Author: Cascade Policy Institute

2021 - The Year of Wishful Thinking-cm

2021: The Year of Wishful Thinking

By Eric Fruits, Ph.D.

With the clock ticking down to midnight on December 31, my family was looking forward to putting 2020 behind us. The New Year held at least a small hope that the pandemic would subside, vaccines would be distributed, schools would re-open, and the chaos and violence would taper off. While the year didn’t kick off the way I’d hoped, I can still dream in what I call my Year of Wishful Thinking.

Operation Warp Speed demonstrated what awesome innovations can be achieved with massive investment and reduced regulatory hurdles. In less than a year, we went from pandemic panic to numerous effective vaccines.

Now, if we can only get those vaccines into people’s arms. With hindsight, it was probably a mistake to put trust in the states to manage the vaccination process. In Oregon, Operation Warp Speed has given way to Operation Equity Lens. The first meeting of Oregon Vaccine Advisory Committee spent a third of its time on “an hour of introductions, sharing of pronouns, expressing words of the day and a Native American prayer” according to the Lund Report. As a result the meeting ran out of time and did not cover key agenda items.

My wish is that the Vaccine Advisory Committee gets moving on putting shots in arms. There is growing evidence that a focus on age is the best strategy for allocating the vaccine. It’s simple, straightforward, and targets the population most likely to die from COVID-19. The next committee meeting should be 15 minutes. “We distribute by age, everyone who agrees, say ‘aye.’” Everyone says, “Aye.” Done. Meeting adjourned, shots go out, the state is vaccinated.

With vaccinations rolling out, we need to focus on reopening the state. People need to go back to work. Businesses need customers. Kids need to be in school, both to learn and to see their friends again. Once a large share of the population is vaccinated, there’s no more reason or excuse for emergency orders shutting down huge parts of the state.

With the re-opening, there will be a reckoning. Residents and businesses will demand that peace, safety, and livability return to their downtowns and neighborhoods. Property owners and utilities will demand back payments. Parents will demand accountability from their schools. State and local governments will demand more and higher taxes. My wish is that the joy of reopening does not devolve into rent seeking and score settling.

The pandemic has provided an opportunity to experiment with deregulation. What we learned is that many regulations do more to stifle opportunities than to protect the public. For example, during the pandemic, the state allows physicians and physician assistants with out-of-state licenses to practice in Oregon so long as they are in good standing in their home state. It seems to be working, let’s make that permanent—and expand it to every occupation. During the pandemic, the state allows restaurant to-go orders to include cocktails. Restaurants have been pushing for to-go cocktails for years. It took an emergency to make it so. Let’s make it permanent.

In my Year of Wishful thinking, I hope state and local governments review their regulations from top-to-bottom to eliminate regulations that do more harm than good.

  • As noted above, many occupational licensing laws do little to protect the public. Instead they serve merely to keep people out of the occupation and extract higher prices from consumers.
  • Oregon’s certificate of need laws have led to an undersupply of much needed hospital beds in the state. If we had more ICU beds, we would not have needed to shut down as fast and as hard as we did.
  • The state’s prevailing wage law was originally designed to exclude non-union and black-owned firms from winning government contracts. “Affordable” public housing costs almost double what privately built housing does and prevailing wages are a big reason why. Without prevailing wage laws, we could be building much more affordable housing.
  • In much of Oregon, a student’s public school is assigned by street address and public money flows to the school system rather than the student. We need to flip that system. Send the money to the student and let their family choose which school meets their needs.
  • Get government out of the business of being in business. There is no reason for Metro, the Portland area regional government, to be running the Zoo, Convention Center, Expo Center, and solid waste management. There is no reason for the City of Portland to also be the water company. We hate monopolies in the private sector and we shouldn’t tolerate them in the public sector.

The chaos of the first weeks of 2021 makes it difficult to be hopeful. But 95% of the year is still ahead of us. It’s not too late for some dreams to come true in the Year of Wishful Thinking.

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

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The Region’s New Transfer Station Means Frills and Bills-cm

The Region’s New Transfer Station Means Frills and Bills

By Vlad Yurlov

Would you like to have a nice picnic near a garbage dump? How about a meeting? If Metro has its way, these are just some of the frills that will come attached to its newest waste facility. A new transfer station is being planned in Cornelius to expand waste management services to the west side of the region. But instead of providing a functional facility that benefits the region, Metro is pitching expensive features that have nothing to do with waste management, such as meeting spaces, parks, and education centers.

If Metro continues down this path, the new transfer station will have flair instead of function. Waste management debt will be used to fund unrelated goals, while regional improvements still beg for attention. Metro’s systems planning manager says both of the current transfer stations in Portland and Oregon City are “at capacity” and “increasingly costly to operate.” Metro should focus on improving waste management, not adding expensive extras. If the region really needs a new transfer station, there is no room for frills.

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

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Employers Are Left With the Bill After Lockdowns-cm

Employers Are Left With the Bill After Lockdowns

By Vlad Yurlov

When businesses fail, they shut down. But when the government shuts down businesses, it simply increases taxes. More than 85% of Oregon businesses will pay higher unemployment insurance rates in 2021. This is after lockdowns and restrictions forced their workers to use unemployment benefits in the first place. Most businesses pay unemployment insurance taxes into Oregon’s Unemployment Insurance Trust Fund, which the state distributes to employees that are laid off without cause.

Oregon’s pandemic response shut down hundreds of businesses, but its effects will continue to dampen economic recovery. Higher unemployment insurance tax rates mean that fewer people can go back to work. And any delay in employment furthers economic instability.

Oregon boasts “one of the healthiest [trust funds] in the nation.” The reserves are meant to supply benefits for 18 months and there is $4.1 billion in the fund today. So why should businesses have to increase their unemployment taxes? If it were up to employers, they would gladly hire their workers back instead! As revenues struggle above break-even, businesses should not be responsible for government restrictions that increase the use of unemployment benefits.

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

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Where Can the Homeless Go. Portland Still Doesn’t Know-cm

Where Can the Homeless Go? Portland Still Doesn’t Know

Shelter space can be used effectively by tracking and reporting vacancies

If a homeless person asks you to find them shelter space, could you do it? It’s harder than you think. That’s because Portland lacks a key piece of a shelter system. No one knows which shelters have space or how much space is available. The first step in sheltering people is knowing where space exists. Without a tracking system, campsites spiral out of control, while their residents suffer. People with mental health problems and drug addictions are effectively cut off from recovery options.

If a homeless person were to ask an outreach worker for a place to stay, the best they could do would be to call each shelter individually. Oregon Housing and Community Services says agencies and local partners rely on 211, an information hotline which can provide only the location and contact information of shelters. Operators do not regularly maintain contact with shelters or receive vacancy updates, so they can’t report actual availability. This leaves people on public streets and away from resources. To solve these problems, Portland should implement a shelter tracking system that would allow outreach workers and officers to house homeless people quickly.

Shelter tracking systems have already helped other western states battle homelessness. Modesto, California successfully implemented a basic tracking system. It takes one person up to two hours each day to contact and receive information from emergency shelter providers in Stanislaus County. After the data is collected, it’s given to outreach workers and law enforcement officers who use it to find shelter for homeless people. Spokane, Washington goes a step further and tracks shelter capacity by having homeless shelters report their availability to a dispatcher. The city is also working on a public website that would allow easy data entry and near-real-time tracking. These examples show that a shelter tracking system is not only a possibility, but it is vital to optimizing local public resources.

Portland should implement a manual tracking system and make use of our local Homeless Management Information System. Effective tools are currently available. The Environmental Systems Research Institute (ESRI) has online applications which track homelessness resources through geographic information systems. The City of Portland already uses ESRI products to report and visualize campsite locations. Proper use of these resources would allow access to near-real-time data on shelter vacancies. By using available and familiar technologies, Portland could target its homelessness outreach and use shelters effectively.

A tracking system also would allow Portland to comply with the Ninth Circuit Court of Appeals ruling Martin v. City of Boise. In 2018, the Court ruled that local ordinances can’t ban sitting or sleeping in public spaces if there is no available shelter space. But if officers can show that nearby shelters have open beds, they could help people get access to life-saving resources and minimize the risks associated with camping outside. Both Modesto and Spokane have maintained compliance with the Martin ruling through their use of shelter tracking systems.

The bottom line is that people are needlessly sleeping on the streets in Portland, while shelters have vacancies that are difficult to find. Over the past few years, Portland and Multnomah County have opened many emergency shelters. Throughout the COVID-19 pandemic, six motels have housed people to help traditional shelters with social distancing. In order to effectively house individuals who have been left in the streets, we need to know what resources are available. By creating a shelter tracking system, Portland would be able to comply with the Martin ruling while providing outreach workers and officers with the right information to connect homeless people with housing. The worst thing someone seeking shelter can hear is, “We don’t know if there is space.” It’s time for answers.

Vlad Yurlov is a policy analyst at Cascade Policy Institute, Oregon’s free market public policy research organization. He co-authored a forthcoming report on Portland’s homelessness crisis.

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Who Will Pay the Bills When the Pandemic Ends-cm

Who Will Pay the Bills When the Pandemic Ends?

By Eric Fruits, Ph.D.

This week, the U.K. became the first western nation to vaccinate its residents against COVID-19. The recipient, a 91-year-old retired shop clerk, voiced relief, “I can finally look forward to spending time with my family and friends in the New Year.” Despite the fanfare greeting the vaccine rollout, authorities warned that the vaccination campaign would take many months. They warned the tough restrictions that have rattled daily life and cratered the economy are likely to go on into spring.

While many of us dream the vaccine will bring a return to normal life, for many people post-pandemic life will be a nightmare. The end of pauses, freezes, shutdowns, and lockdowns will mean the end of moratoriums on housing evictions, utility shutoffs, and student loan payments. During COVID-19, millions of Americans have racked up thousands—maybe tens of thousands—of dollars in unpaid rent, utilities, and student loans. For example, information presented to the Oregon Governor’s Council of Economic Advisors estimates unpaid rent in the state is between $250 million and $300 million. When the emergency ends, those bills will come due.

Elected officials have put themselves in an impossible position. If they allow masses of evictions and utility shutoffs, they will face torches and pitchforks from their constituents. If they try to pass laws wiping out the debt, they will face a revolt from some of their biggest donors. And, even worse, they will face years of constitutional challenges.

Both the U.S. and the Oregon constitutions forbid any laws “impairing the obligation of contracts.” Rental agreements are contracts. So are arrangements with utilities and student loan providers. Neither the federal government nor state or local governments can simply “wipe out” the payment provisions of these contracts. Our politicians are in a bind, but it gets even worse.

One way to work around the constitutions’ contracts clauses would be to establish a voluntary program of debt forgiveness. But for a program to be truly voluntary, the state must provide a compelling incentive for debt holders to forgive the debt.

An option promoted by Rep. Jule Fahey (D-Eugene) would provide state grants to certain property owners who forgive 80 percent or more of their tenants’ past due rent. It has been reported the proposed legislation would set aside $100 million for grants to renters and property owners. On the one hand, $100 million is a lot of taxpayer money. On the other hand, $100 million is less than half the total amount of unpaid rent in the state.

If such a fund is established, it will be an admission that the governor’s emergency orders have caused enormous damage to households and businesses. If the state is willing to admit it’s caused at least $100 million in damage to rental properties, how much damage has it done to restaurants, bars, retailers, manufacturers, nonprofits, and families?

In September, Portland attorney John DiLorenzo sent a letter to Governor Kate Brown demanding the state compensate several businesses for losses associated with her pandemic-related executive orders. Under Oregon law people are “entitled to reasonable compensation from the state” if their property is “taken” under the emergency powers Brown invoked to shut down most of the state. According to DiLorenzo, “What’s happened here is the governor has basically destroyed property for the purpose of furthering the policy behind the executive order.” Rep. Fahey’s draft bill would be the first piece of legislation to attach a dollar figure to the value that has been taken as a result of the executive orders.

It’s easy for politicians and policy makers to mindlessly remind us, “We’re all in this together.” But, too often they face no meaningful consequences for their decisions that affect millions of people. Oregon’s law requiring reasonable compensation for property taken under the governor’s emergency orders was designed to impose a consequence on the government. If the government has to pay a price for its emergency orders, then the government is more likely to make decisions that account for the costs it imposes on everyone else.

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

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Oregon Legislators should throw restaurants and bars a lifeline by legalizing “cocktails to-go”-cm

Oregon Legislators should throw restaurants and bars a lifeline by legalizing “cocktails to-go”

By Rachel Dawson

Do you want to enjoy a drink but don’t feel safe sitting in a bar?

If you live in one of the many states that have allowed “cocktails to-go” since the beginning of the pandemic (including our neighbors in California, Washington, and Idaho), you’re in luck! Oregon restaurants and bars, however, aren’t so fortunate, as our state legislators have thus far failed to similarly update our liquor laws.

In Oregon, restaurants may sell beer, cider, and wine for delivery and take-out orders; and distilleries can sell bottled liquor and cocktail-kits to-go. However, bars and restaurants are barred from selling pre-mixed, to-go cocktails in closed containers for offsite consumption.

Oregon lags behind other states across the nation in this regard. Since the beginning of the coronavirus pandemic, at least 33 states have allowed cocktails to-go. Florida and Mississippi authorized the sale of to-go cocktails on a limited basis before the pandemic began. While Texas restaurants can deliver coolers full of jello shots, Oregon restaurants can’t even include tequila with orders for margarita mix.

Restaurant and bar owners across the state have asserted cocktails to-go sales would be a lifeline for them, given that on-site capacity remains limited and many Oregonians are dining at home. In desperation, the Botanist House, a Portland restaurant, threatened to sell cocktails to-go in defiance of the law. In a public letter, the owner, Matt Davidson, explained his reasoning:

“The COVID-19 Pandemic has simplified our business priorities down to a single word, survival. Our protest is not about increasing our top line revenue, driving more dollars to the bottom line, or expanding our market share. It is simply about doing what 70% of the country is already doing to help struggling businesses survive.”

Ultimately, the protest never took place due to the possibility of a resolution in an anticipated emergency session of the Oregon legislature. State Representative Rob Nosse from the Southeast Portland area has drafted a bill legalizing the sale of to-go mixed drinks. Rep. Nosse’s bill would limit orders to two cocktails and require that cocktails be sealed and purchased in conjunction with food.

Those opposed to a change in legislation argue that this bill could harm people recovering from alcohol abuse and who are susceptible to relapse, or that it could lead to drinking and driving. Rep. Nosse responded that, if this is a concern, “why do we allow people to buy beer at Plaid Pantry and screw-top wine?” Further, 72% of Oregon adults said they would support a proposal allowing cocktails to-go, according to a survey conducted by the National Restaurant Association.

Although many states are allowing cocktails to-go temporarily through emergency orders, some—like Iowa—are taking steps to make them permanent. Iowa’s governor signed a bill legalizing cocktails to-go after it passed through the House with unanimous support back in June.

Oregonians are capable of safely enjoying cocktails to-go with their take-out orders even after pandemic restrictions are eased and restaurants open back up to full capacity. Oregon legislators can learn from Iowa and come together during the next session to pass a bill that will allow restaurants and bars to sell cocktails to-go for both immediate relief of their businesses and their patrons’ future enjoyment.

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

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Comments on the Elliott State Research Forest proposal-cm

Comments on the Elliott State Research Forest proposal

John A. Charles, Jr.
President & CEO
Cascade Policy Institute
November 29, 2020

Below is a summary and discussion of Cascade’s comments on the draft Elliott State Research Forest proposal, which can be found here.

Summary

The ESRF proposal is built on the following key assumptions:

  • The state legislature will provide the financing to decouple the ESF from the Common School Fund in a way that would survive legal challenge from CSF beneficiaries;
  • The $100 million in bond authorization previously approved is a legally sufficient down payment on that decoupling strategy;
  • The total amount needed to decouple is $220.8 million;
  • The state legislature or some other entity will provide $24.8 million in start-up funds;
  • The ESRF will be a financially self-sustaining entity through annual timber harvests of 16.6 MMBF and the sale of carbon credits;
  • If the ESRF is not able to be self-sustaining, OSU trustees will create a firewall to protect the university from incurring losses;
  • The state of Oregon will successfully negotiate a multi-species HCP with the federal government that will allow OSU to harvest an annual average of 16.6 MMBF of timber; and
  • There is a market demand by forestland managers, academics, and policy-makers for the research outputs promised by the ESRF.

It’s unlikely that any of these assumptions are valid, therefore this proposal has little chance of ever being implemented. In the meantime, the State Land Board is breaching its fiduciary obligations to CSF beneficiaries, and remains vulnerable to a lawsuit on the scale of the successful litigation brought by the Forest Trust Counties on similar grounds. Given this vulnerability, the Board should terminate any further work on the ESRF, and prepare to sell the Elliott State Forest in a public auction.

Discussion

This section explores each of the points made above in greater detail.

Decoupling: No one on the SLB or at OSU has a vote in the legislature. Therefore it’s a mistake to assume that a decoupling strategy can work. Indeed, that was the reason why the Board agreed to sell the ESF back in 2015 – it was the only decision that the Board itself controlled. Until such time as a funding package is approved by the legislature and signed into law by the Governor, no one should assume that funding will be available.

Moreover, the assumption that tax-supported funding of $121 million will suffice to decouple is wrong, on both counts. Any financing that relies on taxing CSF beneficiaries is a breach of fiduciary trust by lawmakers. To put the matter plainly, the $100 million in bond funding previously approved by the legislature requires $145.9 million in debt service over the life of the bonds. The debt service in the current biennium is $15.59 million. Those payments are being made by Oregon taxpayers, and a large subset of that group include CSF beneficiaries – parents of K-12 students, school employees, and school board members.

In essence, the SLB has given money to the beneficiaries in one pocket, but is extracting an identical amount from another pocket. That is the opposite of “fiduciary trust.”

While SLB members may be rationalizing this on the assumption that it provides an arbitrage opportunity to borrow money at low rates, and then make a profit through CSF investments, that is purely speculative. Those investments could also lose money. A prudent person would certainly not choose this option when a private party has previously made a cash offer of $220.8 million to take the entire ESF liability off the Board’s hands.

In addition, at the same time the Board rejected the cash offer, it dissolved the ESF Sale Protocol that had resulted in the $220.8 million valuation. That valuation was deliberately depressed by the Board when it designed the protocol with four key sideboards. Previous valuations had been much higher, including the 2006 estimate of $344-489 million stated in the DSL Asset Management Plan, and the estimate of $850 million stated in DSL’s first AMP in 1995.

The only way to determine the true value of the ESF is to place it up for sale in a global auction, with no constraints. Since the Board has already rejected that course of action, while also reducing timber harvests levels to zero, there is no legally viable path forward. As the ESF continues to drain money from the CSF, it’s only a matter of time until beneficiaries sue the Board.

Start-up  funding: The ESRF concept requires estimated start-up funding of $24.8 million. There is no indication of who will provide this. The legislature cannot provide it because appropriating tax revenues would inevitably harm CSF beneficiaries, which is illegal. It will also be difficult for OSU to provide the money because any fundraising effort risks diverting money from other OSU programs, which OSU has promised to protect. This concept paper does not provide any guidance that resolves this problem.

The ESRF will be financially self-sustaining: The pro forma offered in this proposal is based on two anticipated streams of revenue: timber sales averaging 16.6 MMBF annually; and carbon credit sales into the California cap-and-trade market. Neither of these assumptions holds up to scrutiny.

Over the past 30 years, preservation groups litigating under the ESA have reduced the annual timber harvest on the ESF to zero. The last time harvests exceeded 16.6 MMBF was in 2012, when the harvest was 28.54. During the period of 2013-2017, the average annual harvest was 7.09 MMBF. The strategy of ESA litigants has always been to halt timber cutting in the ESF, and they have succeeded. There is no reason to think that they will simply give back those gains.

In fact, shortly after the Board rejected the Lone Rock offer and embraced the ESRF concept as a substitute, a spokesman for Cascadia Wildlands told the Eugene Register-Guard, “If logging old public forests is going to be part of this experimental forest, we oppose it.”

Cascadia Wildlands has consistently out-maneuvered the Land Board both in the court of law and the court of public opinion. That will continue if the ESRF proposal relies on timber harvesting as a source of financing. Using timber revenue to finance a social good (in this case, research) has exactly the same built-in conflict of interest that the CSF has in relying on Trust Lands as a revenue source.

The second assumed source of revenue, carbon credits, is even more speculative. The pro forma is not based on a detailed analysis of ESF timber stands. As stated in the narrative, “Results are estimates. Actual credits available for registration require a carbon inventory, review of baseline assumptions by regulatory agencies and approval by California ARB.”

The ARB has approved the use of specific biomass equations generated by the US Forest Service Forest Inventory and Analysis (FIA) National Program to estimate biomass. All approved projects are required to use them. The equations differ depending on region as well as by tree type. These equations were not used in the draft research proposal in calculating biomass (which is then used to calculate carbon), nor are they referenced. 

Instead, for biomass the proposal cites a 2003 national study by Jenkins et al. However, this is a national meta-analysis on hundreds of other equations and is not recommended for site specific use. Authors of the study state:

  • There is a “…clear variability in tree C allocation from site to site and from study to study…This variability makes it difficult to estimate tree biomass accurately even when a site-specific regression equation is used.”
  • “We found that many of the published equations were unusable for large-scale application because of inconsistencies in methodology and definitions, incomplete reporting of methods, lack of access to original data, and sampling from narrow segments of the population of trees in the United States. Our equations may be applied for large-scale analyses of biomass or carbon stocks and trends, but should be used cautiously at very small scales where local equations may be more appropriate.”

Another substantial barrier is the concept of “additionality.” As noted in the ESRF proposal, “Fundamentally, a landowner must sequester more carbon than would be sequestered under a business-as-usual approach.”

Since 2012, the “business-as-usual” approach on the ESF has been to harvest an annual average of 7 MMBF of timber. Since 2017, that has dropped to zero. Therefore, the 16.6 MMBF proposed in this concept paper is worse than the baseline, from the perspective of the California ARB. Why would California regulators spend taxpayer dollars in Oregon for the ESRF proposal when California residents are already getting a better carbon deal for free?

Moreover, any agreement with California would require that Oregon monitor and maintain tree stands for 100 years. Given the erratic behavior of the SLB over just the past decade – including the bizarre rejection of a $220.8 million cash offer – it’s unlikely that California regulators would trust the Oregon SLB to hold up its end of the contract for 100 years.

Finally, the concept paper provides two scenarios for obtaining carbon credit financing, based on the type of ownership. As explained in the concept paper, “The private protocol yields harvest levels that result in an average stocking equal to the common practice metric. The public protocol is so restrictive that the carbon offsets generated are about one fifth of the private protocol. The main reason the public protocol generates fewer credits than the private protocol is because ARB’s baseline requirements for the two protocols are different.”

The high-bound assumption of carbon credit revenue assumes that the “OSU ownership structure allows for use of private protocol.” Why is this being assumed? The concept paper is replete with statements that the ESF will remain a public asset with public governance. All of the political factors that have resulted in the ESF becoming a net liability to school beneficiaries over the past decade will still apply. There is no reason to create a high-bound assumption of revenue based on private protocol when the ESF is not a private asset.

OSU Trustees will create a financial firewall to protect the university:  The ESRF narrative states, “As part of this structure, we anticipate that the OSU Board of Trustees will ensure OSU does not redirect university resources to cover shortcomings in ESRF revenue.”

This statement of intent is designed to assure students, faculty and donors of OSU that the ESRF will not become a financial albatross. Unfortunately, history suggests that this is a false hope. The ESF already has the strongest possible protection for K-12 beneficiaries – a Constitutional mandate for the SLB to maximize net revenue over the long term – yet Board mismanagement over the past 25 years has turned the forest into a CSF liability.

Given that the Constitutional mandate to do one thing is not being met, how does OSU expect to be protected from losses when the new mission statement described in this 107-page document includes multiple goals, many of which are conflicting?

This problem is referenced on page 10 of the proposal, in the following sentence: “We also acknowledge that not all commitments can be honored simultaneously in the same spaces, which will require a balanced and sustainable approach to forest research and management.”

The Land Board itself has been required by the Oregon Constitution to manage the ESF in a balanced and sustainable way, in pursuit of a single over-arching objective, and it has failed miserably. The most likely scenario going forward is that if the ESRF ever becomes reality, it will suffer immediate operating losses, and after years of procrastination, ownership will revert again to the SLB. That is not a long-term resolution; it simply prolongs the agony.

DSL will successfully negotiate a multi-species HCP with the federal government that will allow the ESRF to move forward:  According to the ESRF narrative, DSL initiated the HCP process in 2018, contracting with IFC, Inc. Drafting the HCP is underway, with a draft “anticipated to be available for public review in early 2021 prior to submission to the federal agencies.”

Pursuit of the HCP is the triumph of hope over experience. This was noted by former Gov. Ted Kulongoski at his last SLB meeting. In a lengthy soliloquy at the end of the meeting, he reminded the audience, “We spent 10 years and $3 million trying to get an HCP, and we wound up with nothing.”

Eventually the SLB, including Gov. Kate Brown, reached the sober conclusion that there was no hope of negotiating an HCP that would allow the SLB to meet its constitutional duty to maximize net timber revenue over the long term. The desire to establish an ESRF with annual timber harvesting at levels more than 100% higher than the average achieved since 2013 is what football fans might refer to as a “Hail Mary” pass. Those plays sometimes succeed, but no team counts on them for points.

There is a compelling need for the proposed ESRF research among academics, forestland managers, and public policy-makers. When State Treasurer Tobias Read hastily proposed to transfer ownership of the ESF to OSU in early 2017, in order to justify the reversal of his prior vote to sell the forest to the Lone Rock consortium, he and his collaborators argued that the world of science was eager to carry out the envisioned research.

In fact, the OSU representatives who testified before the Board that day made it clear that they had other financial requests pending with the legislative Ways and Means Committee, all of which were more important. Conducting long-term, large-scale research as envisioned in this proposal was never a priority for the university. Under questioning, the OSU spokesmen stated that they would be willing to accept ownership of the forest, as long as it was given to them and operational expenses would not impinge on the business model of the university. Those sideboards remain to this day.

It’s evident that this is a shotgun wedding between OSU and the SLB, and that the “fundamental aspiration” for the ESRF is not something the academic community has been pining for.  This is noted in the peer review section by Dr. Jerry Franklin, who states:

I find the concept of conducting an experiment that essentially involves the entire property at the outset of OSU’s stewardship to be inappropriate… I don’t consider an experiment about how to divide forest landscapes at any scale among production and conservation goals to be a high priority in our current world…There are so many important things to be done and this is not one of them.

The fact is, forest management practices are determined by ownership class, not science. Private landowners are motivated by fundamental business principles and don’t need any of the research being proposed herein. Public sector forestland owners are constrained by statutory requirements and litigation outcomes, especially related to the ESA.

Since timber harvest on the ESF has been reduced to zero, exactly as planned by Cascadia Wildlands and other ESA litigants, there is no need for the kind of research envisioned with this proposal. No matter how “pure” the research may prove to be, timber management on the ESF will always be driven by law and politics, as long as it remains in public ownership.

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

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Electricity Ratepayers need tax relief now-cm

Electricity Ratepayers Need Tax Relief Now

December 3, 2020

FOR IMMEDIATE RELEASE

Media Contacts:
John A. Charles, Jr.
Office: (503) 242-0900
Mobile: (503) 459-3727
john@cascadepolicy.org

Rachel Dawson
Office: (503) 242-0900
Mobile: (971) 221-3810
rachel@cascadepolicy.org

Today, Cascade Policy Institute released an analysis of Oregon’s Public Purpose Charge (PPC), recommending that the tax be repealed as soon as possible. The report, Oregon’s “Public Purpose” Energy Tax: Mission Accomplished, or Mission Creep?, was authored by John A. Charles, Jr. and Rachel Dawson.

The PPC is a 3% tax enacted by the Oregon Legislature in 1999. The tax applies to ratepayers of Portland General Electric and PacifiCorp; most natural gas consumers also pay a similar tax that was imposed after 1999 by the Oregon Public Utility Commission. 

The PPC went into effect in 2002, and it was supposed to end in 2012. In 2007 the legislature extended it to 2026.

The legislature directed that 56% of PPC revenue would pay for energy conservation; 17% for funding the above-market costs of renewable energy; 12% for low-income weatherization; 10% for energy conservation in schools; and 5% for construction of low-income housing. Since 2002, the PPC has collected more than $1 billion from electricity ratepayers.

The Energy Trust of Oregon receives 74% of PPC funds, for programs addressing energy conservation, renewable energy, and “market transformation.” Remaining funds are transferred to Oregon public schools within the service territories of the two electric utilities, and the Oregon Housing and Community Services (OHCS).

According to independent reports filed every two years with the legislature, the most cost-effective PPC programs were completed in the early years. In the 2003-04 biennium, PPC administrators spent $91.4 million to acquire 1.7 million British Thermal Units (BTU) of saved or generated energy. During the 2017-19 biennium, PPC expenditures had grown to $159 million, but the energy savings were still 1.7 million BTU. This represented a 73% increase in costs.

Trends in Cost-Effectiveness for PPC Expenditures by Energy Trust, OHCS and Public Schools

YearsPPC ExpendituresClaimed savings or energy generated (MBTU)Expenditure per MBTU
2003-04$91,396,4761,710,36453.4
2005-06$121,070,4762,021,51860.3
2007-08$142,413,4174,355,77332.7
2009-10$176,725,2481,751,822100.8
2011-12$179,486,7731,816,40798.8
2013-14$157,980,2411,914,42482.5
2015-16$188,633,4131,762,673107.0
7/17-6/19$159,277,6931,724,10392.4

During the 2019 Oregon legislative session, a bill was introduced to extend the PPC to 2036. That bill was never voted on but likely will be introduced again in 2021. The purpose of the Cascade study is to help inform state legislators about what has been accomplished with PPC funds since 2002.

Based on nearly a decade of research, the Cascade paper concludes that the original, ten-year mission of the PPC has been met, and the tax should not be extended again. If possible, it should be repealed prior to 2026. Ratepayers are reeling from the effects of COVID-19, and eliminating a costly sales tax would provide immediate relief. PGE reports that customer accounts in arrears (31 days or more past due) are up 41% this year.

If the legislature is unwilling to sunset the PPC program, then Cascade recommends that ratepayers be given a chance to opt out of the tax, since many of them will never benefit directly from PPC programs.

According to Cascade Policy Institute President and CEO John A. Charles, Jr.:

The Public Purpose Charge was enacted as a ten-year program to help fund energy conservation programs and subsidize the renewable energy industry so it could become market-competitive. That mission has been accomplished; the cost of installing solar energy – the most popular offering of the Energy Trust of Oregon – has dropped by 76% since the PPC was enacted. Clearly the renewables sector can stand on its own without further subsidization by tens of thousands of renters and low-income ratepayers who will never own solar energy systems.

The Cascade research paper, Oregon’s “Public Purpose” Energy Tax: Mission Accomplished, or Mission Creep?, 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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Oregon Is Stopping Hospital Construction for Your Own Good-cm

Oregon Is Stopping Hospital Construction for Your Own Good

Eliminating Oregon’s Certificate of Need laws would significantly improve health care

By Vlad Yurlov

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

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

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

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

What is Going On? Cases Rise and Oregon Schools Open

By Helen Doran

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

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

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

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

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

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

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

By Helen Doran

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

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

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

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

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

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

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

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

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Metro Deep in Debt and Getting Deeper-cm

Metro: Deep in Debt and Getting Deeper

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

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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Oregobn's NuScale is one step furth

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

By Rachel Dawson

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

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

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

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

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

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