Blog Posts

Metro needs to break down barriers to nature-cm

Metro needs to break down barriers to nature

By Helen Doran

In Metro’s latest quarterly newsletter, “Our Big Backyard,” the reader is invited to agree with Metro’s vision of nature on the condition that he or she keeps off Metro’s properties.

Ways readers can have access to Metro’s “Big Backyard” are glaringly absent from the newsletter. In fact, a better title for the newsletter could be “Our Hidden Lands” because an estimated 88% of Metro’s land acquisitions are inaccessible to the public. Moreover, the parks available to the public emphasize “passive recreation,” which often means no dogs, no playsets, and no picnic spaces.

Metro has a vision for nature that fits specifically with its agenda, not with the needs voiced repeatedly by area residents. Ironically, Metro condemns this micromanaging of nature in its newest newsletter, stating that historically, “Nature often creates very real barriers to access, but more often these barriers are constructed by us” by defining what is “city” and what is “wilderness.”

It’s time for Metro to take its own advice and break down the very barriers to nature it has imposed. Residents want accessible parks with recreational opportunities near residential areas. Metro needs to abandon its agenda of hiding nature and bring it to the people it serves.

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

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Categories: Land Use
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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Why are we still paying a “temporary” energy tax 19 years later-cm

Why are we still paying a “temporary” energy tax 19 years later?

By John A. Chalres. Jr.

Every month when you pay your electricity bill, you pay a surcharge of about 5.6%. If you are a natural gas customer, you pay a similar tax ranging from 2.5% to 4.9%, depending on your vendor. Both taxes are likely identified as a “Public Purpose Charge” (PPC).

That name tells you nothing, which is by design. The proponents of the PPC don’t want you to think about why the tax was imposed or where the money goes, but you should. A lot of it is being wasted.

For example, the Energy Trust of Oregon – which receives over 80% of all PPC funding – spent $21 per million BTU of energy generated in its green power program in 2003, just after the PPC was enacted. By 2019, that cost had gone up to $135, an increase of 532%.

Between 2013 and 2016, Energy Trust also spent PPC funds to subsidize the sale of energy-efficient refrigerators, freezers and washing machines, while encouraging consumers to give the money away to the Oregon Food Bank. Many did, totaling $252,809. That was great for the Food Bank, but every penny was supposed to be used to entice consumers to buy appliances that they wouldn’t have purchased otherwise. The fact that they gave the PPC money away showed that the subsidies were wasted.

The Energy Trust is so well-funded that according to a 2018 audit by the Oregon Secretary of State, ETO spent $26,500 on a “holiday party and employee recognition expenses” for the retirement of its founding CEO.

Public schools also receive PPC funding; and in 2012, Secretary of State Kate Brown released an audit of school conservation expenditures. Her audit showed that at least 333 projects had costs that exceeded benefits. In one case, the Newberg School District installed insulated roofing panels at Mabel Rush Elementary School in 2005 that had a payback of 111 years and an expected life of 25 years. The panels were estimated to cost $84,200, but were only expected to generate $762 in energy savings each year. The measure was estimated to lose $65,150.

The Public Purpose Charge was enacted by the Oregon legislature in 1999 as a modest, 3% tax on customers of PGE and PacifiCorp. It was supposed to go into effect in 2002 and disappear by April 2012. The purpose was to create a small pot of money that could be used to subsidize both energy conservation and renewable power projects.

Instead, it morphed into something much more expensive. Soon after passage, the Oregon Public Utility Commission began coercing most natural gas companies into participating, which was not part of the original law. Then, in 2007, another add-on tax was approved by the legislature to subsidize small energy conservation projects. In that same law, the PPC expiration date was extended from 2012 to 2026.

Since 2002, the PPC has collected more than $2.3 billion from electricity ratepayers. More than 80% of funding goes to the Energy Trust of Oregon, which now has an annual budget of roughly $200 million.

The most cost-effective PPC projects were completed between 2002 and 2012, exactly as the legislature envisioned. By 2019, the cost of subsidizing energy conservation and green power projects had gone up by 73% since the start of the program.

Cascade Policy Institute recently released an analysis of PPC expenditures and concluded that the original, ten-year mission of the PPC has been met. Now in its 19th year, the tax should not be extended again and should be repealed prior to 2026 if possible. Ratepayers are reeling from the effects of the pandemic, and eliminating a combined 10% tax on electricity and natural gas would provide much-needed relief.

John A. Charles, Jr. is President and CEO of the Portland-based Cascade Policy Institute, Oregon’s free-market public policy research organization. A version of this article was published in the Portland Tribune on January 13, 2021.

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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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Categories: EnvironmentLand Use
Portland’s toxic taxes will do little for clean air-cm

Portland’s toxic taxes will do little for clean air

By Rachel Dawson

In the middle of a worldwide pandemic that has decimated local businesses, Portland is proposing millions of dollars in new taxes. Officials recently announced a new proposal called “Clean Air, Healthy Climate” that would impose two separate carbon taxes on large stationary emitters as early as this month.

Portland facilities that produce 2,500 metric tons of carbon or more each year would be charged a “Healthy Climate Fee” of $25 per carbon ton. Approximately 35 Portland area facilities such as Daimler would be required to pay the fee with a minimum charge of $62,500. Officials estimate the fee will generate around $9 million dollars that would fund programs and projects “to meet the City’s decarbonization pathways.” This includes paying for engagement with specified organizations and vulnerable populations, commercial and residential building retrofits, and EV infrastructure, among other things. While these programs seem highly ambitious, specific details and outcomes remain vague or undetermined.

A separate “Clean Air Protection Fee” would apply a tiered fee of up to $40,000 on major facilities generating “substantial hazardous air pollution locally and are therefore required to hold …Air Contaminant Discharge Permits, or Title V Permits.” In 2019 a total of 72 Portland facilities held these specified permits.

The City estimates the Clean Air Protection Fee would bring in around $2 million annually in revenue. That revenue would be used for investments in “pollution reduction programs” with a focus on vulnerable and marginalized communities. Such investments duplicate current pollution reduction programs such as the Portland Clean Energy Fund and the Energy Trust of Oregon.

The City claims the taxes are needed because county data suggest the region is not meeting its self-imposed greenhouse gas reduction goals. Multnomah County data from 2018 show total GHG emissions were reduced 19% below 1990 levels. Portland claims this is “far short of the City’s goal to reduce emissions 50 percent by 2030.” Aside from the fact that there is a mismatch between Multnomah County and Portland area boundaries, the 19% statistic does not tell the whole story.

While Multnomah County emissions have gone down by 19% since 1990, the county’s population level has increased by 39%. Thus, GHG emissions per capita actually have decreased by 42%, a remarkable achievement.

However, these taxes won’t be imposed on the entire population. Only major stationary emitters, such as industrial facilities, will be required to pay them. And since 1990, industrial facilities in Portland have done more than their fair share in reducing GHG emissions. Between 1990 and 2018 total industrial emissions in Multnomah County have decreased by 51% and industrial emissions per capita have gone down by 65%. Instead of punishing industrial facilities by imposing additional fees, Portland officials should be celebrating their success.

In fact, when industrial emissions are taken out of the equation, total Multnomah County emissions have only gone down by 10% since 1990.

These taxes come at a time when many businesses are struggling to keep their doors open and staff employed. Over the past year, Oregon has lost 16,700 manufacturing jobs. As of August, Precision Castparts eliminated 10,000 jobs worldwide due to the Coronavirus, 717 of which were located in the Portland Metro area. Despite the company’s struggle to keep workers on its payroll, Portland’s proposed carbon fee would cost Precision Castparts an estimated $629,494 annually. The company has stated that “significant tax or fee increases would factor into future decisions related to our operations in Portland.”

Additionally, Evraz North America, a global steel company, would pay over $2.7 million annually. Evraz has already cut around half of its Portland area employees since last year.

Instead of fighting climate change, this tax may end up costing Portlanders their jobs.

Other eligible employers include many major hospitals such as Oregon Health & Sciences University, Legacy Emanuel Hospital & Health Center, and Providence Portland Medical Center.

Officials should be supporting businesses hard hit by the pandemic and recession, not taxing them into layoffs. These two carbon taxes will punish a sector that is already making great strides in lowering GHG emissions. Since total industry GHG emissions have decreased to 51% below 1990 levels, the industry sector by itself has already surpassed Portland’s GHG reduction goal. The City of Portland should immediately halt all current and future work on this proposal.

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

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Categories: Tax and Budget
Oregon’s new cigarette taxes will hurt, not help, low-income residents-cm

Oregon’s new cigarette taxes will hurt, not help, low-income residents

By Rachel Dawson

Oregon couldn’t let a new year commence without the rollout of a new tax increase.

Voters passed Measure 108 last year which increases cigarette and cigar taxes and establishes a new tax on vaping products beginning January 1, 2021.

The measure was approved by 65% of voters, likely because it was painted as an effort to reduce smoking and help low-income Oregonians by directing 90% of funds to the Oregon Health Plan. However, once in practice these new changes will have unintended consequences.

First, the taxes are regressive and will hurt low-income Oregonians. A recent study found that “low socioeconomic status is generally associated with a high prevalence of cigarette smoking.” Smoking prevalence was 41% among men with incomes below the poverty level versus 24% for those with incomes at or above it. It’s absurd that the state is taxing some of the very same people these medical services are supposed to help.

Second, only 10% of raised funds will go to tobacco-use prevention and cessation. It’s clear the purpose of these taxes is to fill a budget hole, not to help tobacco users quit their addiction. The state has created a perverse incentive for itself–the more people smoke, the more money the state brings in. Additionally, e-cigarettes and vaping products, both safer alternatives to cigarettes, will now be taxed. One study found that for every 10% increase in e-cigarette prices, sales dropped by 26%, leading to an increase in traditional cigarette use.

If officials are truly committed to protecting public health by reducing cigarette use, they should allocate a higher percentage of the taxes’ revenue to smoking cessation and prevention programs.

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

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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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Portland Has Highest Income Taxes in the U.S. Are We Getting Our Money’s Worth-cm

Portland Has Highest Income Taxes in the U.S.: Are We Getting Our Money’s Worth?

By Eric Fruits, Ph.D.

This year, Oregon passed a major milestone. In 2020, Portland became the city with the highest personal income taxes in the United States.

The news was delivered this week in testimony to the Oregon Legislature. The State Tax Research Institute reported that state and local income taxes in Portland total nearly 14% — a rate that’s higher than San Francisco or New York.

That means the average Portland resident must work almost two months just to pay their state and local taxes.

Are we getting our money’s worth? It sure doesn’t seem like it.

  • Do we have great schools? No. We have the fifth worst graduation rate in the country.
  • Do we have flourishing businesses? No. Over the past few years it seems more businesses are leaving than arriving.
  • A lot of our taxes go to the Oregon Health Plan. Do we have great health care? According to U.S. News and World Report, our state ranks near the bottom in adult and child wellness visits as well as child dental visits.

Now that we have record shattering tax rates, it’s time for us to ask: When will we get our money’s worth?

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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Categories: Tax and Budget
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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Oregon ratepayers need relief. Ending the Public Purpose Charge can help-cm

Oregon ratepayers need relief. Ending the Public Purpose Charge can help.

By Rachel Dawson

As government-imposed shutdowns continue, more Oregonians are struggling to pay their electricity bills. Portland General Electric reported in June that arrears (when payment is 31 days past due or more) were up 41% compared to the same time last year. Economic hardship likely will persist for many people long after the COVID-19 vaccine is distributed.

It’s clear that Oregon ratepayers need relief. One way for legislators to provide such relief would be to eliminate the Public Purpose Charge (PPC) energy tax, or to allow Oregonians to opt out of it.

This 3% tax has been paid by PGE and PacifiCorp ratepayers since 2002. It was originally intended to last 10 years to help fund energy conservation and to subsidize the renewable energy industry until it became market competitive. The PPC has since been extended to 2026.

A recent Cascade Policy Institute report found the PPC’s ten-year mission has been met and recommends the tax should not be further extended. Just as intended, the most cost-effective programs were completed in the early years of the tax, leading to a 73% increase in costs per unit of energy saved. The cost of installing solar has decreased 76% between 1999 and 2019. Thus, it appears the solar industry no longer needs PPC subsidies to be market competitive.

Ending the PPC is long overdue. And doing this during a recession would be a great way to immediately aid many struggling Oregonians.

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

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Categories: Tax and Budget
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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TriMet Zombie Light Rail Project-cm

TriMet’s Zombie Light Rail Project

By John A. Charles, Jr.

President Trump is not the only one refusing to accept election results. The general manager of TriMet, Doug Kelsey, is claiming that the $3 billion Tigard light rail project is still alive, even though Portland-area voters rejected a proposed funding measure by a wide margin last month.

 At a recent public meeting, Mr. Kelsey stated that Tigard light rail would be built eventually because “demand still exists.”

That is a complete fantasy. Peak-hour ridership on all MAX lines during October was down 72% from a year ago. Unlike driving levels, which have nearly returned to normal, transit ridership has remained depressed over the past 9 months. Transit riders have simply moved on to other options.

Rail transit in particular requires high levels of both residential and worker density, but COVID has induced a mass exodus of workers from downtown Portland. Many of these changes will become permanent. Employers have discovered that remote working is not only feasible, it’s preferred by many employees.

Where is the value proposition for a network of slow trains to the city center if few people need to go there?

The TriMet board should start downsizing the agency immediately, and the easiest first step would be to cancel a rail line that doesn’t yet exist.

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

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Categories: Transportation
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’s Public Purpose Energy Tax Mission Accomplished, or Mission Creep-cm

Oregon’s “Public Purpose” Energy Tax: Mission Accomplished, or Mission Creep?

By John A Charles, Jr. and Rachel Dawson

EXECUTIVE SUMMARY

The Oregon Public Purpose Charge (PPC) is a tax enacted by the Oregon Legislature in 1999, as part of SB 1149. The tax applies to ratepayers of Portland General Electric and PacifiCorp and is set at 3% of utility revenue.

The original reason for the tax was to create a revenue stream that could be used to subsidize energy conservation and renewable power projects within the service territories of the two electric utilities. Specifically, the PPC money was allocated as follows: 56% for energy conservation; 17% for funding the above-market costs of renewable energy; 12% for low-income weatherization; and 10% for energy conservation in schools. For political reasons, 5% of the PPC revenue was designated for construction of low-income housing, although this has nothing to do with energy conservation.

SB 1149 directed the two electric utilities to collect money from ratepayers and turn it over to various organizations to administer the required programs. The Public School Program is administered and overseen by the Oregon Department of Energy, with project implementation handled by school districts. The Oregon Housing and Community Services (OHCS) administers PPC funds for low-income weatherization and subsidized housing.

Almost 74% of PPC funds are designated for energy efficiency projects in homes and businesses, and the above-market costs of certain renewable energy projects. In 1999, no organization existed to administer such programs, so in November 2001 the Oregon Public Utility Commission (PUC) signed a grant agreement with a new  nonprofit, the Energy Trust of Oregon (ETO). The Trust opened for business on March 1, 2002, and began receiving Public Purpose funds through the Oregon PUC.

Natural gas utilities were not affected by SB 1149. However, they were later brought into the fold by PUC stipulation.

During the 1999 legislative session, drafters of SB 1149 made it clear that this would be a temporary tax. The law stated that the PPC would go into effect in March 2002 and would end 10 years later in March 2012.

However, in 2007 a different group of legislators moved the sunset date for the PPC from 2012 to 2026, as part of SB 838. In addition, the new law authorized ETO to negotiate with the private utilities for an additional add-on tax that would pay for more energy efficiency work. The result was a combined energy tax (SB 1149/SB 838) that has grown to over 10% for many ratepayers who use both electricity and natural gas.

Total PPC Rates, 2016-2020*

 PGEPacific PowerNW NaturalCascade Natural GasAvista Natural Gas
      
20165.7%5.5%2.5%4.4%n/a
20177.7%5.9%3.2%4.3%1.1%
20187.1%5.5%4.0%4.3%1.1%
20195.9%6.0%3.9%5.8%2.3%
20205.6%5.6%3.7%4.9%2.7%

            *Includes assessments for schools, low-income and Energy Trust for electric utilities

From its inception in 2002 through July 2019, the original PPC collected roughly $1.33 billionfrom ratepayers for the “public purposes” laid out in the statute.However, the most cost-effective projects were done in the early years – exactly as the authors of SB 1149 envisioned. In the 2003-04 biennium, PPC administrators spent $91.4 million to acquire 1.7 million BTU of saved or generated energy. During the 2017-19 biennium, PPC costs had gone up to $159 million, but the energy savings were still 1.7 million BTU.

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

The costs per unit of energy saved or generated in the most recent biennium were 73.03% higher than in 2003-04.

Moreover, the numbers above are heavily skewed by the fact that the Energy Trust claims 100% of the credit for any renewable energy or conservation project it subsidizes, even if the PPC funding is just a tiny part of the overall cost. If ETO took credit in proportion to its investment of PPC funding, the reported savings (or generation of electricity from renewable energy projects) would be much smaller.

Warning lights about PPC expenditures have been flashing for some time. In 2012, Oregon Secretary of State Kate Brown released an audit of PPC spending in schools, showing that almost $40 million of savings had been missed and that 70% more energy could have been conserved if school districts had implemented the measures identified by energy audits as having the highest payback.

In some cases, PPC money had been used for projects that would never pay for themselves. For instance, Newberg School District installed insulated roofing panels at an elementary school in 2005 that had an estimated simple payback of 110.5 years and an expected life of 25 years. The measure was estimated to lose $65,150 over its lifetime.

The peak years for energy conservation in schools were 2007-2008, when 604 energy-saving measures were implemented. For the most recent biennium, there were only 123 measures implemented – the lowest number since the program began.

The Oregon Housing and Community Services (OHCS) department is required to ensure that they maintain a 1:1 ratio of PPC expenditures to energy saved for installed conservation measures. From 2002-12, the agency was able to do that six out of ten years. Since 2012, OHCS has never met the required standard.

The Energy Trust of Oregon receives 74% of PPC funds. In ETO’s flagship program – electricity savings – the Trust spent $14.7 million in 2003 and achieved savings at a cost of $0.11 per kWh. In 2017, ETO spent $157 million, but savings had a cost of $0.26 per kWh – an increase of 136%.

ETO’s renewable energy program was severely affected by the passage of SB 838 in 2007, which prohibited the organization from spending any more PPC money on utility-scale projects. Confined to small projects, ETO’s cost per megawatt of renewable energy has gone up by more than 1,400% since then.

By legislative design, the Energy Trust of Oregon was incorporated as a  nonprofit charity under section 501(c)(3) of the IRS code. However, it is not actually a charitable organization. Roughly 99% of ETO’s annual revenue comes from the PPC, which is mandatory.

Nonetheless, over the five-year period of 2014-2018, ETO reported PPC revenue to the IRS totaling $847 million under the category of “gifts, grants, contributions, and membership fees.”

If PPC payments by utility customers are considered charitable gifts by the IRS, then ratepayers should be receiving receipts and deducting the cost of the PPC from their federal tax filings. In fact, this was anticipated by the founders of Energy Trust. Article IV of ETO’s Articles of Incorporation states, “It is intended that the Corporation qualify as an organization which is exempt from federal income taxation under Code section 501(c)(3), contributions to which are deductible for federal income, estate, and gift tax purposes….”

We are not aware of Energy Trust or any other administrator of the Public Purpose Charge ever issuing receipts to utility ratepayers for their $1.33 billion dollars of “donations.”

Most energy activists believe that the PPC should become permanent, and PPC administrators tend to agree. In fact, the 2020-2024 strategic plan for ETO explicitly assumes that the PPC will be extended past 2025. A legislative bill for that purpose was introduced in the state legislature during 2019, but did not pass out of committee. It will likely be introduced again in 2021.

The time has come for legislators to decide whether the original mission of the PPC has been accomplished, or if it should be expanded. Based on nearly a decade of research, this paper makes the following recommendations:

  • The Public Purpose Charge has fulfilled its original, 10-year mission, and should be ended as soon as possible. The Oregon economy is reeling from COVID-19. PGE reports that customer accounts in arrears (31 days or more past due) are up 41% this year. There is no reason to maintain a costly energy tax of 6-10% for a program that has already served its purpose.
  • If the PPC continues through 2025 or longer, the SB 1149 mandate related to small-scale renewable energy projects should be repealed. ETO’s renewables program has been made obsolete by multiple laws passed since 1999, including several “green power” mandates and a new solar subsidy program.

    More than 99% of all ETO renewable projects have been solar electric. Since the installation costs of those projects have dropped by roughly 76% since the passage of SB 1149, the original intent of helping renewables transition to market-competitiveness has been met.
  • The SB 1149 mandate for market transformation should also be repealed. There is no way to adequately define or measure the term “market transformation.” Moreover, the preeminent market transformation organization is the Northwest Energy Efficiency Alliance (NEEA), which already has its own funding from over 100 utilities.
  • Between now and 2026, ETO should switch its more costly program offerings from cash grants to no-interest loans. The best way to ensure that a project is worth doing is to require significant “skin in the game” by recipients of public assistance.

    A loan program would provide the up-front cash often needed to start a project, while imposing much-needed fiscal discipline. A loan program would also mean that any ongoing public purpose charge could drop over time to zero, because debt service payments would eventually make the fund self-supporting.
  • ETO should utilize its tax status as a  nonprofit institution regulated under Section 501(c)(3) of the IRS code to seek foundation grants and individual contributions. ETO claims that its various programs have saved ratepayers more than $7 billion dollars. If that is true, it should not be difficult to persuade many of them to donate to the Trust.
  • The legislature should examine why Energy Trust of Oregon lists all revenue on its federal tax filings as “gifts, grants, contributions, and membership fees received,” yet ratepayers receive no gift receipts for PPC payments. The legislature has created a service delivery model that provides tax-exempt status to only one entity: the Energy Trust of Oregon. Ratepayers receive no such treatment. That contradiction should be addressed by the legislature in 2021.

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Government Should Pay the Price for Locking Down Our Economy-cm

Government Should Pay the Price for Locking Down Our Economy

By Vlad Yurlov

Oregon’s government is finally feeling the pain of lockdowns. Last April, an executive order banned the eviction of tenants based on non-payment until June 30, 2020. This action has been extended twice and currently ends January 1st.

Now that the year is coming to a close, the Legislature is deciding whether to extend the moratorium for another six months or let it sunset. But this time, constituents have guided the current proposals to send $100 million from the state’s general fund to renters and property owners to relieve back rent.

Kate Brown initiated the moratorium because many people have lost jobs and are likely to miss rent. But it is largely due to lockdown mandates that have directly limited the ability of people to earn a living.

But it’s not only property owners that deserve compensation for the damages associated with government mandates. Lockdowns have restricted restaurants, cinemas, and offices all over Oregon from earning a living. To align the interests of the public and private sector, everyone damaged by government mandated lockdowns strategies should receive reimbursement for their losses. The politicians who say, “We’re all in this together” should put their money where their mouths are and face the financial consequences of their decisions.

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

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Shopping in a Shutdown How to Support Local Businesses-cm

Shopping in a Shutdown: How to Support Local Businesses

By Helen Doran

The Oregonian reported that an estimated 51,000 more Oregonians are expected to lose their jobs because of Governor Brown’s new state-wide freeze. To make matters worse, almost 70,000 Oregonians could lose their unemployment benefits the day after Christmas when the program for self-employed workers and an extended benefit program expire.

There is hope for small businesses. According to an Adobe survey, small businesses in the United States could expect a +107% boost in revenue for the season. In fact, 51% of shoppers plan to support small and local businesses on Small Business Saturday, and 38% of shoppers “will make a deliberate effort to shop at smaller retailers throughout the holiday season.”

Despite the governor’s freeze on many activities, entrepreneurs have found creative ways to provide support for Oregon businesses during the holiday season. Small businesses that are not equipped to make a profit online are provided an outlet through such non-profits as Built Oregon, which provides vendors a shared online marketplace to showcase their products. In true Oregonian spirit, you can buy anything from Willamette Valley wines to bamboo toothbrushes and leather toolkits.

Gyms have been shut down entirely during the governor’s winter freeze. But that hasn’t stopped gyms like Fulcrum Fitness, which has gone completely virtual with its workouts for customers.

Restaurants have suffered extraordinarily from the pandemic, and with the new freeze, some restaurants and bars are planning to close temporarily rather than switch to delivery and takeout. Others are hoping the holiday spirit will provide them a much needed boost. Andina’s in Portland offered a take-out Thanksgiving dinner for those not partial to imitating Gordan Ramsey in the kitchen. Bars like the Botanist House also provided beer, wine, and cider to-go the day before Thanksgiving.

Even the local arts community has found creative ways to share its passion. The youth orchestra, Metropolitan Youth Symphony, will be celebrating holiday music from around the world through a creative use of online tickets and YouTube. The local ballet company, Oregon Ballet Theatre, is reimagining its annual Nutcracker through a televised format on OBTV. Clearly, in the middle of a turbulent year, Oregon businesses’ innovation and creativity shine through, despite the heavy weight of lockdowns and restrictions. Even so, the next few months will be critical for many local businesses. Oregonians should rally behind their local businesses this holiday season. That might be the Christmas miracle we all need.

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

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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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Categories: Healthcare
Wind turbines are not a birds best friend-cm

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

By Rachel Dawson

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

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

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

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

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

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

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

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

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

By Eric Fruits. Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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Oregons new drug law contains a lethal dose of unaccountability-cm

Oregon’s New Drug Law Contains a Lethal Dose of Unaccountability

Voters approve Measure 110, decriminalizing drugs while creating an unaccountable bureaucracy

By Eric Fruits, Ph.D.

Oregon voters recently approved a ballot measure that decriminalizes possession of small amounts of “hard” drugs, including heroin, cocaine, LSD, and methamphetamine. Supporters see the measure as a big step toward ending the failed 50-year “War on Drugs.” Opponents fear the measure will lead to widespread and rampant drug abuse and turn the state into a destination for narco-tourism. While drug decriminalization made news headlines, the media missed the fact that Measure 110 is a head-on attack on our democratic institutions.

The measure creates a new bureaucratic agency to be known as the “Oversight and Accountability Council.” Despite its name, the council has neither accountability nor oversight. The council is appointed by an unelected bureaucrat, answers to no one, and is guaranteed funding outside the legislative budget process. In other words, with Measure 110, Oregon voters just created an agency that doesn’t have to answer to voters or elected officials.

The Oversight and Accountability Council awards grants to government agencies and community-based nonprofits who will create “Addiction Recovery Centers.” These centers will address the acute and ongoing needs of drug users, provide “intensive” case management, and link drug users to care. All of these services are to be provided free-of-charge to drug users. Put simply, Measure 110 asserts a right to free health care for those with substance abuse issues. The council also awards grants to government agencies and nonprofits to provide housing and peer support to people with substance use disorder. Not only does the council award the grants, but it also writes the rules governing the grants, establishes the requirements for the Addiction Recovery Centers, and oversees their implementation. This Oversight and Accountability Council has enormous authority and will be handling at least $57 million a year, in addition to an undefined amount related to state savings from reduced arrests and convictions.

The 17-member council will be “established” by the director of the Oregon Health Authority, an unelected agency head appointed by the governor. Each member serves a four-year term. Measure 110 does not specify any conditions under which a council member can be removed and provides no process for removing a member. While the governor can be voted out and the OHA director can be fired, Oversight and Accountability Council members face no risk of removal. In this way the council is accountable to no one.

Funding for the Oversight and Accountability Council and its grants will come from the state’s marijuana tax. The measure specifies that this will be at least $57 million the first year that the measure is in effect, 2021. The measure also provides for yearly increases in line with inflation or increases in marijuana tax revenues, whichever is larger. With a dedicated and guaranteed source of funding, Measure 110 bypasses the legislative budget process. While schools, universities, police, and transportation must go to the legislature for most of their funding, the Oversight and Accountability Council sits comfortably on a steadily increasing revenue stream.

Measure 110 won by a wide margin, because the headlines promised it would decriminalize drug possession. With no organized opposition and press that cheered it on, the nefarious details of the measure never got their own headlines. As a result, Oregon voters approved the creation of a huge new bureaucracy that is unaccountable to voters and elected officials and disconnected from the same budget pressures faced by nearly every other state agency. The Washington Post tells us “democracy dies in darkness.” It also dies from voter approval of misleading ballot measures.

Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization. He served on the City Club of Portland’s research committee on substance use disorder in Oregon.

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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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Categories: Economic Opportunity
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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Categories: Education
New Oregon data shows where electric vehicles are located and where they continue to remain a rarity-cm

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

By Rachel Dawson

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

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

Total Number of Electric Vehicles by County

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

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

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

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

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

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

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

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

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

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

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Categories: Transportation
Avoidable Expenses for Affordable Housing-cm

Avoidable Expenses for Affordable Housing

By Vlad Yurlov

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

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

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

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

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

It’s Creepy Season: Metro’s Haunted Lands

By Helen Doran

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

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

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

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

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

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Categories: Land Use
$7 Billion for That-cm

$7 Billion for That?

Metro’s Transportation Tax Will Overspend on Underused Projects

By Rachel Dawson and Vlad Yurlov

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

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

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

Congestion Creators

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

Redundant Projects

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

Lavish Costs

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

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

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

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Categories: Tax and Budget
The Boardman Coal Plant Closed. Now What-cm

The Boardman Coal Plant Closed. Now What?

By Rachel Dawson

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

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

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

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

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

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

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

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

October 19, 2020

FOR IMMEDIATE RELEASE

Media Contact:

Rachel Dawson

(503) 242-0900

rachel@cascadepolicy.org

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

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

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

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

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

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

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


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

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


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

About Cascade Policy Institute: 

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

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

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

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

October 12, 2020

FOR IMMEDIATE RELEASE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 About Cascade Policy Institute:

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

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Government Alone Can’t Solve Homelessness-cm

Government Alone Can’t Solve Homelessness

By Vlad Yurlov

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

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

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

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

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Reject Ordinance 20-1449-cm

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

October 4, 2020

FOR IMMEDIATE RELEASE

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

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

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

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

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

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

Click here to read Eric Fruits’ full testimony.

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

About Cascade Policy Institute:

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

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

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

By Helen Doran

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

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

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

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

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

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

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

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

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Metro Deep in Debt and Getting Deeper-cm

Metro: Deep in Debt and Getting Deeper

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

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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Oregobn's NuScale is one step furth

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

By Rachel Dawson

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

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

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

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

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

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

Achieving Equity: Oregon Students Deserve a Money-Back Guarantee

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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Low income Oregonians need wheels not another light rail line-cm

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

By Rachel Dawson

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

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

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

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

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

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

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

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

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Emancipate the students-cm

Emancipate the Students

By John A. Charles, Jr.

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

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

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

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

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

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Metro mission creep-cm

Metro’s Mission Creep

By Vlad Yurlov

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

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

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

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

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

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

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Pinocchio politics on the november ballot-cm

Pinocchio Politics on the November Ballot

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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The Dalles Dam on the Columbia River-cm

California Blackouts Show the Need for Reliable Hydropower

By Rachel Dawson

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

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

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

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

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

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

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

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

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

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

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

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

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

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Metro pushes transportation bond while acknowledging serious problems-cm

Metro Pushes Transportation Bond While Acknowledging Serious Problems

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

By Vlad Yurlov

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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California blackouts serve as a warning to Oregon officials

By Rachel Dawson

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

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

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

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

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

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The nuclear waste reality that popular media loves to ignore

By Rachel Dawson

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

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

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

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

(United State Nuclear Regulatory Commission Photo)

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

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

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

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

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

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

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

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

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

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

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

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

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Oregon Students Deserve Stability

By Helen Doran

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

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

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

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

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

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

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Higher Taxes, Less Business

By Cooper Conway

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

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

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

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

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

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

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Metro’s Untimely, Nonsensical Light-Rail Project

By John A. Charles, Jr.

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

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

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

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

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

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

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

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

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A Money-Back Guarantee for Oregon Students

By Eric Fruits, Ph.D.

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

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

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

Source: Multnomah County Tax Supervising and Conservation Commission

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

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

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

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

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

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

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

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Oregon Needs a Moratorium on Overbroad Laws

By Vlad Yurlov

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

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

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

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

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

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Portland Politicians Suffer From the Edifice Complex

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Metro’s Broken Promise of Racial Equity

By Helen Doran

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

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

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

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

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

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

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

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

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

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

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School Choice Means Equitable Funding

By Cooper Conway

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

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

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

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

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

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

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

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

By Cooper Conway

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

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

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

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

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

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

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

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

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

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TriMet’s decreasing ridership makes the SW Corridor project obsolete

By Rachel Dawson

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

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

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

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

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

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

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Coronavirus Shouldn’t Stop Learning

By Cooper Conway

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

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

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

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

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

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

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Energy Reform Is Needed to Combat Rising Energy Bills in Oregon

By Rachel Dawson

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

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

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

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

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

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

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

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

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

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

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

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Metro’s Transportation Package: Progressive Politics Mask Regressive Tax

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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Metro’s $700,000 Sentiment

By Helen Cook

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

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

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

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

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

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

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The Big Jobs Squeeze of 2020

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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July Minimum Wage Increase Means Maximum Uncertainty

By Cooper Conway

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

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

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

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

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

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Categories: Right to Work
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Supreme Court Upholds Parents’ Right to Choose Religious Schools

By Kathryn Hickok

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

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

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

Objective 1: Reduce VMT per capita

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

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

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

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

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

Objective 2: Support use of cleaner vehicles and fuels

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

Objective 3: Consider GHG in decision making

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

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

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

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

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

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

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Categories: Tax and Budget
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OLCC Provides a Silver Lining in COVID-19 Recovery

By Vlad Yurlov

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

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

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

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

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

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Categories: Economic Opportunity
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Supporting Students, Not Systems, Is Social Justice

By Cooper Conway

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

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

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

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

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

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

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

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

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

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

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

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The hidden truth behind the Renewable Energy Certificate market

By Rachel Dawson

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

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

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

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

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

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

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

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

According to WalMart: (emphasis added)

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

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

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

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

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

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

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School Choice Can Help Solve K-12 Social Distancing Challenges

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

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

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

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

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

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

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

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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COVID-19 and New Business Taxes: Bayonetting the Wounded

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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Metro’s Housing Measure: Bad Policy, Terrible Timing

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Flexibility and Students’ Needs Should Drive Education Options in 2020

By Kathryn Hickok

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

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

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

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

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

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Ballot Measures with No Accountability Deserve a No Vote

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Portland Gas Tax: Big Dollars, Minuscule Results

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

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

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Letting Oregonians Find a Path to Recovery Is Essential Business

By Eric Fruits, Ph.D. 

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

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

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

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

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

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

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

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

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

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

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

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

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Nature 1, Lockdown 0

John A. Charles, Jr.

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

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

By Kathryn Hickok

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Eric Fruits, Ph.D.

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

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

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

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

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

Here’s where investment returns come in.

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

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

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

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

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

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

Where will that additional money come from?

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

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

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

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

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

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

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Oregon Can Support Workers by Reducing Regulations

By Rachel Dawson

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

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

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

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

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

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

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

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

                      Source: Oregon Global Warming Commission, 2018 Biennial Report

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

                                Source: Oregon Department of Energy, 2018 Biennial Report

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

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

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

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

March 9, 2020

FOR IMMEDIATE RELEASE

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

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

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

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

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

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

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

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

The letter can be read here.

About Cascade Policy Institute:

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

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

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

By Rachel Dawson

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

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

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

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

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

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

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

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Categories: Land Use
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Metro’s Housing Tax Requires Serious Oversight

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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The Grid Is Not a Tinker Toy

By John A. Charles, Jr.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Cap Taxes or You’ll Trade Business

By Miranda Bonifield

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

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

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

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

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

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

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TriMet Drops Ridership Estimate by 13% for Tigard Light Rail

By John A. Charles, Jr.

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

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

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

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

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

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

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

According to one PBOT stakeholder (emphasis added):

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

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

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

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

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

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

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

February 11, 2020

FOR IMMEDIATE RELEASE

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

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

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

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

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

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

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

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

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

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

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

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

A copy of the letter and documentation is available here.

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Categories: Land Use