy failed.

The Portland regional transit agency, TriMet, was given more than $3.6 billion to build a light rail system; yet between 1997 and 2016, TriMet’s market share of all commute trips in Portland fell from 12% to 10%. As a result, traffic congestion has become a major barrier to regional mobility.

Now a bipartisan group of legislators, led by Republican Rich Vial of Wilsonville and Democrat Brian Clem of Salem, has introduced a bill that would jump-start the highway-building process. HB 3231 would authorize cities and counties to jointly form special districts for the purpose of building and operating limited-access public highways.

If built, such highways would likely be financed through loans, with debt service paid off by tolls.

So far HB 3231 has not received a public hearing. It should. Motorists deserve all the highways they are willing to pay for. Let’s give them a chance to vote with their dollars for a better road system.


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

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It’s Finally Time to Sell the Elliott State Forest

By John A. Charles, Jr.

At the February 14 meeting of the State Land Board, the Board voted 2-1 to enter into negotiations with a private consortium to sell 82,450 acres of the Elliott State Forest. Gov. Kate Brown, who was on the losing end of the vote, has ordered the Department of State Lands to come back in April with an alternative plan that would allow for continued public ownership.

Not only is the Governor being petulant, but the alternative she favors has been studied repeatedly since 1995. That was the year that the Board released its first “Draft Asset Management Plan.” The Elliott was then valued at $850 million, but annual revenues were dropping due to rising management costs.

The Land Board was told by a consultant that “selling the Elliott State Forest would be the most effective way to maximize Common School Fund revenues.” The Board is required by the Oregon Constitution to make money on the Elliott because it is an endowment asset for public schools.

Sadly, that recommendation was rejected. Instead, state officials spent the next 20 years engaged in fruitless negotiations with federal regulators regarding compliance with the Endangered Species Act. Every time the Board thought an agreement to cut more timber had been reached, it turned out to be a false summit.

Meanwhile, advocacy groups used the Elliott as a legal piñata. They successfully sued the Land Board so many times that the forest stopped generating any revenue by 2013 and actually became a financial liability for Oregon schools.

The costs of this wait-and-see approach were not trivial. According to a report published by the Board in 2014, the Elliott had cost the Common School Fund $1.4 billion in lost earnings since 1995.

Things actually worsened after the report was published. In 2015 the Land Board decided to finally sell the Elliott; but instead of taking competitive bids, the Board established a fixed price. The Board also downzoned the land by imposing multiple limitations on future timber harvesting.

The result was that the Board received a single offer in 2016, for the state-mandated price of $220.8 million. The net result of 22 consecutive years of public ownership was a loss to the Common School Fund of at least $1.62 billion.

Governor Kate Brown now wants to renege on the sale entirely (despite voting for it in 2015) and use state bonding capacity to “buy out” a portion of the Elliott. This is probably the worst idea yet. The public already owns the forest; why would we want to go into debt buying ourselves out?

While the $220.8 million offer now on the table is a far cry from the $850 million we could have received in 1996, it’s better than hanging on to a dead asset. Secretary of State Dennis Richardson and State Treasurer Tobias Read voted to sell the forest, and that was the appropriate decision. Adding $220 million in new revenue to the Common School Fund endowment will generate many billions of dollars for schools over the next century.


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in the Portland Tribune on March 16, 2017.

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Now Is the Time: Oregon’s Educational Opportunity Act, The Power of Choice

By Steve Buckstein

Oregon now has the chance to become an early adopter of a universal Education Savings Account program. An ESA program allows Kindergarten through 12th grade students to use part of the state funds allocated to their local school districts for other educational expenses and services of their choice, such as private or home schools, tutors, and online courses. Funds not used by the student in a given year can be rolled over, all the way to college.

Senate Bill 437 as Introduced would allow 100 percent of the average annual state funding (currently $8,781) for disabled and low-income students, and 90 percent for all other students, to fund ESAs for any students wishing to use them. This likely would result in a $200 million fiscal impact on the state and local school districts combined. A small price to pay for educational freedom, but not likely to happen in a legislative session facing a budget shortfall.

So, the bill has been amended to virtually eliminate any negative fiscal impact. It lowers ESA accounts to $6,000 for disabled and low-income students and $4,500 for all other students. These accounts represent real money…for real educational opportunities…for every student—with no fiscal impact on the state budget.

Please share your interest in Senate Bill 437, the Educational Opportunity Act, with your state legislators. And get involved at the Educational Opportunity Act Facebook page and at SchoolChoiceforOregon.com.


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

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Testimony Before the House Committee on Health Care in Support of HB 2128

To: Chairman Greenlick and members of the House Committee on Health Care

From: Steve Buckstein, Senior Policy Analyst and Founder, Cascade Policy Institute, a non-profit, non-partisan public policy research organization based in Portland

HB 2128 is a common-sense response to Oregon’s overreach when it became the first state to require a prescription for drugs containing pseudoephedrine in 2006. Only Mississippi has followed our lead.

While our prescription-only law was meant to reduce the incidence of meth labs in the state, federal government data show that by the time our law went into effect, we had already seen an 89 percent drop in the previous two years. Why? Because Oregon adopted its earlier behind-the-counter law for pseudoephedrine drugs in 2004.

As federal data in Figure 1 of Cascade Policy Institute’s 2012 study show, Oregon reported 467 meth lab incidents in 2004, and just 50 by 2006. By 2010 we reported 12 meth lab incidents. So, the overwhelming drop came before our prescription-only law even went into effect. As shown in Figure 1, our two neighboring states of Washington and California showed similar declines over the same period; and they only put these drugs behind the counter, as all states were required to do by federal law starting in 2006.

While I don’t have access to the meth lab incident data from more current years, we do know that according to recent reports from the U.S. Customs and Border Patrol, 99.8 percent of meth seized in the United States in 2015 was produced in Mexico.

Let’s be clear: Neither putting pseudoephedrine drugs behind the counter nor making them prescription-only did anything to reduce meth use and abuse.

Requiring prescriptions simply inconveniences Oregonians who want to treat minor cold or seasonal allergy symptoms, something consumers in 48 other states don’t have to bother with.

Oregonians have to make an appointment, take time off work to visit their doctor, ask for a prescription, and then go to the pharmacy to buy a product they previously could purchase by just asking their pharmacist.

A 2014 study found that this prescription requirement increased consumer prices for these drugs by 35 percent.

Making pseudoephedrine Rx-only is also likely to result in some patients relying on less effective treatments or avoiding treatment altogether due to additional cost and hassle. This could result in more lost work time for individuals and lost productivity for employers.

It’s time to recognize that we solved most of the meth lab problem by placing these drugs behind the counter in 2004. We didn’t need to overreach with our prescription-only law in 2006.

It’s time to repeal the prescription-only restriction and let honest consumers buy the cold and allergy medicines they prefer, just like people in 48 other states.

Thank you.

Click here for Figure 1 of Cascade Policy Institute’s 2012 study

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Testimony Before the House Committee on Revenue in Opposition to Tobacco and Inhalant Nicotine Tax Bills

To: Chair Barnhart and members of the House Committee on Revenue

From: Steve Buckstein, Senior Policy Analyst and Founder of Cascade Policy Institute, a Portland-based non-partisan, non-profit public policy research organization

Re: Tobacco taxes and inhalant nicotine taxes proposed in
HB 2037, HB 2056, HB 2062, HB 2084, HB 2119, HB 2662, and HB 3178

Why the state should not depend on increased sin taxes

  • Oregon’s addiction to tobacco/nicotine revenues will only grow if we become more dependent on them to fund new or existing programs.
  • Taxes on alcohol and tobacco are frequently justified as a means of discouraging “unhealthy” behavior. But this objective quickly gives way to a different one: raising revenue. This creates a “moral hazard” problem: sin taxes cannot simultaneously both discourage consumption and raise more revenue. For one to succeed, the other must fail.
  • As cigarette smoking continues to decline, tobacco taxes will continue to shrink, punching one more hole in future state budgets.

The regressivity of Sin Taxes

Paying for any state programs by taxing smokers may make some program recipients better off, but it will also make smokers and their families worse off.  As you may know:

  • Cigarette smoking adults are more likely to be uninsured than non-smoking adults.
  • Cigarette smokers are in poorer physical condition than non-smokers.
  • Cigarette smokers generally have lower incomes and less formal education than non-smokers.
  • Cigarette smokers are more likely to be unemployed or unemployable than non-smokers.

Policy option:

Currently, less than eight percent of Oregon tobacco taxes are used for the Tobacco Use Reduction Program. Funding other state programs through cigarette, tobacco and/or nicotine taxes is very regressive, targeting less educated, lower income and sicker Oregonians. If anything, these taxes should be reduced, not increased.

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The Road to Success Travels Through 3rd Grade Reading

By Kathryn Hickok

Denisha Merriweather failed third grade twice. Today, she is finishing her master’s degree, thanks to Florida’s tax-credit-funded scholarship program. Last week Denisha was President Trump’s guest at his Address to Congress, where he called educational choice “the civil rights issue of our time.”

The key to Denisha’s success was her godmother’s ability to remove Denisha from a school that was failing her, and to send her to the school that provided her with the support she needed.

Denisha says:

“Now that I’m in graduate school, I can look up statistics that suggest I’ve beaten the odds….[S]tudents who don’t read proficiently by the third grade are four times as likely to drop out of high school as those who do….

“That was me.”

According to the National Association of Education Progress, only 34% of Oregon fourth-graders tested “proficient” in reading in 2015. Oregon students should have the power of choice to find their own path to success, just like Denisha. The Oregon Legislature can help them do this with Senate Bill 437. SB 437 would give parents who want to opt out of a public school a portion of the per-student state funding for their child, to spend on education in other ways. No one disputes the need for improvements to public schools. But children who need help today should be able to get help now.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Oregon program at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Oregon Taxpayers, Not Riders, Pay Most Costs of Public Transit Operations

By John A. Charles, Jr.

In a recent interview with the Portland Business Journal, Chris Rall of Transportation for America argues for increased state support of public transit service. He says that Oregon only covers three percent of the operating costs of transit, while other (unnamed) states pay for 24 percent.

I don’t know the source of Mr. Rall’s claim, but the audited financial statements for the largest transportation districts in Oregon show a very different picture.

In FY 2016 TriMet had total operations revenue of $542,200,000 but only $118,069,000 came from passenger fares. That means TriMet riders received a 78% subsidy from other sources.

At Lane Transit District in Eugene, passenger fares in 2015 were only $7.2 million, while total operating revenue was $60.9 million. Non-riders paid for 88% of operations.

For Cherriots Salem-Keizer transit, public support totaled 94% of all operating revenue in 2015.

Undoubtedly the largest subsidy goes to the Portland-Eugene passenger rail line operated by ODOT. For every one-way ticket sold in 2015, the public paid $120.

Before state legislators approve any more subsidies to transit, they should require that transit operators recover at least 50% of costs from customers. If riders are only willing to pay 10 percent, why should taxpayers have to pick up the rest of the tab?


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

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75th Anniversary of Roosevelt Order a Sober Reminder to Defend Constitutional Liberties

By Lydia White

On Monday, government offices were closed in honor of Presidents’ Day. Americans enjoyed a break from work and school, and some championed historic Leaders of the Free World.

But, just one day before, few observed a Day of Remembrance for abominable actions committed by a still-celebrated President.

Seventy-five years ago, Franklin D. Roosevelt issued Executive Order 9066. The order evicted nearly 120,000 citizens and nationals of Japanese descent from Oregon, Washington, and California. Men, women, and children were forced to abandon their homes and businesses simply because of their ethnicity.

Many victims, over half of whom were U.S. citizens, were rounded up and relocated to temporary internment camps. Stables, including Portland’s own Pacific International Livestock Exposition, were converted into living quarters. Most victims were shipped to long-term incarceration camps, where they stayed for four years until the war concluded. All were subjected to bitter hostility, even upon returning home.

During the hysteria of war, racism swept the nation. The duress caused by international tensions led citizens and political leaders alike to choose security over liberty, destroying thousands of innocent lives in the process.

On Presidents’ Day, we should celebrate the achievements of our past leaders. But let us not forget the atrocities committed by Presidents past, and work diligently to prevent present and future leaders from further violating civil liberties.


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

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Land Board Votes to Sell Elliott State Forest

By John A. Charles, Jr. 

On February 14 the Oregon State Land Board – comprised of Governor Kate Brown, Treasurer Tobias Read, and Secretary of State Dennis Richardson – voted 2-1 to sell 82,450 acres of the Elliott State Forest to a consortium of private parties led by Lone Rock Timber Management Company. The agreed-upon sale price is $220.8 million; and the net proceeds will be placed in the Oregon Common School Fund (CSF), an endowment for public schools.

This parcel is a small part of the Oregon Common School Trust Land portfolio of 1.5 million acres of lands that must be managed by the Land Board to maximize revenue over the long term for the benefit of public schools.

For many years the Elliott was a money-maker, but environmental litigation steadily reduced timber harvesting to a trickle. For the last three years the Elliott has actually lost money, which prompted the Board in August 2015 to vote unanimously to sell the Elliott and put the proceeds into alternative investments.

As a long-time Board member, Gov. Kate Brown repeatedly voted to sell the forest, but in December 2016 she changed her mind and announced her intent to use state bonding capacity to buy a portion of the Elliott and keep it in public ownership. Treasurer Ted Wheeler and Secretary of State Jeanne Atkins agreed with her conceptually, but no formal vote was taken and both of them have since left the Board.

At the meeting earlier this week, Gov. Brown made a motion to terminate any further negotiations to sell the forest, despite the fact that Lone Rock and its partners had spent at least $500,000 putting together a good-faith offer in response to the Land Board’s sale protocol. Her motion never received a second.

New Treasurer Tobias Read indicated that he was uncomfortable walking away from the offer at the last minute, and that the legal doctrine of “undivided loyalty” to Common School Fund beneficiaries – public schools – compelled him to sell the money-losing forest. Secretary of State Dennis Richardson concurred and the Governor was out-voted.

Cascade Policy Institute has been urging the Land Board to sell the Elliott since 1996, when the forest was valued at roughly $800 million. It was evident to us that over the next several decades, environmental lawyers would treat the Elliott like a legal piñata and file continuous lawsuits to prevent timber harvesting. That is exactly what happened, turning this vibrant forest into a net liability by 2013.

Cascade published a number of technical papers demonstrating that over virtually any time period and under any reasonable set of assumptions, Oregon schools would be better off if the Board simply sold the forest and put the net proceeds into stocks, bonds, and other financial instruments. These papers were ignored by multiple generations of Land Board members, including John Kitzhaber, Ted Kulongoski, Jim Hill, Phil Keisling, Randall Edwards, and Kate Brown.

Many editorial writers are urging the Land Board to “hit the pause button” on this sale, but the fact is the Board has been “pausing” since at least 1995. As timber harvest receipts steadily declined over the next several decades, Oregon wasted more than $3 million trying to negotiate a so-called “Habitat Conservation Plan” with the federal government that would shield Oregon from further litigation. Such an agreement was never reached.

In a report paid for by the Department of State Lands in 2015, experts found that the failure to sell the Elliott in 1995 – as recommended by a Department of Forestry consultant – had cost public schools $1.4 billion in lost earnings over a 20-year period.

Gov. Brown’s last-minute effort to buy back timberland the public already owns was poorly thought out. Most of the media observers – who tend to favor public ownership – have apparently overlooked the fact that any revenue bonds sold by Oregon would have to be paid off by profits generated on-site. Since the Elliott has been steadily losing money under public management, it’s unlikely that anyone would even buy such bonds.

Although selling the Elliott was the right thing to do, we will never know if the public received fair market value because the Land Board refused to take competitive bids. In 2016 the Board established a price of $220.8 million based on multiple appraisals, and no one was allowed to offer a higher amount. Clearly, this was a bizarre way to sell a valuable asset and demonstrates how Kate Brown, Ted Wheeler, and Jeanne Atkins consistently abdicated their fiduciary responsibilities in favor of a political agenda to retain public ownership.

Treasurer Read and Secretary Richardson deserve credit for moving forward with the sale. Neither of them wanted to do it, but they understand that they have an obligation to current and future public school students to add value to the Common School Fund.


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

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Car Ownership Is Not a Crime

By John A. Charles, Jr.

A bill has been introduced in the state legislature that would impose a $1,000 ownership tax every five years on automobiles more than 20 years old.

Fortunately, leaders of the Republican Party quickly denounced it; and without bipartisan support the bill has no chance of passage. The chair of the House Revenue Committee, Rep. Phil Barnhart of Eugene, has announced that the bill is dead.

The fact that this legislation was even introduced points to a conceptual problem shared by many lawmakers: They think that owning a vehicle is undesirable and should be taxed.

But owning a car imposes no cost on the public; it’s the use of the vehicle that we should be concerned with.

As one legislator told me many years ago, “I own four cars—but I only drive one at a time!”

Since we do need money for improved roads, any transportation tax should focus on road use. One option would be to lower the cost of vehicle registration in exchange for a small increase in the gas tax.

Motorists deserve all the roads they are willing to pay for. Raising the gas tax would give drivers a chance to vote with their tires for a better road system.


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

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Parental Choice Champion Betsy DeVos Confirmed as U.S. Secretary of Education

By Steve Buckstein

Opponents of Betsy DeVos tried everything they could to keep her from becoming U.S. Secretary of Education. In the end, she was approved by the Senate on Tuesday with Vice President Pence breaking a 50-50 tie vote.

In addition to arguments that she is wealthy (which she is) and that she never attended public schools (which she didn’t), opponents feigned shock that she had the temerity to argue that educating children takes precedence over protecting and funding public schools that may not meet their needs.

Perhaps her opponents’ biggest error is thinking that private schools are not providing “public education.” But they are. Many Americans recognize that meeting the educational needs of children trumps meeting the financial needs of the adults who work in public school buildings.

Public education means educating the public—or it should. Students don’t suddenly stop being part of the public just because their parents believe they will be better educated in other than their local public school building.

Betsy DeVos believes that public funding of education shouldn’t be limited to schools dominated by public teachers unions. She may not be a friend of those unions, but she is a friend of children who may need those funds to help them learn somewhere else. She has, and will advocate for school choice programs including charters, vouchers, and Education Savings Accounts that allow those children to take their public education funds to the schools they and their families—not the government—choose.


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

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Policy Picnic – February 23, 2017

Please join us for our monthly Policy Picnic led by

Cascade Policy Institute’s

Research Associate Lydia White


The Seen and Unseen World of Solar Net Metering

Environmentalists claim residential solar energy is the solution to fulfilling our energy needs, but they often overlook its unintended consequences. Looking through the lens of Frédéric Bastiat’s “That Which is Seen, and That Which is Not Seen,” Lydia will address the flaws of solar net metering. The “Seen” paints a rosy picture of sustainable green energy captured by our greatest renewable resource, the sun. But, the “Not Seen” reveals the unreliability and unaffordability of net metering and the inequity this program creates.

Admission is free, but reservations are required due to space limitations. You are welcome to bring your own lunch; light refreshments will be served.

Reserve your free tickets here.

Cascade’s Policy Picnics are generously sponsored

by Dumas Law Group, LLC

dumaslawlogo 80percent

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“Facing Reality” Report Offers Solutions to Governor Brown’s $1.7 Billion Budget Hole Without Raising Taxes

FOR IMMEDIATE RELEASE

Media Contacts:

Steve Buckstein (503) 242-0900

Jeff Kropf (541) 729-6229

PORTLAND, Ore. – Cascade Policy Institute and Oregon Capitol Watch Foundation jointly released a new report Wednesday, entitled Facing Reality: Suggestions to balance Oregon’s budget without raising taxes. The report offers practical solutions to fill Governor Kate Brown’s estimated $1.7 billion budget hole without raising taxes.

Facing Reality is the third budget blueprint in a series: In 2010 and 2013 Cascade Policy Institute and Americans for Prosperity-Oregon published Facing Reality reports that offered state legislators an opportunity to “reset” state government using the time-tested principles of limited government and pro-growth economic policies.

“Oregon has over one billion dollars more to spend than the last budget but is still nearly two billion short because Governor Brown’s budget continues out-of-control and unsustainable spending,” said Jeff Kropf, Executive Director of Oregon Capitol Watch Foundation. “It’s time to face the reality that raising taxes will never provide enough money to build the fantasy utopia envisioned by the Governor and current legislative leadership. There is no free lunch, and new taxes are only going to hurt the poor and the middle class.”

Facing Reality outlines $1.3 billion in reduced spending in seven specific areas which, coupled with small across-the-board agency reductions, equals $1.7 billion, enough to fill the Governor’s estimated budget hole and removing the need to raise taxes.

“Keep in mind that even with our Facing Reality budget reductions, the state of Oregon will still be spending more money than the previous budget,” said Steve Buckstein, Senior Policy Analyst and Founder of Cascade Policy Institute. “The reality the Governor and the legislature must face is that the bill for years of overspending is coming due, and raising taxes that hurt the economy is not the answer. Reducing how fast spending grows is the sustainable way forward.”

This third Facing Reality report offers politically possible solutions to meet the needs of Oregonians. It still gives most state agencies more money to spend, but without enacting new taxes being proposed by the several dozen tax increase bills introduced for consideration in the 2017 legislative session.

Here are the seven specific budget reductions proposed in Facing Reality:

Solution Impact
PERS—$100,000 cap $135 million
Department of Administrative Services—halt additional hiring $120 million
Medicaid—opt out of ACA expansion $360 million
Cover All Kids—reject expansion $55 million
Department of Human Services—targeted reductions $321 million
Department of Human Services—cash assistance reforms $160 million
State School Fund—reject Measure 98 $139 million
Total $1,290 million

For agencies not identified for specific reductions in the report, across-the-board reductions of about three percent from Governor Brown’s budget would eliminate the shortfall she identified. If this plan were implemented, none of the tax and fee increases outlined in the Governor’s budget would be necessary.

Buckstein and Kropf note, “Most Oregonians must face their own family budget realities every day. Facing Reality is a good-faith effort to hold our state government to the same budgetary realities. We look forward to working with state legislative and executive branch leaders to help implement such realities in 2017.”

Read the full report here: Facing Reality: Suggestions to balance Oregon’s budget without raising taxes

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.  Oregon Capitol Watch Foundation is a 501(c)3 charitable educational foundation dedicated to educating Oregon citizens about how state and local governments spend their tax dollars by researching, documenting, and publicizing government spending and developing policy proposals that promote sound fiscal policies and efficient government.

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Renewable Energy Certificates Don’t Turn on Your Lights

By Allison Coleman

Over the past two decades there has been a large push for environmental policy initiatives.

Unfortunately, some of these policies do nothing for the environment. The sale of so-called “green power” by electric utilities is one example. More than 60 Northwest utilities market green power products to consumers through monthly subscriptions, in which consumers think they are buying electricity from clean and renewable sources. Utilities promote these at different levels, ranging from platinum to silver, depending on the amount a customer spends.

However, customers are not actually buying renewable energy. Instead, they are buying “Renewable Energy Certificates” (RECs), which simply offer them the bragging rights associated with renewable power produced somewhere. The electricity may be sold to a homeowner in Montana, while the REC associated with that power is sold to a consumer in Oregon.

The REC itself is not a unit of electricity. In fact, it doesn’t even exist; it’s just an electronic number.

From 2011-2015, Multnomah County spent $230,000 on RECs. In 2016, the City of Beaverton spent $29,282. In 2015, Metro spent $104,539.

Every dime of that money was wasted. Taxpayers received no green power, or power of any kind.

Individual consumers are free to spend their own money on worthless junk. Elected officials spending tax dollars should be held to a higher standard.


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

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The Past, Present, and Future of School Choice in Oregon

By Steve Buckstein

The vast majority of Oregonians attended public schools assigned to them based on their ZIP codes. Yet, everyone has friends or relatives who made different choices such as private, religious, and home schooling.

Few know, however, that these other choices were almost eliminated in the 1920s. Bigotry was strong across America then, and not only against Blacks. The Ku Klux Klan and others placed a measure on Oregon’s 1922 ballot that would have required children to attend only schools run by the government. The Oregon Compulsory Education Act was defended as “a “precautionary measure against the moral pestilence of paupers, vagabonds, and possibly convicts.”

Approved by a narrow margin, the measure was challenged and overturned by a unanimous U.S. Supreme Court decision in 1925. In its ruling the Court said “the fundamental theory of liberty upon which all governments in this Union repose excludes any general power of the State to standardize its children by forcing them to accept instruction from public teachers only. The child is not the mere creature of the State; those who nurture him and direct his destiny have the right, coupled with the high duty, to recognize and prepare him for additional obligations.”

So, while choices other than public schools remained available, most families have been unable to afford public school taxes and private school tuition at the same time. This reality caused a small group, including myself, to place a citizen initiative on Oregon’s ballot in 1990. Measure 11 would have provided refundable tax credits to every K-12 student in the state, which they could use to attend any public, private, religious, or home school of their choice. No state had voted on such a sweeping reform before, and we felt it was time for Oregon to lead the way.

On election night that November we came up short, with only about one third of the vote. That didn’t surprise us, because school choice was a new concept to most people, and it was easy for our opponents to scare voters into saying No. Before the votes had even been tallied, we began thinking about how we could move our school choice agenda forward in the future. We decided that Oregon needed a free-market think tank to advocate for school choice as well as other limited government ideas. We incorporated Cascade Policy Institute two months later. In the 25 years that have now passed some significant progress on the school choice front has been made.

We worked hard to introduce the charter school concept in the state in the mid-1990s. By 1999 the Oregon legislature passed a charter school bill that now allows more than 120 public charter schools to operate across the state.

Also in 1999 we evolved from just talking about school choice to actually providing choice to hundreds of low-income kids in the Portland area through our Children’s Scholarship Fund program. We initially raised $1 million of private money that was matched by $1 million nationally to provide partial scholarships to over 500 students for four years at the schools of their choice. The fact that over 6,600 children applied for those 500 slots demonstrated that the demand for school choice is great in Oregon. We can’t help them all, so we continue to advocate for broader programs that will.

In 2011 three school choice bills passed as part of an education reform package, including expansion of online charter schools, more options to sponsor new charter schools, and open enrollment between public school districts.

Over these past twenty five years Cascade and others have brought a number of national speakers to the state talking about the benefits of school choice elsewhere, including some 61 privately or publicly funded scholarship programs, charter schools, education tax credits, vouchers, and Education Savings Accounts (ESAs).

In 2014, Cascade proposed a limited Education Savings Account bill to help disabled, foster, and low-income children. ESAs allow students to take some or all of the money the state would spend on them in a public school and put it on a restricted use debit card. They can fund a wide variety of approved educational options, such as private school, individual tutoring, and distance learning. Any money not used in a given year can be rolled over to spend on educational expenses in the future, even into college.

Earlier tax credit and voucher programs are now seen as the rotary-dial telephones of the school choice movement. ESAs, with their expansive array of options and their ability to hold costs down as students plan and save for the future are seen as the smartphones of the movement— smartphones with virtually unlimited apps to help children learn in their own unique ways.

This year, Cascade is promoting a broad ESA proposal in the Oregon legislature. Senate Bill 437, and other bills that may emerge, are designed to enhance school choice for everyone. In the future, our mission—and yours if you choose to accept it—will be to help our fellow Oregonians understand and support what many now call the new civil rights issue in America: the right of every child, no matter where they live or their parents’ financial means, to reach their own potential by making their own educational choices affordable. Until this right is achieved, too many children will remain trapped in schools assigned to them by their ZIP code that fail to meet their needs.

We won’t stop advocating for school choice until every child has the real choices they deserve. We appreciate the help of everyone who shares this vision. It can’t become a reality too soon.


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

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An Oregon Education Solution Whose Time Has Come

By Kathryn Hickok

Derrell Bradford has spent his adult life passionately advocating for education reform through parental choice. Derrell grew up in southwest Baltimore and received a scholarship to a private high school. Better than anyone, he knows the power of educational choice to unleash a child’s potential.

“A scholarship is not a five-year plan or a power point…,” Derrell explained recently. “It’s a ticket to the future, granted today, for a child trying to shape his or her own destiny in the here and now….”

Choices in education are widespread in America, unless you are poor. Affluent families can move to different neighborhoods, send their children to private schools, and supplement schooling with enrichment opportunities. Lower- and middle-income families, however, are too often trapped with one option: a school in need of improvement assigned to them based on their home addresses. Families deserve better.

January 22-28 is National School Choice Week, the world’s largest celebration of parental choice and effective educational options for all children.

Students have different talents and needs and learn in different ways. The landscape of options to meet those needs is more diverse today than ever. These options include traditional public schools, charter schools, magnet schools, online learning, private schools, and homeschooling.

Oregon’s 2012 “Mother of the Year” and parental choice activist Bobbie Jager says, “The word ‘choice’ in our home means, ‘of high quality and carefully selected,’ as our children’s education and schools should be. As parents, we need to be able to make these choices for each of our children.”

It’s time Oregon took a serious look at the diversity of options parents now have in 61 school choice programs across the country, including privately or publicly funded scholarship programs, charter schools, education tax credits, vouchers, and Education Savings Accounts.

Parents—not public school bureaucracies—should be in the educational “driver’s seat.” To really empower Oregon families, the Legislature should enact Senate Bill 437 during this year’s upcoming legislative session. This law would give parents who want to opt out of a public school that is not meeting their child’s needs a portion of the per-student state funding for spending on their child’s education in other ways. With this “Education Savings Account” (analogous to a debit card for qualifying education expenses), parents can choose the schools or services that will meet their children’s learning needs.

Oregon has a history of bold experimentation in other policy areas. It’s time to expand the role of parents choosing―and the market delivering―better education for Oregon’s children through educational choice, because every child deserves a ticket to a better future right now. Parental choice is the way of the future, and Education Savings Accounts for Oregon parents are a life-changing education solution whose time has come.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute, Oregon’s free market public policy research organization. This article originally appeared in The Coos Bay World on January 23, 2017.

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An Oregon Education Solution Whose Time Has Come

By Kathryn Hickok

Derrell Bradford has spent his adult life passionately advocating for education reform through parental choice. Derrell grew up in southwest Baltimore and received a scholarship to a private high school. Better than anyone, he knows the power of educational choice to unleash a child’s potential.

“A scholarship is not a five-year plan or a power point…,” Derrell explained recently. “It’s a ticket to the future, granted today, for a child trying to shape his or her own destiny in the here and now….”

Choices in education are widespread in America, unless you are poor. Affluent families can move to different neighborhoods, send their children to private schools, and supplement schooling with enrichment opportunities. Lower- and middle-income families, however, are too often trapped with one option: a school in need of improvement assigned to them based on their home addresses. Families deserve better.

January 22-28 is National School Choice Week, the world’s largest celebration of parental choice and effective educational options for all children.

Students have different talents and needs and learn in different ways. The landscape of options to meet those needs is more diverse today than ever. These options include traditional public schools, charter schools, magnet schools, online learning, private schools, and homeschooling.

Oregon’s 2012 “Mother of the Year” and parental choice activist Bobbie Jager says, “The word ‘choice’ in our home means, ‘of high quality and carefully selected,’ as our children’s education and schools should be. As parents, we need to be able to make these choices for each of our children.”

It’s time Oregon took a serious look at the diversity of options parents now have in 61 school choice programs across the country, including privately or publicly funded scholarship programs, charter schools, education tax credits, vouchers, and Education Savings Accounts.

Parents—not public school bureaucracies—should be in the educational “driver’s seat.” To really empower Oregon families, the Legislature should enact Senate Bill 437 during this year’s upcoming legislative session. This law would give parents who want to opt out of a public school that is not meeting their child’s needs a portion of the per-student state funding for spending on their child’s education in other ways. With this “Education Savings Account” (analogous to a debit card for qualifying education expenses), parents can choose the schools or services that will meet their children’s learning needs.

Oregon has a history of bold experimentation in other policy areas. It’s time to expand the role of parents choosing―and the market delivering―better education for Oregon’s children through educational choice, because every child deserves a ticket to a better future right now. Parental choice is the way of the future, and Education Savings Accounts for Oregon parents are a life-changing education solution whose time has come.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute, Oregon’s free market public policy research organization. This article originally appeared in The Coos Bay World on January 23, 2017.

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Limiting Government: A Goal That’s Always Worthwhile

By Lydia White

As inauguration weekend unfolded, Republicans cheered with a gasp of relief, Democrats protested, and many broke down into tears and even violence.

The extremity of responses from people across the political spectrum reveals a troubling aspect of contemporary politics: Many are terrified the “wrong” party will come into the federal government’s vast powers.

If Americans feel their livelihood depends on one election cycle, the scope of government is far too big.

Since the 1990s, each party held control of the White House and both chambers of Congress for four years. Under their leadership, Republicans ballooned public debt by 32%, Democrats by 45%.

Every new administration, whether Republican or Democratic, brings more spending and less freedom. Yet, for some reason, Americans find this acceptable as long as the spending is on their party’s preferred programs, compensating for the other party’s inane spending. This never-ending cycle sets precedent for every subsequent administration to retaliate and further mushroom public debt.

Instead of continuing this trend of ever-growing government, self-declared limited-government advocates should live by their principles and scale back bureaucracy across the board.

Should they be tempted to engorge themselves by forcing “favorable” big government policies through Congress, conservatives must be ready to face the consequences. The powers amassed may very well land into the “wrong” hands yet again.


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

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The Oregon Education Solution Whose Time Has Come

By Kathryn Hickok

Next week is National School Choice Week, the world’s largest celebration of parental choice and effective educational options for all children.

Students have different talents and needs and learn in different ways. The landscape of options to meet those needs is more diverse today than ever. These options include traditional public schools, charter schools, magnet schools, online learning, private schools, and homeschooling.

Oregon’s 2012 “Mother of the Year” Bobbie Jager says, “The word ‘choice’ in our home means, ‘of high quality and carefully selected,’ as our children’s education and schools should be. As parents, we need to be able to make these choices for each of our children.”

Parents—not public school bureaucracies—should be in the educational “driver’s seat.” To really empower Oregon families, the Legislature should enact Senate Bill 437. This law would give parents who want to opt out of a public school that is not meeting their child’s needs a portion of the per-student state funding for spending on their child’s education in other ways.

With this “Education Savings Account” (analogous to a debit card for qualifying education expenses), parents can choose the schools or services that will meet their children’s learning needs. Parental choice is the way of the future, and Education Savings Accounts for Oregon parents are a life-changing education solution whose time has come.


Cascade Policy Institute will host a National School Choice Week Policy Picnic on Wednesday, January 25, at noon. Oregon’s 2012 “Mother of the Year” Bobbie Jager will talk about how she got involved in education advocacy and what’s ahead for Oregon parents and students in 2017. Those interested in attending can find more information and RSVP here.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Surprise! Renewable Energy Mandates Are Actually Fossil Fuel Mandates

By John A. Charles, Jr. and Lydia White

The Sierra Club and other environmental groups are objecting to PGE’s plan for new, natural gas-powered generation to help replace the electrical output that will be lost when PGE shuts down the Boardman coal plant in 2020. What these groups should admit is that they are the ones responsible for that decision.

Last March, the Oregon legislature adopted the Oregon “Renewable Portfolio Standard” (RPS), which requires PGE to procure 50% of its retail load from designated renewable energy sources by 2040. This requirement, enacted with few public hearings in the rush of the one-month session, was demanded by environmental groups as a way to burnish the state’s mythical green power credentials.

The RPS is essentially a mandate for more utility-scale wind and solar power. These are known as “intermittent resources” because wind farms don’t generate any power about 68% of the time, while solar goes dead about 71% of the time. Being forced to rely on randomly-failing generators means that utilities must have back-up sources (known as “spinning reserve”) in order to preserve grid reliability.

Electricity cannot be stored like other commodities. As soon as electricity is fed into the grid, it travels at the speed of light through many pathways until it is consumed almost instantaneously by a household, factory, or some other end-user. Supply and demand have to be matched at all times in order to avoid grid failure, or “blackout.”

Right now, wind and solar only account for about 5.69% of Oregon’s electricity supply. As lawmakers keep ratcheting up RPS mandates towards 50%, the need for spinning reserve will go up as well. The only practical fuel is natural gas.

These new gas-fueled plants will be running even when not used, in order to be ready when the windmill blades stop turning or the sun goes down. This will result in wasted fuel and increased air pollution.

If utilities must have spinning reserve, can we predict the need for it? This question was the subject of a paper recently published by the National Bureau of Economic Research (NBER). The researchers found that a 1.0 percentage point increase in the share of fast-reacting fossil generation capacity in a country is associated, on average, with a 0.88 percentage point increase in the long-run share of renewable energy.

In other words: more wind and solar = more fossil fuel use. Oregon legislators rushed through the RPS law so quickly that they forgot about the law of unintended consequences.

PGE and PacifiCorp will both be turning to increased natural gas generation over the next 20 years because they don’t have a choice. Customers want their electricity 100% of the time, not 30% of the time. If environmental groups are offended by the use of more natural gas, they should admit that the 50% RPS requirement was a mistake and ask legislators to repeal it.


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. Lydia White is a Research Associate at Cascade. This article originally appeared in the Portland Business Journal on January 12, 2017.

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Cascade Policy Institute Welcomes Oregon’s 2012 “Mother of the Year” to Celebrate National School Choice Week 2017

For Immediate Release

Media Contact:
Steve Buckstein

503-242-0900

steven@cascadepolicy.org

 

Portland, Oregon to play role in nation’s largest celebration of education reform

Portland, Ore. – Cascade Policy Institute will hold a special event in celebration of National School Choice Week 2017, organizers announced today. The event will shine a spotlight on the need to expand access to educational options for all children.

National School Choice Week 2017 (NSCW, January 22-28, 2016) will draw “millions of parents, teachers, students, citizens and community leaders” to support educational opportunity for every child, according to NSCW organizers.

In honor of National School Choice Week, Cascade Policy Institute is delighted to host guest speaker Bobbie Jager, Oregon’s 2012 “Mother of the Year” and energetic advocate for educational choice for all Oregon children. She will talk about how she got involved in education advocacy and what’s ahead for Oregon parents and students in 2017. Last year Jager wrote a Cascade Commentary in support of extending Oregon’s public school open enrollment law.

The event will take place at noon on Wednesday, January 25, at Cascade Policy Institute. Admission is free, but reservations are required due to space limitations. Light refreshments will be served.

Started in 2011, National School Choice Week has grown into the world’s largest celebration of opportunity in education. The Week is a nonpartisan, nonpolitical public awareness effort. Held every January, National School Choice Week shines a positive spotlight on effective educational options for every child. These options include traditional public schools, public charter schools, magnet schools, online learning, private schools, and homeschooling. “School choice” means empowering parents with the freedom to choose the educational options that are best for their children.

“The word ‘choice’ in our home means, ‘of high quality and carefully selected,’ as our children’s education and schools should be,” said Jager. “As parents, we need to be able to make these choices for each of our children.”

More than 21,392 independent events have been planned for National School Choice Week across all 50 states, including:

  • 16,758 hosted by schools of all types
  • 2,168 hosted by homeschool groups
  • 1,358 hosted by chambers of commerce
  • rallies and special events in more than 25 state capitals

“National School Choice Week provides a unique opportunity for Americans to join together on an issue that impacts all of us: educational opportunity,” said Andrew Campanella, National School Choice Week’s president.

By participating in National School Choice Week 2017, Cascade Policy Institute joins millions of Americans in raising awareness about the need to empower parents with the ability to choose the best educational environments for their children.

Founded in 1991, Cascade Policy Institute is Oregon’s premier 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 schoolchoiceweek.com and cascadepolicy.org.

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Kate Brown’s Math Problem

By John A. Charles, Jr.

For the past 18 months, the Oregon Land Board has been working to sell the Elliott State Forest. The decision to seek buyers was based on the fact that the Elliott is losing money, and it is supposed to be making money for Oregon schools.

At its December meeting, the Board was presented with a firm offer of $221 million from a private buyer. Instead of accepting the offer, the Board did nothing. Governor Kate Brown said she wants to sell bonds to buy the Elliott so that it remains in public ownership.

The only problem is that the public already owns it. Selling bonds to buy ourselves out makes no sense.

Land Board members have a fiduciary obligation to maximize revenues from the Elliott for the benefit of students. Increasing taxes on the parents of those students to pay off bonds would be a breach of fiduciary trust.

The only way to ensure that taxpayers benefit is to sell the Elliott to private parties and place the proceeds in the Common School Fund, where the investment earnings are shared with school districts.

The two new Land Board members—Treasurer Tobias Read and Secretary of State Dennis Richardson—should work with the Governor to accept the private offer and move on.


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

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Bad Consequences of Public Policies Aren’t Really “Unintended,” Just “Unacknowledged”

By Steve Buckstein

Decades of research and experience tell us that raising the government-imposed minimum wage results in fewer younger and lower-skilled individuals being hired, and in some of them losing jobs they previously held at lower wages.*

Decades of research and experience also tell us that requiring landlords to charge lower rent than market conditions dictate results in fewer housing units being built, making housing shortages worse and raising housing costs in areas not subject to rent controls.**

During last year’s minimum wage debate in Oregon, pointing out the negative consequences was not enough to stop the legislature from imposing significant wage increases. Likewise, this year the legislature may allow local jurisdictions to impose rent controls even though opponents will surely point out the negative consequences of this policy also.

It now seems obvious what is happening. Supporters of minimum wage increases and rent control aren’t blind to their negative consequences; they simply refuse to acknowledge them because the political benefits outweigh the real costs imposed on those forced to endure them.

The harm done by minimum wage increases and rent control is so obvious that we should probably stop saying that their negative consequences are “unintended.”  Rather, we should say that their negative consequences are “unacknowledged” because their supporters refuse to admit that they exist.

* Making Youth Unemployment Worse, Randall Pozdena and Steve Buckstein, Cascade Policy Institute, December 2016

** The Rent Is Too Damn High! — Why Rent Control Won’t Help, Steve Buckstein, Cascade Policy Institute, September 2016


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

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There’s Never Enough Money for Government

By John A. Charles, Jr.

The news from Portland is that despite record levels of revenue, the City Council needs to cut $4 million in spending next year in order to balance the budget.

The news from Salem is that despite record levels of revenue, the Governor needs to close a $1.7 billion dollar budget gap for the next two-year state spending cycle.

It’s not just a coincidence that these messages are the same. Elected officials are almost always poor stewards of public money. No matter how much they receive from property taxes, income taxes, payroll taxes, liquor taxes, garbage taxes, and dozens of other fees and licenses, it’s never enough.

The primary reason is that politicians tend to adopt new programs where the costs are back-loaded. Policies are approved that sound good and don’t seem to cost much in the short-term; but decades out, the costs explode. Public employee pensions are the most painful example of this.

By the time it becomes obvious that we can’t afford the programs, the politicians who approved them are long gone, and the expenses are locked in.

We don’t have a revenue problem in government; we have a spending problem. The top priority at both the Portland City Council and the state legislature should be to reduce or completely eliminate programs before any new taxes are even considered.


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

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Educational Choice: A “Ticket to the Future” for Every Child

By Kathryn Hickok

Derrell Bradford has spent his adult life passionately advocating for education reform through parental choice. Derrell grew up in southwest Baltimore and received a scholarship to a private high school. Better than anyone, he knows the power of choice to unleash a child’s potential.

“A scholarship is not a five-year plan or a power point…,” Derrell explained recently. “It’s a ticket to the future, granted today, for a child trying to shape his or her own destiny in the here and now….”

Choices in education are widespread in America, unless you are poor. Affluent families can move to different neighborhoods, send their children to private schools, and supplement schooling with enrichment opportunities. Lower- and middle-income families, however, are too often trapped with one option: a school in need of improvement assigned to them based on their home addresses. Families deserve better.

It’s time Oregon took a serious look at the diversity of options parents now have in 61 school choice programs across the country, including privately or publicly funded scholarship programs, charter schools, education tax credits, vouchers, and Education Savings Accounts. Oregon has a history of bold experimentation in other policy areas. It’s time to expand the role of parents choosing―and the market delivering―better education for Oregon’s children through educational choice, because every child deserves a ticket to a better future today.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Making Youth Unemployment Worse

The unintended negative effects of raising minimum wage rates

By Randall Pozdena and Steve Buckstein

President-elect Donald Trump has nominated the CEO of one of the nation’s largest fast food chains to serve as U.S. Secretary of Labor. The food preparation and serving industry employs almost half of all minimum wage workers. It is thus widely assumed that the nominee would be unfriendly to minimum wage regulation. Efforts such as the union-financed Fight for 15 are seeking to raise the federal minimum wage in the food service industry to $15 per hour—a 52 percent increase over the $9.87 average pay rate in the industry today.

The spotlight has thus returned to the issue of minimum wage regulation, including the impact of recent Oregon legislation. SB 1532, passed in 2016, phases in a $14.75 minimum wage in the Portland metro area, and $13.50 and $12.50 respectively in other metro areas and rural areas, by 2022. The average annual increase over the prior (statewide) minimum wage would be 8.5, 6.6, and 5.0 percent respectively for these three tiers over the 2016-2022 phase-in period. As with the last major reform in 2002, the legislated minimum wages would be adjusted after that time by any increases in the CPI.

To put these events in perspective, Cascade Policy Institute has released a major, new analysis of the history, theory, and empirical impacts of minimum wage regulation. The report focuses on the labor market impacts on youth, aged 16 to 24—the age cohort most likely to be affected as new entrants into the labor force. The study uses data and statistical techniques that, for the first time, allow measurement of how the impact of an increase in the minimum wage evolves over time, not just in the period immediately after the increase. In addition, it allows prediction of the interaction of the minimum wage shock with employment, wages, and labor force participation over time.

The findings have ominous implications for youth labor markets. First, as many studies over the past fifty years have shown, the new study finds that increases in the minimum wage significantly depress youth employment and labor force participation. The share of youth employed falls by 3 percent in just the first six months after a 10 percent increase in the minimum wage, and it falls by 6 percent after a year. Similarly, the share of youth participating in the labor force declines by 4 percent at 6 months and 6 percent at 18 months.

Second, contrary to the claims of minimum wage advocates that higher minimum wages create a cascade of even greater increases, youth wages only rise by the amount of the mandated increase—and then only for those lucky enough to find a minimum wage job. Collectively for all youth, what wage increases occur are more than offset by condemnation of a large share of youth to a zero wage; namely, to unemployment.

Third, the study finds that even a one-time increase in the minimum wage persistently continues to depress the share of youth who are employed. Specifically, statistically significant employment impacts can be expected to cumulate over time for at least five years into the future. Even seemingly innocuous increases in the minimum wage—such as Oregon’s prior 2002 policy of adjusting for the CPI—can significantly depress youth employment. Since the implementation of that adjustment policy fourteen years ago, the previous 56 percent share of youth employed has fallen to just 46 percent, an 18 percent decline. Thus, it appears that inflexible, automatic CPI indexing is inferior to letting markets set youth wage rates.

Oregon’s newest policy of legislating different minimum wage levels among metro and designated rural markets is, ironically, a concession to the reality that unregulated private market forces better balance the supply and demand for youth labor. Since the state imposed higher-than-market levels of wages nonetheless, the new study uses its findings to estimate the impact on the three tiers’ respective youth labor markets.

Although detailed, localized youth employment data for Oregon does not exist, application of the nationally estimated behavior measures can be used to estimate regional tier impacts. This analysis suggests that Portland metro area youth will suffer the most, with the share of employed youth falling by 30 percent by 2022. Youth in the state’s other metro areas will see a 20 percent decline, and youth in designated rural areas of Oregon will see a 15 percent decline.

Even though a three-tiered minimum wage is an attempt to accommodate real economic differences between urban and rural areas, Oregon has made a public policy mistake that predictably will be paid for by many of the state’s youngest current and soon-to-be potential members of the youth labor force.


Randall Pozdena is President of QuantEcon, Inc., an Oregon-based consultancy. He received his BA in Economics from Dartmouth College and his Ph.D. in economics from the University of California, Berkeley. He is the author of Cascade Policy Institute’s new analysis, Minimum Wage: Its Role in the Youth Employment Crisis. Steve Buckstein is Senior Policy Analyst and founder of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Policy Picnic – January 25, 2017

Please join us for our monthly Policy Picnic led by

special guest Bobbie Jager

 


 

From 2012 “Oregon Mother of the Year” to School Choice Activist

 

January 22-28, 2017 is National School Choice Week. Started in 2011, NSCW has grown into the world’s largest celebration of opportunity in education. The Week is a nonpartisan, nonpolitical public awareness effort.

Held every January, National School Choice Week shines a positive spotlight on effective education options for every child.

The goal of National School Choice Week is to raise public awareness of all types of education options for children. These options include traditional public schools, public charter schools, magnet schools, online learning, private schools, and homeschooling.

In honor of National School Choice Week, Cascade Policy Institute is delighted to host guest speaker Bobbie Jager, Oregon’s 2012 “Mother of the Year” and energetic advocate for educational choice for all Oregon children. She will talk about how she got involved in education advocacy and what’s ahead for parents and students in Oregon in 2017.

Last year Bobbie wrote a Cascade Commentary in support of extending Oregon’s public school open enrollment law.

Admission is free, but reservations are required due to space limitations. You are welcome to bring your own lunch; light refreshments will be served.

Reserve your free tickets here.

 

Cascade’s Policy Picnics are generously sponsored

by Dumas Law Group, LLC

dumaslawlogo 80percent

 

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Cascade Report Finds Long-Term Negative Impacts on Youth from Oregon’s New Minimum Wage Policy

FOR IMMEDIATE RELEASE

Media Contact:

Steve Buckstein

Senior Policy Analyst

Cascade Policy Institute

(503) 242-0900

steven@cascadepolicy.org

PORTLAND, Ore. – Cascade Policy Institute released a report today that has foreboding implications for young people in our state. The report was commissioned after passage of SB 1532 earlier this year, which phases in large increases in Oregon’s minimum wage. The law mandates minimum wages by 2022 of $14.75 in the Portland metro area, and $13.50 and $12.50 respectively in other metro areas and rural areas. These rates must be adjusted after 2022 by any increases in the Consumer Price Index.

Authored by Oregon economist Randall Pozdena, Ph.D., Minimum Wage: Its Role in the Youth Employment Crisis analyzes the history, theory, and empirical impacts of minimum wage regulation. It focuses on youth aged 16 to 24 because they are most likely to be affected by minimum wage increases as new entrants into the labor force. The report uses data and statistical techniques that, for the first time, allow measurement of how the impact of an increase in the minimum wage evolves over time, not just in the period immediately after the increase. In addition, it allows prediction of the interaction of the minimum wage shock with employment, wages, and labor force participation over time.

“This report confirms ominous long-term negative consequences of minimum wage increases, not just for those currently 16 to 24 years old, but for future potential workers coming into this age group,” said Steve Buckstein, Cascade’s founder and Senior Policy Analyst. 

Key findings of the report: 

  • Increases in the minimum wage significantly depress youth employment and labor force participation. The share of youth employed falls by 3 percent in just the first six months after a 10 percent increase in the minimum wage, and it falls by 6 percent after a year. Similarly, the share of youth participating in the labor force declines by 4 percent at 6 months and 6 percent at 18 months.
  • Contrary to the claims of minimum wage advocates that higher minimum wages create a cascade of even greater increases, youth wages only rise by the amount of the mandated increase—and then only for those lucky enough to find a minimum wage job. Collectively for all youth, what wage increases occur are more than offset by condemnation of a large share of youth to a zero wage; namely, to unemployment.
  • Even a one-time increase in the minimum wage persistently continues to depress the share of youth who are employed. Specifically, statistically significant employment impacts can be expected to cumulate over time for at least five years into the future. Even seemingly innocuous increases in the minimum wage—such as Oregon’s prior 2002 policy of adjusting for the CPI—can significantly depress youth employment. Since the implementation of that adjustment policy fourteen years ago, the previous 56 percent share of youth employed has fallen to just 46 percent, an 18 percent decline. Thus, it appears that inflexible, automatic CPI indexing is inferior to letting markets set youth wage rates.
  • Portland metro area youth likely will suffer the most, with the share of employed youth falling by 30 percent by 2022. Youth in the state’s other metro areas will see a 20 percent decline, and youth in designated rural areas of Oregon will see a 15 percent decline.

Buckstein and Pozdena conclude that “even while bowing to the reality of economic differences between urban and rural areas of the state in its latest minimum wage law, Oregon has made a public policy mistake that predictably will be paid for by many of the state’s youngest current and soon-to-be potential members of the youth labor force.”

The report, Minimum Wage: Its Role in the Youth Employment Crisis, is available here.

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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No Standing in Lines, Just Amazon Go

By Lydia White

Amazon has introduced its new line of physical stores: Amazon Go. Using a smartphone, consumers can swipe into the store, pick up their desired items, and exit—receiving an electronic receipt for their purchases and avoiding dreaded checkout lines. Many hail this new technology as promising and exciting, while others are concerned about the potential for job losses.

Such concerns overlook a fundamental aspect of free market economies: freedom of choice. While many will choose Amazon’s technology for convenience or cost, others may prefer not to out of regard for traditional retail job opportunities or other business or personal reasons. But regardless of these differences, freedom of choice serves everyone.

This holds true across industries. You can buy a BlackBerry or upgrade to an iPhone. You can hail a taxi or download Uber. The economy is not a zero-sum game.

Consumer decisions aren’t made in an ivory tower or executive board meetings, but by each of us in our daily lives. Businesses must cater to our needs to maintain mutually beneficial, voluntary transactions. No one is forced to shop in an Amazon Go store, and traditional shopping experiences will continue to exist as long as consumer demand for them exists.

So, whether or not you are enthusiastic about capitalism’s creative destruction, the choice remains yours.


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

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Testimony Before the Oregon State Land Board on the Sale of State Trust Lands

Cascade Policy Institute President and CEO John A. Charles, Jr. presented a version of this testimony before the Oregon State Land Board on December 13, 2016.


Re: December 13 SLB hearing on the possible sale of the Elliott State Forest

Dear Land Board members:

I am writing in advance of the December 13 Land Board hearing to summarize my testimony.

First, you were correct in deciding last year that a sale of the trust lands was necessary to fulfill your fiduciary responsibilities to the Common School Fund (CSF) beneficiaries. The continued requests from public land advocates to retain ownership should be ignored.

Unfortunately, your sale protocol is fatally flawed, for two reasons: (1) the four unnecessary “public benefits” requirements inherently devalue the asset; and (2) you are prohibiting competitive bids. Both of these elements ensure that you will not be able to get the best possible offer for the transfer, which you are required to do as fiduciaries.

Any sale should be made through a straight up, no-string-attached auction of the property. That is the only way you can determine fair market value.

To illustrate how much money you are leaving on the table, we’ve done two sets of calculations. In one scenario, we took the difference between the “official” price tag of $220.8 million and the high appraisal of $262 million ($41.2 million), and calculated the value of that over 50 and 100 year periods.

In another scenario, we assumed that the Land Board took the “maximum revenue” approach by dispensing with appraisals and simply selling the Elliott via competitive bid with no public benefit requirements. For this scenario we picked $350 million as a conservative value for what the winning bid might be, then subtracted the official price of $220.8 and used the difference ($129.2 million) as the starting point.

We used two different assumptions about future return rates – the first being the 7.5% used by Oregon PERS, and the second a more conservative rate of 6.0%. The projections are below.

Elliott State Forest sale

Investment projections of net proceeds under various assumptions

Difference between high appraisal and sale price: $41.2 M
Interest rate 7.5% 7.5% 6.0% 6.0%
Time period 100 years 50 years 100 years 50 years
Present value $41,200,000 $41,200,000 $41,200,000 $41,200,000
Future value $56,982,781,049 $1,532,217,537 $13,979,245,841 $758,910,356
Difference between market price and sale price: $129.2M 7.5% 7.5% 6.0% 6.0%
Time period 100 years 50 years 100 years 50 years
Present value $129,200,000 $129,200,000 $129,200,000 $129,200,000
Future value $178,693,575,522 $4,804,915,187 $43,837,829,190 $2,379,883,932

Notice the stunning difference in earnings between the first 50 years and the second 50 years. This is, of course, the miracle of compounding. The refusal of the Land Board to sell off this land in a traditional auction will likely cost public school students somewhere between $44 billion and $179 billion in lost earnings by 2117, and much more in the centuries beyond that. 

You have a fiduciary responsibility to the CSF beneficiaries to get the best possible price for the timberland. That can only come through a traditional auction. I urge you to set aside the one offer in front of you and direct the DSL staff to design a new, competitive bid sale protocol to be implemented during 2017.

Sincerely,

John A. Charles, Jr.

President & CEO

Cascade Policy Institute

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WES Is an Energy Hog

By Allison Coleman

In 2009 the regional transit agency, TriMet, opened a commuter rail line running from Wilsonville to Beaverton. The line is known as the Westside Express Service, or WES.

According to transit advocates, commuter rail would help reduce energy consumption in the Portland region because it was assumed that trains moved people more efficiently than private automobiles.

However, the energy efficiency claims about WES turned out to be wrong. WES uses 6,753 BTUs of energy per passenger mile, which is 4,000 more than the national average of all commuter rail lines. WES also uses more than twice the amount of energy as a car to move the same number of passengers. On average, automobiles consume only 3,122 BTUs per passenger mile, and that number has been dropping steadily since 1970.*

Many transit advocates have been so enthused about commuter rail that they have urged lawmakers to fund an expansion of WES to Salem. Not only would this be costly, it would be a step backwards for energy efficiency. Surprising as it may seem, the average automobile is now far more efficient than commuter rail.

*See http://cta.ornl.gov/data/tedb35/Edition35_Chapter02.pdf, page 2-20, table 2.15.


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

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Portland’s Regional Transit Strategy Is Not Working

By John A. Charles, Jr.

The Portland Auditor released the 2016 Annual Community Survey on November 30. The responses show that the share of all commute trips taken by public transit fell 17% during the past year.

This was part of a longer-term decline in transit use. The transit share of all Portland commute trips peaked in 2008 at 15%. Since then it has hovered near 12%, and now rests at 10%.

Taxpayers should be especially concerned about the negative correlation between passenger rail construction and market share. In 1997, when the region had only one light rail line—the Blue line to Gresham—transit market share was 12%.

After extending the Blue line to Hillsboro and adding four new lines plus the WES commuter rail and the Portland Streetcar, transit market share is only 10%.

Travel Mode Share for Weekday Commuting

Portland citywide, 1997-2016

Mode 1997 2000 2004 2008 2010 2012 2014 2015 2016
                   
SOV 71% 69% 72% 65% 62% 61% 63% 60% 61%
Carpool 9% 9% 8% 8% 7% 6% 6% 5% 6%
Transit 12% 14% 13% 15% 12% 12% 11% 12% 10%
Bike 3% 3% 4% 8% 7% 7% 8% 7% 8%
Walk 5% 5% 3% 4% 6% 7% 8% 9% 9%
Other n/a n/a n/a n/a 7% 6% 6% 7% 7%

      Source: Portland Auditor, Annual Community Survey

The numbers cited above are for citywide travel patterns. When broken out by sector, the Auditor found that just 5% of all commuters in Southwest Portland took transit to work in 2016. Despite this lack of interest by commuters, TriMet and Metro are working to gain approval for another light rail line extension from Portland State University through SW Portland to Bridgeport Village. The likely construction cost will be around $2.4 billion.

Unfortunately, there is no empirical basis for thinking that cannibalizing current bus service with costly new trains would have any measurable effect on transit use.

Transit advocates like to claim that we simply need to spend more money to boost ridership, but we’ve already tried that. TriMet’s annual operating budget went up from $212.2 million in 1998 to $542.2 million in 2016. After adjusting for inflation, that’s an increase of 72%. Those increases were on top of construction costs for rail, which cumulatively exceeded $3.6 billion during that era.

It’s time to stop the myth-making and start holding public officials accountable for a plan that isn’t working.


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

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How Much Is the Elliott State Forest Worth to Oregon Schools? (Don’t Forget the Value of Compounding)

By John A. Charles, Jr.

Advocates of public schools frequently complain about the need for more money, yet many of them are now objecting that the State Land Board is on the verge of selling off the Elliott State Forest, which is an endowment asset for public schools.

The fact is, the Land Board is required by the Oregon Constitution to maximize revenue from the Elliott. The sale has to go forward because timber management is no longer profitable. But the Board should insist on competitive bids, which it is currently prohibiting. The Board should also remove all restrictions on future timber harvesting.

If the Elliott were sold in a competitive auction, it would likely go for $350 million or more. Let’s assume that the proceeds were invested in a manner similar to the PERS fund and had average annual returns of 7.5%, which is the target rate for PERS.

After 50 years, the investment would be worth $13 billion; but after 100 years, it would be worth $487 billion. The huge difference in the two time periods is due to the miracle of compounding.

Do school funding advocates have a better idea for raising $487 billion? If not, they should support an auction sale of the Elliott State Forest.


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 Should Dump the Garbage Tax

By Allison Coleman

Portland-area voters just approved Ballot Measure 26-178, which imposes a five-year property tax that will generate $80 million dollars for Metro to maintain parks owned by the agency.

On the surface, this seems like a wonderful thing; everyone likes parks, and they need to be maintained. However, local residents are already paying a Metro garbage tax of $2.50 per ton, originally intended for this very purpose.

In 2002 the Metro Council enacted a garbage tax to pay for the operating costs of parks. In 2004 the tax was raised from $1.50 per ton to $2.50 per ton. Between 2004 and 2015, this tax brought in $46.8 million dollars for Metro.

In 2006, Metro “undedicated” the tax, meaning it would still be collected but the money would be swept into the general fund for other purposes.

This year, the Metro Council claimed they needed the operating levy to maintain their parks, but they never told voters about the garbage tax.

Metro should do the honorable thing and repeal the garbage tax. Voters may not mind paying for parks, but there is no reason to tax them twice.


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

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Portland’s Zoning Policies Make the Housing Crisis Worse

By Lydia White

The masterminds behind Portland’s newest inclusionary zoning recommendations have proven once again to be economically illiterate.

The Portland Planning and Sustainability Commission unanimously recommended requiring developers with 20 units or more to make 20% of units “affordable” at 80% of median family income, or 10% “affordable” at 60% median family income.

This policy fails to accomplish the Portland Housing Bureau’s stated intentions to “harness the economic power of the private market to increase the supply of affordable housing.”

A simple economics lesson would show them their policies exacerbate the city’s affordable housing crisis.

Developers are indeed responsive to basic economic concepts like incentives and cost-benefit analyses. They will not, and cannot, eat 20% of their costs. As with any tax, costs are passed on to consumers. Developers must offset their losses by accepting taxpayer-funded subsidies, cutting costs (such as forgoing routine maintenance or major repairs), or raising the prices of remaining units. This makes housing even less affordable, forcing lower-income households out of the city and spurring gentrification.

Until such unintended consequences are seriously considered, Portland city leaders will continue to amplify the housing crisis. Only the most out-of-touch city planners believe they can defy the laws of economics and make a scarce commodity more affordable by decreasing its supply.


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

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Now What?

By Steve Buckstein

Here at Cascade Policy Institute, as a nonprofit, nonpartisan think tank we don’t support or oppose political candidates. But we aren’t shy about telling candidates and elected officials what we think about their policies.

Now that this especially contentious election is finally over, you’re probably happy about some of the results and unhappy about others. But even if you got what, or whom, you wanted, you might think about some timeless insights from two discerning historical figures.

The first insight comes from Eric Hoffer, known as the longshoreman philosopher. In his 1951 book The True Believer, Hoffer noted:

“A man is likely to mind his own business when it is worth minding. When it is not, he takes his mind off his own meaningless affairs by minding other people’s business.”

The second insight comes from American statesman Daniel Webster, who in the early 1800’s said:

“There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters.”

Even if the worst happened on election night in your opinion, remember that America has survived as a free and strong nation since declaring our Independence in 1776. In those 240 years we’ve benefited from some great public servants, and suffered some terrible ones. But we’ve always survived and generally prospered, and odds are that we will this time too.

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Policy Picnic – November 16, 2016

Please join us for our monthly Policy Picnic led by

Cascade’s President and CEO, John A. Charles, Jr.


Innovations in Highway Finance

All over the world, new highways, bridges, and tunnels are being built, paid for with tolls. But these not your grandfather’s tolls, and there are no toll booths. These are collected electronically, with variable price rates to ensure traffic speeds of 45 MPH or better. This presentation will summarize the latest roadway projects and the implications for Oregon.

Admission is free, but reservations are required due to space limitations. You are welcome to bring your own lunch; light refreshments will be served.

 

Cascade’s Policy Picnics are generously sponsored

by Dumas Law Group, LLC. 

Dumas Law Group
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Portland’s 100% Renewable Energy Claim Is “Greenwashing”

By Allison Coleman

In 2001, the Portland City Council declared that by 2010, all electricity used by city agencies would come from renewable energy. However, by 2010, only 9 percent of Portland’s power was renewable.

Undeterred, in 2012 Portland leaders again declared that city agencies would achieve 100 percent renewable energy. This time around, the city managed to get up to 14 percent.

Today, Portland has magically declared victory, claiming that municipal electricity use is 100% renewable. However, this is a blatant case of greenwashing. Portland is currently generating only 9 percent of its electricity from city-owned biogas and solar facilities. Another 15 percent is claimed from “green power” sold by Portland General Electric.

The remaining 76 percent of city use comes from a conventional mix of coal, gas, nuclear, and hydro. Portland then pretends to offset this by purchasing so-called “Renewable Energy Certificates” (RECs).

Unfortunately for consumers, an individual REC is not a unit of electricity; it is simply is a certificate claiming to represent the “environmental amenities” associated with one megawatt-hour of electricity generated by sources such as wind and solar. You cannot charge your phone or cook dinner with a pile of RECs because they don’t actually exist.

Last year, Portland spent $104,539 purchasing 74,671 RECs to create the image of 100 percent green power consumption. Every dollar spent buying those RECs was wasted money. Portland taxpayers should demand an end to this green power charade.


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

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Power Is the Narcotic of Choice for Politicians

By John A. Charles, Jr.

Oregon’s free-market research center, Cascade Policy Institute, celebrated its 25th anniversary with a gala dinner party on October 20 at the Tualatin County Club. Since its founding in 1991, Cascade has emerged as a leading voice for individual liberty and economic opportunity. Building coalitions with others, Cascade has helped develop innovative policies such as Oregon’s charter school law and the more recently enacted Right-to-Try statute.

Cascade helped Ethiopian immigrants break the Portland taxi cartel and secure a license to operate a new company. The Institute also helped a young Black woman start her hair-braiding business by persuading the legislature to repeal onerous licensing regulations.

And a paper first published by Cascade in 1996 suggesting that 84,000 acres of the Elliott State Forest be sold off helped persuade the State Land Board to do just that; a sale will be approved by the Board in December of this year.

However, such advancements will be tougher to come by in the years ahead, because the culture of Oregon has changed. The permanent political class that now rules the state has little respect for the entrepreneurial spirit.

The 2016 legislative session served as Exhibit A for this change. In the short space of 30 days, the majority party rammed through two major pieces of legislation: (1) a dramatic increase in the minimum wage; and (2) a mandate forcing electric utilities to provide 50% of their retail load from designated “renewable energy” sources.

Each bill only received a few hearings. Vast areas of complexity were brushed aside as unimportant. When hundreds of witnesses showed up pleading for a more incremental approach, they were dismissed. In 35 years of lobbying, I had never seen anything like it.

This was in contrast to Cascade’s early years, when the organization sponsored “Better Government Competitions” in 1994, 1996, 1998, and 2000. These events solicited good ideas from citizens about how to make government work better. Top officials including Governor John Kitzhaber and Portland Mayor Vera Katz enthusiastically endorsed Cascade’s “citizens’ suggestion box.”

Today, many elected officials openly disdain the public they serve. They don’t want your ideas, just your obedience and your tax dollars. Moreover, if you compromise and give them half of what they want today, they’ll be back for the rest tomorrow.

Nowhere was that more evident than with the so-called “coal to clean” bill in 2016. Why was this topic even being discussed when only nine years ago the legislature passed SB 838, which mandated that large electric utilities procure 25% of their power needs from specified “renewable energy” sources by 2025?

SB 838, passed in 2007, was seen as a visionary achievement. The leading legislative advocates, Senator Brad Avakian and Representative Jackie Dingfelder, were exultant. Oregon was now on a path to renewable energy Nirvana!

Yet by 2016, the “25 by 25” banner was seen as wimpy and out of date. Oregon’s perceived reputation as an international environmental leader had been undercut by legislation elsewhere. So the new (arbitrary) standard became “50% by 2040.”

We can do better than this. Perhaps if Measure 97 fails, legislators will stop looking for quick fixes and work together on tax reform. There are officials in both parties willing to tackle PERS reform and transportation finance, if the Majority party allows it.

Replacing hubris with humility would be a good first step.


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 October 2016 edition of the newsletter, “Oregon Transformation: Ideas for Growth and Change.”

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Something’s Rotten in Metro’s Missing Garbage Tax Money

By John A. Charles, Jr. and Allison Coleman

Metro is asking for a new tax levy this November (Measure 26-178 on your ballot) despite the fact that it already has sufficient funds to operate all its parks.

In 2002, the Metro Council enacted a garbage tax for the specific purpose of funding operations and maintenance of Metro parks. That amount was raised to $2.50 per ton in 2004. Between 2002 and 2015, the garbage tax brought in $46.8 million for Metro parks.

Given that Metro raised all this money for parks, why is Metro asking for voter approval of another $80 million parks levy in the upcoming November election? Where did the $46.8 million in garbage tax money go?

The answer can be found in a bait-and-switch ordinance adopted by Metro in 2006. The Council amended the Metro Code to retain the garbage tax, but “undedicate” its use so that revenues would be swept into the Metro General Fund.

Since 2006, regional taxpayers have paid more than $32 million in garbage taxes that should have gone to parks, but instead went to other purposes. We’ve heard the scare stories before, but it’s time to call Metro’s bluff. Voters should reject the Metro tax levy and demand that all money from the garbage tax be rededicated to parks maintenance, as promised 14 years ago.


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. Allison Coleman is a Research Associate at Cascade.

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Oregon Must End “Economic Apartheid”

By Randal O’Toole

The housing affordability crisis is turning Portland, already one of the whitest cities in America, into one that is even whiter. Census data indicate that, between 2010 and 2014, the number of whites living in the city of Portland grew by 30,500, or 6.8 percent, but the number of blacks shrank by 4,500, or 11.5 percent.

Some of those blacks moved to Portland suburbs, but most moved out of the Portland area completely. While the number of whites in the Portland urban area grew by 94,000, the number of blacks shrank by 3,400.

Even before 2010, Portland’s high housing prices were negatively affecting blacks and other low-income groups. Census data show that, between 2000 and 2010, the share of households headed by whites living in single-family detached homes declined by 3.3 percent, but the share of households headed by blacks living in such homes declined 16.1 percent.

Housing prices also affected homeownership. Between 2000 and 2010, the share of whites living in their own homes fell by 2.2 percent, but the share of blacks (which was already well below the white share) fell by 12.6 percent.

In short, Portland’s housing affordability crisis forced some low-income people to leave the region and others into lower-quality housing. This process has led some to charge the region with “economic apartheid.” Yet, planners defend the region’s housing prices, one saying, “This is capitalism; how do you fight it?”

In fact, Portland’s high housing prices aren’t a result of capitalism; they are due to government land use restrictions. Portland planners celebrate the fact that the region’s urban growth boundary has forced the population to “grow up, not out,” as the region’s population density has grown by 20 percent since the boundary was first drawn in 1979.

Such increased densities are a prescription for increased land and housing costs. In 1990, an acre of land suitable for home construction inside the growth boundary cost about $25,000. Today, a similar acre, if you can find it, would generally cost about $300,000.

Higher land prices are accompanied by increased regulation as Portland-area governments know that homebuyers have few alternatives if they don’t want to endure long commutes. In 1999, the Portland City Council approved a comprehensive design ordinance despite warnings from the Home Builders Association of Metropolitan Portland that the new rules would make housing more expensive.

Portland and other Oregon cities also have stiff system development charges that can add $20,000 to $40,000 to the cost of a new home. By comparison, similar charges in Houston, one of the nation’s most affordable housing markets, are less than $2,000 for homes of up to 3,000 square feet.

In 1990, the median value of owner-occupied homes in the Portland area was twice median family incomes, which was very affordable. Today, thanks to the growth boundary and regulation within the boundary, it is nearly five times median family incomes, which is very unaffordable.

These policies effectively discriminate against low-income blacks and other minorities; and under a 2015 Supreme Court ruling, they violate the Fair Housing Act just as much as if Portland put out a sign saying, “No blacks allowed.” The ruling said that land use policies that make housing more expensive can be legal under the Fair Housing Act only if they have a legitimate goal and there is no other way of accomplishing that goal without making housing less affordable.

For example, requiring sewer hookups makes housing more expensive but has a legitimate goal of protecting public health. The goals of the urban growth boundary and densification, however, are either not legitimate or could be achieved without creating a housing crisis.

Boundary advocates often claim the growth boundary is needed to preserve farms and open space. But all of the urban developments in Oregon only occupy 1.5 percent of the state; and if there were no boundaries, it still would be less than 2 percent. Urbanization is no threat to Oregon farms, forests, or open space.

Advocates also claim that densification will lead people to drive less, saving energy and reducing greenhouse gas emissions. However, the effects of density on driving are tiny, especially when compared with the huge costs; and there are much better ways of saving energy and reducing emissions that don’t make housing unaffordable.

To end discrimination against blacks and other low-income minorities, the Oregon legislature must repeal the state’s land use laws that authorize growth boundaries and other regulations that make housing unaffordable.


Randal O’Toole is an adjunct scholar with Cascade Policy Institute, Oregon’s free market public policy research organization. He is the author of Cascade’s new report, Using Disparate Impact to Restore Housing Affordability and Property Rights.

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Uber Translated: Better Service for the Underserved

By Lydia White

It’s not news that free-market visionaries provide better service than their corrupt competitors, but big government advocates are reluctant to admit it, even when such enterprise benefits their causes.

Ride-hailing services like Uber and Lyft provide cheaper, timelier, and higher quality rides. They better serve those with lower incomes and disabilities. They give Portland residents a local source of income. They also better comply with city regulations.

Uber serves high- and low-income communities equally; taxis underserve poorer neighborhoods. Ride-hailing services connect the disabled with handicap-accessible cars; taxi companies force disabled users to wait and hope for one to eventually pass by.

The Portland City Auditor claims the Portland Bureau of Transportation (PBOT) isn’t doing enough to “monitor the quality of service by ride-for-hire companies” and ensure riders from low-income communities or with disabilities are fairly served. Yet PBOT found that while Uber and Lyft provide a plethora of data (too much, in fact, for PBOT to analyze), taxi companies fail to comply with the Bureau’s requirements. Moreover, Uber’s internal rating system provides its own system of accountability—including cleanliness and efficiency.

The free market is forging ahead with 21st-century technology. While cronyism befell taxi companies, Uber and Lyft created an innovative alternative.

Proponents of big government should embrace the free-market sharing economy, especially if they truly wish to help traditionally underserved minorities.


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

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Abolish Growth Boundaries to Ensure Fair Housing

By Randal O’Toole

A recent Supreme Court decision found that government policies that make housing expensive may violate fair housing laws. This decision could have a profound impact on Portland’s housing market.

Portland’s rapidly growing housing prices are a major hardship on newcomers, renters, and low-income families. Particularly hard hit are blacks, whose per capita incomes remain only about 60 percent of whites’.

The housing crisis has actually forced many blacks to move outside of the region. According to Census Bureau estimates, between 2010 and 2014, white numbers grew by 6.8 percent in the city of Portland and 6.5 percent in the Portland urban area, while black populations fell by 11.5 percent in the city and 5.3 percent in the urban area, thus reaffirming the claim that Portland is “the whitest city in America.”

Though many urban planners deny it, there is no doubt that the ultimate source of Portland’s housing crisis is the region’s urban growth boundary. Common sense says that restricting the supply of something for which demand is increasing will cause prices to go up. This is confirmed by economic studies from Harvard, the Federal Reserve Board, the University of California, and the University of Washington, among other places, concluding that strict land-use regulation is the main cause of unaffordable housing.

Other policies also make housing less affordable, including lengthy delays in the permitting process, onerous impact fees, and gaudy architectural design codes. But these policies would have little effect if developers could meet market demand by building homes in unregulated areas outside of existing cities. Urban growth boundaries not only limit supply, but they shield city governments from outside competition.

In 1857, Oregon’s first constitution banned blacks from moving to the state. This was rendered unconstitutional by the 14th Amendment to the U.S. Constitution in 1868. But in June 2015, the Supreme Court ruled that governments that impose land-use restrictions that make housing less affordable can be just as guilty of violating the Fair Housing Act as if they put up a sign on their borders saying, “No blacks allowed.”

A rule written by the Department of Housing and Urban Development says that “land-use rules, ordinances, policies, or procedures” that make housing more expensive are allowable only if they are needed to achieve a “legitimate” goal and there were no other way of reaching that goal that wouldn’t increase housing costs. None of the reasons used to justify Oregon’s urban growth boundaries meet these tests.

For example, planning advocates say boundaries are needed to protect farms, forests, and open space. But more than 98 percent of Oregon is rural, and urbanization is no threat to the state’s agricultural or timber production.

Planning advocates also say boundaries help save energy and reduce greenhouse gas emissions. But research has shown that the effect of growth boundaries on these things is tiny, and there are far better ways of saving energy and reducing emissions that don’t make housing more expensive.

Many Portland planners argue that housing can be made more affordable by growing up, not out, that is, by increasing urban densities rather than allowing the region to “sprawl” across the landscape. But this has never worked anywhere.

Recent census data clearly reveal a strong correlation between urban densities and unaffordability. Moreover, fifty years of census data also show a strong correlation between increases in urban densities and declines in housing affordability.

For example, in 1969, the San Francisco Bay Area was very affordable, with median housing prices a little more than twice median family incomes. Since then, urban growth boundaries adopted by Bay Area counties have increased densities by 65 percent, while median housing prices have grown to seven times median family incomes.

When comparing urban areas across the country, it is clear that the key to housing affordability is to keep land outside of city limits relatively unregulated so that developers and builders can meet demand. For social justice, Oregon must repeal the laws allowing urban growth boundaries and regulation of unincorporated lands.


Randal O’Toole is an adjunct scholar with Cascade Policy Institute, Oregon’s free market public policy research organization. He is the author of Cascade’s new report, Using Disparate Impact to Restore Housing Affordability and Property Rights.

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Metro’s $32 Million Broken Promise

— Why You Should Vote Down Metro’s Natural Area Levy

By John A. Charles, Jr. and Allison Coleman

In 2006, the Metro Council submitted to the voters a general obligation bond measure in the amount of $227.4 million to fund natural area acquisition. The measure was approved.

In a little-noticed appendix to Resolution No. 06-367A, the Metro Council stated that greenway lands acquired with bond funds would be land-banked with limited maintenance beyond initial site stabilization and possible habitat restoration. The Council noted that it had the financial means to carry out this promise:

“Once the 2006 Natural Areas Bond Measure is approved by voters, Metro will commit existing excise taxes to this basic level of maintenance, with Metro having sufficient resources currently to manage the newly acquired properties in this manner for a period of approximately ten (10) years.”

If the phrase “existing excise taxes” seems puzzling, there’s a reason; almost no one remembers that in 2002, the Metro Council enacted a garbage tax of one dollar/ton for the specific purpose of funding operations and maintenance (O&M) of parks. That amount was raised to $2.50/ton in 2004. Between 2002 and 2015, the garbage tax brought in $46,789,044 for Metro parks.

Metro Solid Waste Excise Tax

Dedicated to natural area maintenance

 

Year Excise Tax Tonnage Total Revenue
2002 $1.00 1,251,823 $1,251,823
2003 $1.00 1,362,204 $1,362,204
2004 $2.50 1,563,884 $3,909,710
2005 $2.50 1,626,255 $4,065,637
2006 $2.50 1,720,168 $4,300,420
2007 $2.50 1,613,848 $4,034,620
2008 $2.50 1,524,370 $3,810,925
2009 $2.50 1,381,326 $3,453,315
2010 $2.50 1,320,992 $3,302,480
2011 $2.50 1,248,191 $3,120,477
2012 $2.50 1,297,716 $3,244,290
2013 $2.50 1,373,612 $3,434,030
2014 $2.50 1,431,132 $3,577,830
2015 $2.50 1,568,513 $3,921,282
Total Revenue     $46,789,044

Given that Metro raised all this money for parks, and promised no new taxes before 2016, why did Metro place an operating levy on the ballot in 2013 for parks maintenance (which passed); and why is Metro asking for voter approval of another $80 million parks levy in the upcoming November election? Where did the $46.8 million in garbage tax money go?

The answer can be found in a bait-and-switch ordinance adopted by Metro just a few weeks after the bond measure was referred out to voters in March 2006. The Council amended Metro Code Section 7.01.023 to retain the $2.50/ton excise tax, but “undedicate” its use so that revenues would be swept into the Metro General Fund.

Since 2006, regional taxpayers have paid more than $32 million in garbage taxes that should have gone to parks O&M, but instead went to other purposes.

Instead of owning up to this chicanery and restoring the garbage tax as a dedicated revenue source, Metro officials continue to make the case for a new property tax. In a 2011 publication, Metro claimed, “…the existing financial model is not sustainable. Metro’s portfolio of land continues to grow, while the general fund resources needed to support it are decreasing.”

In a more recent document, Metro asserted, “In Metro’s general fund, which pays for many primary programs and support services, costs continue to rise faster than revenues.”

Both of these claims are false. In 2011 Metro was already taking in more than $3 million annually in garbage tax revenue for parks. By the end of 2015 it was nearly $4 million.

Meanwhile, Metro was swimming in a sea of new revenue. The Metro Auditor found that during the 10-year period of 2003-2013, total annual revenue went up 22% in real terms, while total expenses went up only 16%. Annual revenue per capita for the Metro region went up 7%; expenses per capita increased by only 4%.

Metro Councilors now state that if voters refuse to approve a new tax levy in November, the agency will “have to ramp back pretty much everywhere.”

We’ve heard the scare stories before, but it’s time to call Metro’s bluff. Voters should reject the Metro tax levy (Measure 26-178 on your ballot) and demand that all money from the $2.50/ton garbage tax be rededicated to parks maintenance, as promised 14 years ago.


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

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New Report Highlights Civil Rights Implications of Oregon Land Use Laws, Urban Growth Boundaries

FOR IMMEDIATE RELEASE

Media Contact:
John A. Charles, Jr.

john@cascadepolicy.org

503-242-0900

PORTLAND, Ore. – A new report released today by Cascade Policy Institute demonstrates that Portland’s rapidly growing housing prices are a major hardship on newcomers, renters, and low-income families. The report claims the ultimate source of Portland’s crisis in housing affordability is the region’s urban growth boundary and that minorities suffer the most from the consequences of high housing prices.

The report, Using Disparate Impact to Restore Housing Affordability and Property Rights, is authored by Randal O’Toole, an adjunct scholar with Cascade Policy Institute, Oregon’s free market public policy research organization, and the author of The Vanishing Automobile and Other Urban Myths.

The report claims the ultimate source of Portland’s crisis in housing affordability is the region’s urban growth boundary:

“The Oregon legislature and various cities have applied band-aid solutions to this problem; but none of them will work and some, such as inclusionary zoning, will actually make housing less affordable. That is because none of these solutions address the real problem, which is that the urban growth boundaries and other land-use restrictions imposed by the Land Conservation and Development Commission, Metro, and city and county governments have made it impossible for builders to keep up with the demand for new housing.”

“Common sense says that restricting the supply of something for which demand is increasing will cause prices to go up,” says O’Toole, who cites the findings of economic studies from Harvard, the Federal Reserve Board, the University of California, and the University of Washington, among others, to conclude that strict land-use regulation is the main cause of unaffordable housing.

Other policies which make Portland-area housing less affordable, the report claims, include lengthy delays in the permitting process, onerous impact fees, and architectural design codes. But these policies would have little effect if developers could meet market demand by building homes in unregulated areas outside of existing cities. Urban growth boundaries not only limit supply, but they shield city governments from outside competition.

“These policies effectively discriminate against low-income blacks and other minorities,” says O’Toole. “Under the 2015 Supreme Court ruling, Texas Department of Housing v. Inclusive Communities Project, they also violate the Fair Housing Act just as much as if Portland put out a sign saying, ‘No blacks allowed.’”

O’Toole explains how this Court decision could have a profound impact on Portland’s housing market. He says the Supreme Court’s ruling said that land use policies that make housing more expensive can be legal under the Fair Housing Act only if they have a legitimate goal and there is no other way of accomplishing that goal without making housing less affordable.

According to Cascade Policy Institute CEO John A. Charles, Jr., “Policymakers think the solution to our housing shortage is to build more tax-subsidized apartments, but simply deregulating the land markets would result in far greater housing supply at lower cost.”

The report, Using Disparate Impact to Restore Housing Affordability and Property Rights, is available here.

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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