Blog Posts

The Housing Affordability Crisis: The Role of Anti-Sprawl Policy

By Randall Pozdena, Ph.D.

Executive Summary

So-called smart growth policies are advocated as a means of avoiding sprawl.  These policies have at their heart a policy of reducing the availability of land for housing in urban areas. In Oregon and some other states, anti-sprawl policy is implemented by regulations that impose urban growth boundaries (UGBs).  Other regulations impose minimum density policies and others reduce spending on highways and increase spending on transit service—especially light rail—as an alternative.  Advocates of anti-sprawl policies argue that such regulations would allow urban growth to proceed at a lower overall cost.

Many states adopted smart growth policies in the last five decades—enough time for the policies to have demonstrated their purported advantages.  The evidence, at least on the housing front, is that the cost-containment claims have not materialized.  Instead, many urban areas are finding themselves with home prices that make ownership and rental of housing increasingly unaffordable.  Cities and states are thus using or considering additional regulations and subsidy policies to provide their residents with more affordable housing.  There is virtually no discussion of whether anti-sprawl regulatory interventions precipitated the housing crisis, let alone consideration of abandoning the policy.

The purpose of this study is to examine the links between anti-sprawl regulations and the spectacular increases in housing costs and the virtual disappearance of affordable housing in many markets.  Specifically, we measure the extent of site supply restrictions and its impact on housing prices using an economic model of housing markets, data on the economic conditions in housing markets, and trends in development revealed in satellite inventories of US land uses.

We apply the analysis to data from all 50 states and identify those states whose development policies reflect constrained site supply and those that do not.  Because Oregon has among the longest-standing and most aggressive implementations of smart growth land use policy, we pay particular attention to the state, and drill down with analyses at the Metropolitan Statistical Area (MSA) level in Oregon to demonstrate that the state-level findings are corroborated for all of its MSAs.

The primary metrics examined in this study are the rate of housing price appreciation, the degree of rigidity (“inelasticity”) of the supply of new homesites, and the degree to which the housing stock has failed to increase enough to affordably provide additional housing services.  Since we note that the adverse trends in house price inflation and slowing of site supply took greatest effect the last 30 years or so, we scrutinize market behavior subsequent to this period.  Because of the onset of the Great Recession in 2007, however, we estimate our models on this period.  This is because we do not wish to conflate the effects of anti-sprawl policy with the collapse of mortgage markets and home construction that persisted for the next half decade.

After establishing the linkage between constrained site supply and housing prices and affordability, we turn to the evaluation of the various policies that are in place or proposed to redress these problems.  This analysis is performed for the state of Oregon only.  The State’s wide-ranging and aggressive policies and proposals make it broadly representative of the nature, cost, and effectiveness of these policies—both those in place and those recently proposed.  With theory as a guide, and our acquired knowledge of the reactivity of the housing market to various stimuli, we can then opine on the likely effectiveness of these policies.  We also offer our own suggestions.

At the national level, using state and MSA data, we find the following:

  1. Twenty-three of the 50 states studied fail to provide housing units at a volume adequate to keep housing prices and incomes growing at a rate consistent with affordability. On average, these states under-provided housing units by 6.4 percent of their current stock of housing units.
  2. We demonstrate that those states that fail the affordability and supply adequacy test are overwhelmingly those with documented adoption of one or more aggressive anti-sprawl growth regulatory initiatives.
  3. Annual housing price inflation exceeded annual income growth by 14 percent each year during the study period in those states that failed to provide housing in sufficient quantity to keep it affordable. Extrapolating the findings to the nation, the housing stock is smaller by as much as 4.5 million housing units (in 2015 likely) than it should have been to preserve affordability.

Because Oregon has aggressively pursued anti-sprawl policy, it was given special attention in the study.  We found the following:

  1. All eight of Oregon’s MSA housing markets failed the test of affordability and adequacy of supply over the various study periods for which data was available. The estimated total shortfall in supply equals approximately 18 percent of the existing stock—virtually identical to that found for Oregon using state-level data.
  2. We analyzed the current and proposed housing policies of the state of Oregon. At present, proposals include approximately $2.3 billion by the State and the Department of Housing and Urban Development (HUD) to assist housing access and over $600 million in new affordability-related programs. This study finds that there is little hope that these policies can redress the scale and extent of Oregon’s affordable housing problems and, in some cases, may worsen them by burdening developers of housing with new regulations.

In summary, this study finds anti-sprawl policy to have been implemented in a manner that has pernicious effects on housing affordability.  Specifically, regulatory constraints on site supply have caused an on-going crisis of housing supply and affordability.  In many markets, the development of land for housing is regulated too aggressively.  Additionally, existing and new programs for addressing housing affordability rely on other regulation and spending programs that will not have the designed effect of providing affordable housing.  This study strongly recommends, instead, relaxation of regulations that limit the land area available for housing development.  Any residual concerns about sprawl should be addressed by reforming current highway and transit pricing and finance practices, which are known to be economically inefficient.

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Ride-Hailing Could Give an Uber-Needed Lyft to TriMet Service

By Miranda Bonifield

TriMet’s ridership has been steadily declining in recent years, to the great concern of transit advocates and fiscally conscious citizens alike. Proposed solutions involve sending expensive new bus and rail lines to underserved locations. But what if TriMet could reach new customers at a fraction of that cost?

Cascade Policy Institute recently released a study by economist Dr. Eric Fruits which found one or more high-cost and low-ridership bus lines could be replaced by facilitating the use of ride-hailing services in partnership with transit. Riders within particular areas could call an Uber or Lyft, ride to the bus, and then take public transit the rest of the way—a much more efficient and comfortable method than walking or biking through the rain. It could cost 55% less than expensive proposed bus lines—saving TriMet money—and slightly less than current bus and Max fares—saving customers money.

This isn’t a new idea; transit companies across the country have taken advantage of ride-hailing services’ ability to complement public transit. Studies have found a small but significant increase in transit ridership in cities with large transit systems which chose to partner with ride-hailing services. TriMet should pursue this low-risk, high-benefit option with a one-year pilot project beneficial to taxpayers, riders, and TriMet alike.

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

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Categories: Transportation

Options in Education Fest Celebrates Oregon Parents’ Education Choices

By Bobbie Jager

As a mother of 13 children (no, that’s not a typo) and grandmother of 17 more, I understand the critical role that parents play in the lives of their children. Education can make or break a child’s future, and school choice gives parents the power—and the responsibility—to decide what education options fit their children best. That’s why I support school choice and National School Choice Week.

Every January, National School Choice Week (www.schoolchoiceweek.com) shines a spotlight on effective education options for all children. A nonpartisan and nonpolitical celebration of educational choice, the Week raises awareness of the different K-12 education options available to children and families. National School Choice Week recognizes all K-12 options, including traditional public schools, public charter schools, public magnet schools, private schools, online academies, and homeschooling.

Started in 2011, National School Choice Week is now the world’s largest annual celebration of opportunity in education. Parents, teachers, supporters, and students will gather at more than 40,000 events the week of January 20-26, 2019. These events will celebrate the ways in which school choice has brought quality educational options to millions of households nationwide.

Some parents may not know it, but they do have a wide array of options. In Oregon, school choice runs the gamut, from homeschooling to magnet schools offering specialized programs in subjects like the arts or sciences. Some school districts offer choice through open enrollment (children studying in public schools outside their neighborhood borders).

Some argue that school choice undermines public education. Far from it! For one thing, many school choice options are public options, including open enrollment, magnet schools, charter schools, and online learning. Oregon’s publicly funded options include more than a hundred charter schools and 12 virtual (online) schools, all of which have greater autonomy and flexibility than traditional public schools.

But regardless of the school setting parents choose, education should always have children—and parents—as its focus. However well-intentioned, no school official can ever replace the love, care, and affection that parents will show a child. Because they care so much, and know so much about their sons and daughters, parents are the best-placed individuals to decide the right schooling option for their children. School choice gives them that power, that opportunity, and that voice.

The joy in children’s eyes at National School Choice Week festivities reminds me of my kids’ excitement when they came home from school after completing a big project or doing well on a test. When placed in an environment that nurtures and cultivates their special skills and abilities, children have a chance to shine, and their faces radiate happiness. As a mother, I hope all parents can witness that joy in their children’s faces—not just once or twice a year, but throughout their schooling.

Here in Oregon, we will use National School Choice Week to host the Options in Education Fest 2019: Exploring Your Child’s Education Opportunities, at the Salem Convention Center, Saturday, January 19, 2019. Parents and children can learn more about their options, including programs offered and application processes at various schools. This knowledge will provide parents with the power to make informed choices for their children. For more information and to attend the Options in Education Fest, visit schoolchoicefororegon.com.

A few years ago, I had the privilege of being named Oregon’s “Mother of the Year.” But in reality, all children see their parents as the Mother or Father of the Year. And all parents who make sure their children receive a quality education—and the better future that comes with it—qualify. So please celebrate National School Choice Week by considering your school options or coming out to the Options in Education Fest. Your children will thank you, both now and for many years to come.

Bobbie Jager, Oregon’s 2012 “Mother of the Year,” is a parental choice advocate and the School Choice Outreach Coordinator for the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article appeared in The Portland Tribune on December 18, 2019.

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Categories: Education

Annual School Choice Week Celebrates K-12 Education Options

By Kathryn Hickok

Every January, National School Choice Week shines a spotlight on effective education options for all children. A nonpartisan and nonpolitical celebration of educational choice, the Week raises awareness of the different K-12 options available to families, including traditional public schools, public charter schools, public magnet schools, private schools, online academies, and homeschooling. This year’s celebration will be January 20-26, 2019.

Here in Oregon, Cascade Policy Institute will host the Options in Education Fest 2019: Exploring Your Child’s Education Opportunities, at the Salem Convention Center, Saturday, January 19, 2019. Parents and children can learn more about their options, including programs offered and application processes at various schools. This knowledge will provide parents with the power to make informed choices for their children.

Children have different talents, interests, and needs; and they learn in different ways. The options available to meet students’ learning needs are more diverse today than ever. For more information and to attend the Options in Education Fest, visit schoolchoicefororegon.com.

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

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Categories: Education

ODOT’s Passenger Rail Project Equals Increasing Costs, High Taxpayer Subsidies

By Justus Armstrong

The Oregon Department of Transportation recently published its Tier 1 Draft Environmental Impact Statement (EIS) for the Oregon Passenger Rail Project, which plans to expand and improve passenger rail service between Eugene and Portland and increase Amtrak Cascades rail service from two to six round trips per day. Out of two potential build alternatives—Alternative 1, which would improve the existing Amtrak route, and Alternative 2, which would create a new route along Interstate 5 between Springfield and Oregon City—ODOT has identified Alternative 1 as the preferred alternative. Many are optimistic about improved passenger rail options, but Alternative 1 would include anywhere from $870 to $1,025 million in capital costs. Is the project worth such a high price?

One of the stated goals of the Passenger Rail plan is to implement a cost-effective project, but based on ODOT’s own testimony, it appears that Amtrak is actually becoming less cost-effective. In a 2017 Legislative report on passenger rail performance, ODOT reported that “[t]he gap between revenue and costs continues to increase.…It is likely the costs to operate the service will increase in the coming years.”

The EIS estimates that Alternative 1 would cost around $48 million a year in operations and maintenance costs—a sharp increase from the $17.75 million ODOT currently pays Amtrak annually to support the existing rail service. The EIS also admits that this is a conservative estimation based on the assumption that Amtrak payments will triple as the number of round trips triples. Currently, ODOT subsidizes each one-way Amtrak ride to the tune of about $118, and with the costs to operate Amtrak already rising, expanding an increasingly cost-ineffective service risks adding to an even greater burden on Oregon taxpayers.

On the other hand, if the improved passenger rail service were to achieve the 89 percent increase in ridership hoped for by 2035, ODOT’s subsidy would be distributed more broadly among an expected 646,000 annual rail passengers. Theoretically, this could help make ODOT’s investment more worthwhile.

More Amtrak passengers would mean more ticket revenue, lessening the gap between revenue and operating costs. However, ODOT’s ridership projections are largely based on the hope that population increases in the Willamette Valley “could result in unprecedented ridership increases.” In perspective, only 105,000 (less than 4%) of the Willamette Valley’s 2.8 million residents were riding Amtrak in 2015. Living up to the ridership goals in the EIS would require a significant shift in transportation choice towards intercity passenger rail not yet seen in Oregon.

The draft EIS does not include projections for expected revenues and fare recovery, so exact measures of cost effectiveness for the project are not yet nailed down. Unless fare recovery is significantly improved, Oregon will continue to lead the nation in passenger rail subsidies and triple already wasteful operating expenditures.

There is also the matter of the $1 billion in construction and design costs that would have to come from state and federal funds. ODOT’s passenger rail plans are likely motivated by prospects of broader eligibility for federal funding, but any advancements in rail service are bound to be a costly investment for Oregonians.

Public transportation expansions are often put forward as solutions to highway congestion. However, the EIS for the passenger rail project admits that neither build alternative would alleviate Oregon’s congestion issues, stating that the potential reduction in the number of vehicles on I-5 between Eugene and Portland “would not be significant enough to affect or improve congestion on I-5.” In fact, the EIS states that the project could even exacerbate congestion by increasing vehicle activity on surface streets near Amtrak stations. Expanding passenger rail service may benefit the small portion of the Willamette Valley population that uses Amtrak, but would do little to address Oregon’s broader transportation challenges.

Instead of expanding Amtrak rail service, ODOT could plan on gradually increasing the frequency of Thruway bus service over the next 20 years. The No Action alternative already includes plans to increase intercity bus service between Eugene and Portland to seven round trips per day, so why not focus on further increasing bus frequency rather than replacing it with a more costly rail alternative? That way, transportation service can be more flexibly adjusted to transportation demands without the same level of capital investment and heavy subsidies that expanding passenger rail would require.

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

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

FOR IMMEDIATE RELEASE

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

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

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

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

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

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

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

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

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

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

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Categories: Transportation

Ride Hailing as a Solution to TriMet’s High-Cost Bus Lines

A Proposal for a Pilot Project

By Eric Fruits, Ph.D.

Summary and recommendation

This report recommends TriMet pursue a one-year pilot project that replaces one or more of its high-cost bus lines with ride hailing services supported by a subsidy funded with the cost savings from eliminating the high-cost bus line.

  • A subsidy covering 75 percent of the fare to eligible riders would be straightforward and relatively easy to understand, implement, and use.
  • TriMet bus lines 97 (Tualatin-Sherwood Rd) and 63 (Washington Park/Arlington Hts) would be reasonable candidates for the pilot project. These lines provide the best combination of lower user costs and cost savings to TriMet.
  • The average rider’s cost would be slightly lower than current TriMet fares. Because the customer is paying a portion of the fare, riders would be more likely to weigh the benefits and costs of using the ride hail service as a connection to the TriMet system (first mile/last mile, a complement to TriMet service) versus door-to-door (a substitute for TriMet service).
  • The cost of the 75 percent subsidy on lines 97 and 63 would be approximately 55 percent lower than the current costs of operating the high-cost bus lines.

Each of the bus lines identified in this report intersects with other bus, MAX, and WES stops or overlaps TriMet transit centers. Uber found that nearly 25 percent of Uber trips in suburban Portland began or ended within one-quarter mile of a MAX or WES station, as shown in Figure 1 and Figure 2 of this report. To encourage use of ride hailing services as a complement to the TriMet system, proof of fare payment should also serve as a 2.5 hour TriMet pass.

More than a dozen cities in the United States have programs similar to the proposed pilot project. Many of these cities have developed procedures to accommodate users who do not have a smartphone and users with ADA-related needs. Several of the programs began as pilot programs that have been extended because of the success of the pilot.

TriMet faces a challenge of declining ridership in conjunction with rising costs. In addition, the agency operates a number of high-cost bus lines. At the same time, ride hailing services, such as Uber and Lyft have grown in popularity since their introduction to the Portland region in 2015, providing convenient, reliable, low-cost service to millions of riders.

Recent research finds that ride hailing services have the largest positive complementary effect on rail service in cities with large public transit systems already in place, such as Portland. For these cities, the researchers found a small, but statistically significant, complementary effect on bus ridership.

The pilot project recommended in this report would be a low-cost, low-risk test of potential synergies between public transit and private ride hailing. If successful, the lessons learned can and should be applied to additional high-cost transit lines.

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Categories: Transportation

Proof by Assertion

By John A. Charles, Jr.

Many Portland drivers probably wonder why there are so many curb pop-outs on Portland streets. The pop-outs, also called bioswales, are usually shaped like rectangles or triangles and filled with plants, grass, and a drain pipe.

While advocates think the bioswales are important to protect water quality, a new report released by the Portland Auditor shows that there is little evidence to support such claims. The problem is the Portland Bureau of Environmental Services doesn’t have a monitoring plan.

In 2018 the Bureau spent $13 million in construction and maintenance costs for watershed protection, but no one was responsible for oversight. In fact, the Bureau did not even have an inventory to document where it spent money for restoration projects and the goals achieved.

This should not be a surprise. Both the Portland City Auditor and the Metro Auditor have issued multiple reports in recent years criticizing their own agencies for spending money without having systems in place to evaluate results. Those audits have generally been ignored by bureaucratic supervisors.

Unfortunately, Auditors can shine light on waste and mismanagement, but they cannot force changes. Only voters can do that by holding public officials accountable.

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

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More Spending Won’t Solve Educational Woes

By Miranda Bonifield

Increasing funding to Oregon’s school system may seem like an admirable attempt to give all kids their best shot. But the answer to our never-ending quest to educate children isn’t blowing the budget; it’s smart spending. The most recent public school spending proposals fail to mention a potential source for the extra billion dollars per year in education spending they include—which would be compounded by Oregon’s extraordinarily expensive public pension plan. Raising Oregon’s already-high taxes to hire more teachers while promising pensions Oregon can’t deliver is a recipe for disaster.

EdChoice recently published a study of the fiscal impacts of American school choice programs and found that American taxpayers saved about $3,400 for every school voucher that’s been awarded. In addition, public schools no longer have to educate the student who decides to participate in a school choice program, automatically shrinking the class size of the school she would have enrolled in.

Education Savings Account programs allow parents to withdraw their children from their assigned public schools and use some of the funding for the education of their choice. An analysis of such a proposed program in Oregon found that an allocation of $4,500 per participating student would result in a net savings of $6 million per year. I don’t know about you, but I think that sounds much better than a billion-dollar tax increase.

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

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Categories: Education

Prosper Portland’s Latest Business Grants Program Oversteps Again

By Justus Armstrong

Should the City of Portland invest taxpayer money in local marijuana businesses just because they’re owned by people of color? Prosper Portland seems to think so. Its new grants program seeks to expand minority-owned cannabis businesses in the Portland area.

 The Cannabis Business Development Equity Program, funded by a 3% local tax on legal cannabis sales, is intended to address the disproportionate effects of the War on Drugs on people of color. Grants ranging from $5,000 to $30,000 will be administered by the NuLeaf Project and are expected to be awarded to 10-20 businesses. Prospective grant recipients must have at least 51% ownership by people of color to qualify.

 Redressing—in some fashion—the economic impacts of marijuana prohibition on minorities might seem like a laudable goal. Grants funded by Portland cannabis tax revenue have also gone towards clearing records and assisting with workforce reentry for those disproportionately affected by marijuana prohibition.

 Measures addressing the direct criminal justice implications of drug convictions may, in fact, help to right past inequities; but the business development aspect of Portland’s program oversteps these intentions. Prosper Portland’s latest “investment” project follows the same trend as many other government programs, continuing a troubling pattern of crony capitalism disguised as affirmative action.

 Giving cannabis startups funding from the city doesn’t correlate to healing the wounds of incarceration. The NuLeaf Project doesn’t require applicants to come from a background specifically affected by cannabis prohibition. Rather, preference is given to any business with at least 51% minority ownership. The assumption seems to be that because drug possession charges have disproportionately affected people of color, all minority entrepreneurs in the cannabis industry face significant “capital, education, and connection hurdles” when starting a business.

 Prosper Portland packages the program as a way to help negatively impacted communities, but the request for proposals explicitly states that the program is “designed with an emphasis on supporting a business through growth and ensuring technical assistance leads to wealth creation outcomes.” Whether or not NuLeaf’s mission is worthwhile, it’s hard to see why public money should be given away for private wealth creation. Should Portland assume that minority-owned businesses in an industry approaching $25 billion can’t succeed without help from the city government?

 Corporate welfare is corporate welfare, regardless of the industry or the race of a business’s leadership. If you don’t believe Carrier Corporation should receive targeted tax breaks from President Trump, or that Amazon should receive special treatment from Seattle, the principle is the same. Prosper Portland’s subsidizing of cannabis companies is a similar market distortion and an illegitimate use of public funds. Tax funding should not be directed to fund businesses in Portland or anywhere in Oregon. Minority-owned cannabis businesses, like any other businesses, should succeed or fail by their own merit.

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

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QuickPoint! – “They Left Out Radio!” – The Human Genius Behind Economic Growth

By Kathryn Hickok

Bull market? Bear market? Growth? Uncertainty? What does 2019 have in store?

Economies are described in numbers, percentages, and quarterly comparisons. But the picture is richer than dollar values of production and consumption. No economy exists without millions of unique people bringing to the marketplace their creativity, intelligence, initiative, and effort. The knowledge, skills, and experiences of people are the true wealth of a society.

President Reagan once remarked on the limitations of economic predictions that can’t measure human genius. He said:

“You know, back in the twenties I think they did a report for Herbert Hoover about what the future economy would be like. And they included all their projections on industries and restaurants and steel, everything. But you know what they left out? They left out radio! They left out the fantastic rise of the media, which transformed the commercial marketplace….

“And now they make their projections, and they leave out high tech….”*

Fostering economic growth requires a tax and regulatory climate that’s friendly to businesses and the people who start them. The Oregon legislature should remember this when it convenes in February.

 

* Peggy Noonan, What I Saw at the Revolution: A Political Life in the Reagan Era (New York: Random House, 1990), 146.

 

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

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Categories: Tax and Budget

Lessons in Education from Gandalf the Grey

By Miranda Bonifield

Cascade Policy Institute has supported parental choice in K-12 education since 1991. In fact, it’s the issue that convinced founder Steve Buckstein of the need for a free-market think tank in Oregon. But would you have imagined that Gandalf, fictional hero of J.R.R. Tolkien’s The Lord of the Rings, would be a voice for educational choice as well?

Yes, you read that right: Gandalf the Grey (delighter of hobbits, purveyor of fireworks, and instigator of disruptive adventures) would support school choice—giving parents the power to choose the educational setting that works best for their children. It’s all right if you need some tea to process that. I’m enjoying my second breakfast as I write this.

If you think Gandalf would never have any concern about education, consider the man who created the beloved character.

J.R.R. Tolkien was a celebrated philologist who studied and taught at Oxford. As a child, most of his initial education in languages, literature, botany, music, and art came from his widowed mother, whose creativity and passion for knowledge were passed on to her children. When her already meager allowance from her husband’s relatives was cut off upon her conversion to Catholicism, the Tolkien family moved to even harder circumstances and benefited from a local parish school. After his mother died, the young author persevered as a student.

Tolkien would later say, “True education is a kind of never-ending story—a matter of continual beginnings, of habitual fresh starts, of persistent newness.”

His character Gandalf regularly placed his faith in the character of everyday people, entrusting the most important task of Tolkien’s saga—the care and destruction of the One Ring—to an ordinary halfling. “Soft as butter as they can be,” the wizard said, “and yet sometimes as tough as old tree-roots.” Even comfortable, curmudgeonly Bilbo Baggins demonstrated how right he was—exchanging riddles to save his life from Gollum, rescuing his dwarven companions from giant spiders, and then risking the anger of the same friends to broker peace between gathering armies.

With such demonstrations of Bilbo’s merit, I think it’s safe to say Gandalf would trust ordinary people’s desire and ability to obtain a good education for their children.

Wisdom (and our favorite wizard) recognizes that life isn’t one-size-fits-all. One doesn’t reason with the evil possessing the king of Rohan—drive it out by whatever means necessary. One doesn’t send an impetuous, proud prince of Gondor into Mordor with a ring of unfathomable power. Instead, send an ordinary person whose heart is in the right place.

Likewise, parents don’t want to send their uniquely gifted child, who may have special needs, to a school that isn’t a good fit. Every parent wants to give their child the best education possible.

The most effective way to accomplish that is not by trying to force public schools to cover every eventuality and trapping students in schools that don’t meet their needs. Rather, we should return the power to parents by putting education funding in their hands to utilize resources that are already available for their children.

Last year, researchers at EdChoice combed through the highest-quality studies of school choice programs around the country. Did you know that 31 of the 33 studies on the competitive effects of school choice demonstrate a positive impact on public school test scores? Each of the three studies on the competitive effects of school choice programs found that participants in school choice programs graduate at a higher rate than their peers. School choice typically has a positive effect on racial and ethnic integration. Perhaps most importantly, parents who are able to take advantage of school choice are more satisfied with the quality of education their children receive and feel their children are safer at school.

It’s high time we brought some newness to Oregon’s education system. With good counsel from the wisest advisor of the Shire, I’m sure the excellent and commendable hobbits here in Oregon will agree: Each one of us should be a voice for school choice.

Miranda Bonifield is a Research Associate at Cascade Policy Institute, Oregon’s free-market public policy research organization. She is also the Program Assistant for the Children’s Scholarship Fund-Oregon, a Cascade program that provides K-8 scholarships to low-income Oregon children.

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Categories: Education

Fake Leadership

By John A. Charles, Jr.

Governor Kate Brown’s proposed two-year general fund budget for 2019-21 requests $23.6 billion. That is an increase of 12.4% over the current level, which was the largest budget in Oregon history when it was adopted 18 months ago.

So far, few legislative leaders have questioned why the Governor needs so much money. At the Oregon Business Plan summit, held on December 3, most of the talk was about adopting new taxes and repealing the popular “kicker” law that rebates surplus funds to Oregon taxpayers. That’s not a good omen.

Most parents teach their children at a young age that they can’t always ask for more; sometimes you have to make do with what you have. That lesson has been lost on Oregon’s political leaders. No matter how much money we send to Salem, it’s never enough.

Before legislators vote to approve even one more tax, they should ask where the money will go, and why is it needed? And more importantly, if the current record-setting budget is not enough, what will change in the next two years to avoid another huge increase in 2020?

Any governor can demand more money; addressing the root causes of our problems takes real leadership. Gov. Brown has yet to figure that out.

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: Tax and Budget

The Story Behind Thanksgiving That Every Elected Official Should Know

By Kathryn Hickok

The quintessential American holiday, Thanksgiving evolved from the Pilgrims’ celebrations to thank God for the harvests that saved Plymouth Colony. What most people didn’t learn in school is that nearly half the Mayflower Pilgrims died of starvation because many refused to work in the fields.

Plymouth Colony originally had a socialist economy. Land and crops were held in common. In the words of Governor William Bradford, “the young men who were most able objected to being forced to spend their time and strength working for other men’s wives and children without any recompense.” Collectivism incentivized colonists needlessly to rely on the efforts of others. Realizing this, Governor Bradford assigned each household its own plot of land. Families could keep what they produced or trade for things they needed. The result was a bountiful harvest in 1623.

Instituting private property and respecting the autonomy of the family unit caused Plymouth to survive. Collectivism and central planning produce scarcity. Private property, free markets, and personal responsibility lead to prosperity and plenty. A healthy economy, with strong and independent families, enables a community to help those who genuinely need assistance. All are important lessons for America today from William Bradford’s first Thanksgiving.

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

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Categories: Economic Opportunity

TriMet’s New Electric Buses Will Be Less Reliable, More Costly

By John A. Charles, Jr.

The TriMet board recently voted to replace the agency’s entire bus fleet with battery-electric buses by 2040. Since each electric bus is more than twice as expensive as a standard diesel bus, this decision will cost taxpayers more than $550 million in excess costs.

The electric premium might be worth it if there were significant benefits to switching fuels, but there aren’t. In fact, battery-powered buses are far less reliable than diesel or natural gas buses. According to a recent study by the Federal Transit Administration, battery electric buses in Seattle only traveled 2,771 miles on average between breakdowns; for diesel buses, it was 17,332.

Since moving passengers is TriMet’s primary job, this alone should have disqualified battery buses from consideration.

The primary motivation for TriMet seems to be reducing so-called “greenhouse gases,” but battery-powered buses offer no real air quality benefit. The buses must be charged from the utility grid, which is powered mostly by coal and natural gas. Even large wind farms are backed up every minute of the day by other sources such as gas and hydro dams. Using battery-electric buses simply changes where greenhouse gases are emitted, which is meaningless.

A better alternative would be renewable natural gas, derived from processing food waste or methane emissions from landfills. For this reason the Los Angeles County Metropolitan Transit Authority concluded in 2016 that it would switch its entire fleet to renewable natural gas buses because it would provide “approximately 39% greater reductions in GHG emissions at half the cost” when compared to electric buses.

Finally, TriMet has no way to pay for the electric bus conversion. The staff recommended buying the first 80 electric buses with combinations of federal grants and money from the new statewide employee tax, followed by a hoped-for legislative bailout sometime after 2022. That’s not a plan, it’s a fantasy.

TriMet has already been awarded ten battery electric buses through grants from the federal government. A more prudent option going forward would be to buy ten buses using other fuels—such as compressed natural gas and renewable natural gas—and then test them all head-to-head to measure reliability, emissions, noise, and passenger comfort.

This was a rash decision. The TriMet Board should admit that it made a mistake, and spend the next two years analyzing alternative fuels. If taxpayers are going to be forced to pay an extra half-billion dollars for new buses, there should at least be a good reason.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article appeared in The Portland Tribune on November 13, 2018.

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Categories: Transportation

Survey Shows Florida Scholarship Parents Are Overwhelmingly Satisfied with Their Children’s Schools

By Kathryn Hickok

Florida’s Tax Credit Scholarship Program currently helps more than a hundred thousand of the state’s most disadvantaged students to get a better education through privately funded scholarships, making it the largest private school choice program in America. The program has been funded by voluntary corporate donations to nonprofit scholarship organizations. In return for these donations, companies receive dollar-for-dollar tax credits against their state income tax.

Last week, EdChoice released the largest-ever survey of the parents of Florida’s tax credit scholarship students, revealing these families’ educational priorities and experiences.

Analyzing the responses of more than fourteen thousand parents, EdChoice concluded:

  • “The vast majority of Florida scholarship parents expressed satisfaction with the tax-credit scholarship program.”
  • “Florida parents chose their children’s private schools because those schools offer what their public schools can’t/don’t.”
  • “Among respondents whose children were previously enrolled in a public district or charter school before using a scholarship to enroll in a private school, most parents reported engaging in a variety of education-related activities more often than before switching schools….”

Children have different talents, interests, and needs; and they learn in different ways. The landscape of educational options to meet students’ learning needs is more diverse today than ever. For more information about school choice in Oregon, visit schoolchoicefororegon.com.

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 partial tuition scholarships to Oregon elementary students from lower-income families.

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Categories: Education

Metro Should Let Transit Customers Drive Transportation Innovation

By Justus Armstrong

ABC’s Shark Tank may be coming to the Portland region—not in the form of a reality TV special, but as a taxpayer-funded project that positions the Metro regional government to act as a venture capital firm. Rather than investing in the success of growing businesses, however, the Sharks at Metro plan to fund temporary pilot projects that test new transportation technology.

Metro proposes that its Partnerships and Innovative Learning Opportunities in Transportation (PILOT) program—a component of the Emerging Technology Strategy—would help meet its “guided innovation” goals, but the shortsighted approach of this program ignores a vital question: Are risky technological investments the best use of taxpayer funding?

In a presentation at a Metro work session in July, Senior Technology Strategist Eliot Rose suggested the PILOT program would “guide innovation in transportation technology toward creating a more equitable and livable region.” Embedded in the presentation were numerous contradictions, beginning with the oxymoron of “guided innovation.” In Metro’s case, guided innovation more than likely means “hindered innovation,” with PILOT funding being a carrot-and-stick method of ensuring that emerging technologies take the direction technocrats deem appropriate, not the direction consumers are demanding.

By allocating government funding to the transportation projects of its choice, Metro risks preventing better ideas from emerging and hampering the innovation necessary for real progress to take place. As Metro strategist Rose noted, ridesharing, bikesharing, and other technologies PILOT wishes to foster have already been expanding in Portland. This technological progress has taken place with private investment, yet Rose still concludes that public money is needed for it to continue.

During the July work session, Metro staff claimed that the government “needs to intervene to bring technology to people and communities that the market doesn’t serve.” This assumption presents another contradiction: If an investment isn’t cost-effective for a private actor, what makes it a cost-effective investment to Metro? And how can successful projects be expected to continue without public funding, if the projects’ functions wouldn’t otherwise be demanded by the market?

Furthermore, Metro’s plan risks sinking taxpayer money into potentially unsuccessful projects. The $165,000 Forth-Hacienda project was presented by Metro as an example of a successful pilot project—not because the project itself was successful, but because its failure offered a great learning experience. The desire to better understand new technologies is not without merit, but the experimental nature of such pilot projects hardly makes them a good fit for taxpayer funding.

For all the project’s flaws, discussion about Metro’s Emerging Technology Strategy has included some promising aspects. For instance, during the work session, Metro Councilor Shirley Craddick brought up the idea of transitioning some of TriMet’s responsibilities to ridesharing networks. Considering more innovative modes for public transportation would be a step in the right direction and likely would improve cost-effectiveness, quality, and ridership of transit while meeting the needs of the populations Metro seeks to assist.

Perhaps a more effective Emerging Technology Strategy could focus solely on ways to improve existing public transportation through new technology, rather than interfering with private transportation markets through subsidies and attempts to shape private development. Instead of subsidizing companies with PILOT funding, Metro could offer open-ended transportation vouchers directly to transit users, especially transit-dependent and underserved populations.

Transit vouchers could be spent on a variety of transportation options, including TriMet and the newer technologies the PILOT program intends to target, such as rideshare, bikeshare, and electric vehicle and autonomous vehicle rentals. Putting the money directly into the hands of transit users could drive innovation through consumer sovereignty on the demand side, encouraging competition and making companies work to meet transit users’ needs instead of Metro’s project specifications.

With its PILOT program, Metro seeks to encourage innovation while managing risk; but any risk associated with developing new technologies should be borne by the companies driving the innovation, not by the public. If Metro moves forward with the PILOT program, it will only hinder its own goals. Instead of shaping existing markets in the private sector, Metro should focus on applying technological improvements to public transportation options.

Moreover, Metro should reform the regulatory framework and barriers to entry that may be preventing the emerging transportation technology market from functioning at its best. After all, the expansion of Uber and Lyft in Portland didn’t take place because Portland subsidized these companies. It happened because Portland stopped banning them. Metro councilors and staff can’t foresee the direction that new technologies will take, so they can’t know enough in advance to guide the direction of innovation or adequately manage its risks. The best they can do is get out of the way.

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

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Another Tax Increase from Kate Brown

By John A. Charles, Jr.

Governor Kate Brown’s top health care administrator is requesting that the legislature increase taxes on beer, wine, cider, cigarettes, cigars, and vaping pens. If approved, the taxes would result in $784 million in new revenue for the state over the next two years.

Health officials claim that this is a “public health” measure designed to reduce consumption of harmful products, but it’s really just a money grab. The state has an estimated shortfall of $800 million in Medicaid funding, and this proposal conveniently would raise almost that amount.

However, the proposed tax probably will not actually raise that much money because of a built-in contradiction: If consumption goes down, then tax revenue has to go down as well. Legislators cannot support it as both a public health measure and a revenue-raiser at the same time. For one goal to succeed, the other must fail.

It’s an open secret in Salem that the biggest “addiction” problem in the state is not tobacco or alcohol consumption; it’s the addiction that politicians have to taxation on smoking, drinking and gambling. They don’t want less of these activities; they actually want more.

Legislators are not our parents. Oregonians should be left alone so they can decide for themselves what products to use.

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: Tax and Budget

Metro’s Bond Measure 26-199 Raises Taxes on Homeowners, Requires No Accountability for Money Spent

By Miranda Bonifield

Metro claims Measure 26-199 is designed to address affordable housing, but the 652.8 million dollar bond measure raises taxes for homeowners without ensuring that it will accomplish its goals.

Metro claims these bonds would fund up to 3,900 low-income housing units. However, the measure doesn’t require a minimum number of units: Metro could build a few units, spend the rest of the money on “services,” and fulfill the requirements of Measure 26-199. The text of the measure even says these bonds may be used for things like grocery or retail space without limitation. In other words, there’s no guarantee the measure will make even a small improvement to housing affordability.

There is no deadline ensuring Metro provides these units in a timely fashion. There is no requirement for Metro to change its practices if auditors find Metro is failing to accomplish its goals. 26-199 asks you to trust Metro’s intentions without any accountability to encourage success. Meanwhile, urban growth boundaries and endless red tape keep Oregon’s housing supply from meeting the needs of our growing population.

Any major project needs firm deadlines and specific goals to have any hope of success, but Metro’s measure provides neither.

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

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Categories: Tax and Budget

Is Oregon’s Department of Justice for Hire?

By Justus Armstrong

Last June, former Portland City Commissioner Steve Novick was hired by the Oregon Department of Justice as a Special Assistant Attorney General (SAAG). What many Oregonians may not know is that his entire salary is being paid by an out-of-state private source.

New York University’s State Energy & Environmental Impact Center, backed by Bloomberg Philanthropies, funds Novick’s legal fellowship with the aim of strengthening state attorney general offices in their crusade against the Trump administration’s environmental policies.

The unprecedented practice of providing external funding to state attorneys general to push a policy agenda ought to raise ethical concerns. As attorney Andrew Grossman put it: “What you’re talking about is law enforcement for hire….Really, what’s being done is circumventing our normal mode of government.”

In August 2018, Competitive Enterprise Institute published a report by Christopher Horner which details the roots and function of the SAAG program. Law Enforcement for Rent: How Special Interests Fund Climate Policy through State Attorneys General describes the genesis of the SAAG program as an informal coalition between states, spearheaded by former New York Attorney General Eric Schneiderman.

A letter included in the report’s appendix from Schneiderman and Vermont Attorney General William Sorrell to Oregon Attorney General Ellen Rosenblum shows she was invited to a March 2016 meeting of this coalition. The letter describes the program as “an important part of the national effort to ensure the adoption of stronger federal climate and energy policies.” Correspondence between members of the coalition (also compiled by Horner) expresses a desire to collaborate on targeting companies in the energy industry with regulatory and enforcement tools.

This same environmental policy agenda drives NYU’s Center, as expressed in its communication with state attorneys general. Emails state that the “opportunity to potentially hire an NYU Fellow is open to all state attorneys general who demonstrate a need and commitment to defending environmental values and advancing progressive clean energy, climate change, and environmental legal positions.” NYU’s website directs interested attorneys general to demonstrate a need for outside funding to pursue these legal positions.

If this sounds questionable, imagine a similar practice being used to serve other political agendas. If a nonprofit backed by Charles and David Koch offered to fund a position in a state to provide legal assistance on regulatory matters, would it be considered a conflict of interest? If the National Rifle Association were bankrolling state employees to serve as a “resource” on gun law enforcement, would it raise red flags? This isn’t simply about protecting the environment versus not. It’s a question of impropriety and corruption. NYU states in its agreements that fellows owe their loyalty solely to the state attorney general once they’re assigned there, but SAAGs like Novick are still being paid by an outside source while working on behalf of the state.

It appears that Rosenblum was anxious about the ethical gray areas of this arrangement from the start. Emails from within the DOJ show that Rosenblum instructed the DOJ not to use the word “volunteer” to describe Novick’s position in his hiring paperwork. The obfuscating language of the hiring process is notable: In reality, Novick isn’t working as a “volunteer” or a “research fellow,” but as an environmental lawyer, as he has been for years. Rosenblum also showed apprehension about the potential media attention the unprecedented arrangement could draw, as one email states:

“We need to be sure we are prepared to explain his position to the media, who, no doubt, will be interested. (Because he is being paid by an outside entity—which is quite unusual I think)….”

Novick’s position is quite unusual indeed, and Oregonians deserve an explanation. Regardless of one’s views on Novick, Rosenblum, or Bloomberg’s environmental policy agenda, embedding privately funded legal counsel in our justice department is a conflict of interest. The Attorney General’s office should be loyal to Oregon citizens, not out-of-state donors, and should uphold the law rather than push a legislative agenda.

If statutes aren’t clear enough on the practice, Oregon voters may need to consider a constitutional amendment to keep privately paid employees out of state offices and keep the DOJ from undermining the democratic process. The Resistance agenda belongs on the campaign trail, not in law enforcement.

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

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Categories: Right to Work

Watch “School Choice Changes Lives!” Online Now

By Steve Buckstein

On September 25, Cascade Policy Institute and its School Choice for Oregon project hosted a live audience event in downtown Portland, “School Choice Changes Lives!”

Designed to attract an online audience and social media participation, the event aired simultaneously on Facebook.

National school choice experts Dr. Matthew Ladner (Charles Koch Institute) and Tim Keller (Institute for Justice) were the featured guests for this fast-moving, question-and-answer panel discussion on school choice.

If you missed the live event online, you can watch it now to learn how school choice can benefit all Oregon children. Whether you’re a parent, grandparent, educator, and/or taxpayer, you won’t want to miss this opportunity to learn from experts how School Choice Changes Lives!

You can watch the archived video at Facebook.com/SchoolChoiceforOregon. If you’re not on Facebook, simply go to SchoolChoiceforOregon.com; click on the Social button and watch School Choice Changes Lives on YouTube. There is no login required to watch on YouTube.

If you think Oregon’s school children are not getting all the opportunities to learn that they deserve, you won’t want to miss this event. So go to Facebook or YouTube, and learn how School Choice Changes Lives and how you can get involved to help make school choice a reality in Oregon.

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Categories: Education

Electric Buses: Another Costly Fad

By John A. Charles, Jr.

The TriMet Board recently approved a plan to replace its entire fleet with battery-electric buses (BEBs) by 2040. If implemented, this will cost taxpayers $553 million more than buying diesel buses.

It might be worth the premium if battery powered buses were cleaner or more reliable, but they aren’t. King County, Washington has been testing BEBs since April 2016. On average, they only travel 2,771 miles between service failures. Diesel buses are good for 17,332 miles—more than six times as long.

In addition, battery buses are not the best environmental option, because they draw electricity from power plants using fossil fuels. The Los Angeles County Metropolitan Transit Authority went through an extensive analysis in 2016, and found that “renewable” natural gas derived from landfill methane had a much better environmental profile than electric vehicles.

For that reason, the MTA decided to convert its bus fleet to renewable natural gas, not electric. The agency concluded that renewable natural gas “achieves 39% greater reductions in greenhouse gas emissions, at half the cost” of electric buses.

What does TriMet know that the Los Angeles MTA doesn’t? That question should be answered before we spend $553 million.

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

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Kate Brown’s Environmental Showmanship Has No Substance

By John A. Charles, Jr.

Governor Kate Brown has announced a legislative proposal that she claims is necessary to “resist” the Trump administration’s changes to federal environmental regulations.

While this bit of showmanship will play well to her base, it has no actual substance. The Oregon Environmental Quality Commission has long had the authority to adopt its own standards that are equivalent to or stronger than federal regulations, and it has done so many times.

In fact, it’s entirely plausible that if federal statutes such as the Clean Air Act and the Clean Water Act were completely repealed by Congress, there would be no measurable effect on Oregon. The state runs its own environmental programs and doesn’t need Congress or the Environmental Protection Agency.

Gov. Brown may find it convenient to manufacture an environmental crisis; but ambient loadings of air and water pollution have been falling for decades and will continue to do so, regardless of who is President. This is a great American success story, driven mostly by technological innovation and a commitment by corporate boards to continually reduce emissions.

We don’t have an environmental crisis, and we don’t need another law. Gov. Brown should stop using President Trump as a prop in her re-election campaign.

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: Environment

Oregon Parents Need More Options for Children with Learning Challenges

By Miranda Bonifield

For students born with learning disorders like dyslexia, learning to read without a specialized program is an incredibly difficult task. Instead of being a satisfying challenge, it becomes a demoralizing chore.

Consider the experience of Tara Mixon, who quit her job to homeschool her dyslexic first grader.  His self-confidence had plummeted when he couldn’t learn to read alongside his Kindergarten class. Transitioning to a single income meant she couldn’t afford specialized tutoring, which often costs more than $50 per hour. Tara’s hard work means her son can enroll in fourth grade this year, but she is far from confident in the public schools’ ability to address his needs. Like many parents of dyslexic students, Tara fears her son will fall behind his peers again and lose the confidence he has built over the last two years.

New legislation recently passed in Oregon makes an admirable effort at early identification of reading disorders, but experience has shown parents and children alike that good intentions don’t guarantee results.

Instead of trying to shoehorn students with unique needs into a single system, Oregon should empower families with school choice. Implementing a system like Education Savings Accounts would allow parents like Tara to enroll their students in specialized programs or pay for tutoring—turning reading from an insurmountable obstacle back into the joy it should be.

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

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Categories: Education

Can School Choice Change Lives?

By Steve Buckstein

Can School Choice Change Lives? Join Cascade Policy Institute and SchoolChoiceforOregon.com the evening of Tuesday, September 25th for a Live Stream Facebook event featuring two prominent national School Choice experts.

Find out how and why School Choice is indeed changing lives around the country, and how Oregon school children can benefit from much more school choice than they have today.

Each student has individual challenges and learning styles, and many factors can cause them to fall behind. Join this discussion to learn how School Choice can help.

Are you a parent? Are you an Oregon taxpayer? You won’t want to miss this fast-moving Q&A discussion with local and national school reform experts, in front of a live studio audience in Portland.

We invite you to submit questions in advance or during the Live Stream at Facebook.com/SchoolChoiceforOregon.

To be involved, go to SchoolChoiceforOregon.com/Events and enter your email address. You’ll be notified by email before the event goes live on Facebook at 6 pm on September 25th.

If you’ve ever wondered why Oregon’s public education system is so expensive, yet produces such poor results for so many children, you won’t want to miss this important event. Again, go to SchoolChoiceforOregon.com/Events and enter your email address.

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

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Categories: Education

The Kicker Debate Continues

By Steve Buckstein

Because of Oregon’s recent and projected strong economy, a personal “kicker” tax refund of $686 million is projected to go out in the first half of 2020. This would be the second-largest kicker amount in the state’s history. If you pay personal income taxes to the state of Oregon, you will get some of this money as a credit on your future tax liabilities. This will again raise the question: Is the kicker law good or bad public policy?

Some people will be envious that the “rich” will get much bigger refunds than the rest of us and they don’t really “need” the money. While the average kicker is projected to be $336, they point to those in the highest adjusted gross income bracket of $401,200 and above who can expect to receive $6,787. What is often unstated in this argument is that those “lucky” top taxpayers paid way more income tax than the rest of us, and they will get back exactly the same percentage of their tax payments as everyone else does.

So, whether the kicker law is good or bad public policy, let’s think a little about who this money really belongs to. Is it a rebate for overpaying your taxes, or is it somehow “our” money that is better left in government coffers?

How the kicker works 

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

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

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

Whose money is it? 

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

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

How much is that latte? 

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

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

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

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

Steve Buckstein is Senior Policy Analyst and Founder of Cascade Policy Institute, Oregon’s free market public policy research organization. You can find more Cascade Commentaries on Oregon’s kicker law here.

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Categories: Tax and Budget

Better Forest Management Can Prevent Oregon WIldfires

By Justus Armstrong

Wildfires in Oregon this summer have burned thousands of acres, resulting in hazardous air quality conditions and the evacuation of hundreds. As our firefighters face these fires, it’s important to examine the policies and practices that may contribute to increased wildfire risks.

Environmental advocates point to carbon-induced climate change as a factor in intensified droughts and longer fire seasons, but dealing with climate change as a means of dealing with wildfires puts the cart before the horse. Wildfires are a cause of carbon emissions more than a consequence, since burning forests release higher amounts of stored carbon. Before addressing the impacts of carbon on our forests, we must address the impacts of poor forest management.

Proposed strategies for preventing wildfires have included clearing overcrowded forests with commercial logging, or focusing the Forest Service budget on prevention today to save money on firefighting tomorrow. These solutions are a start, but the root of the problem exists at the top. The U.S. Forest Service simply doesn’t have the same incentive to take care of Oregon forests as those most affected by wildfires. In addition to reevaluating regulations that hinder controlled burning and forest clearing, Oregon officials can advocate for the decentralization of federal forest management to state, local, or private levels. Rethinking forest management is one step towards preventing future wildfires.

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

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Categories: Land Use

To Work or Not to Work, That Is the Question

By Jakob Puckett

When I was growing up in Ohio, my family had an enormous garden with every kind of produce. Tomatoes, cucumbers, squash, zucchini—you name it, we grew it. We grew so much of it that we would cook the extras into zucchini bread, pickles, and pasta sauce. And we had extras of those, too. My brother and I saw an opportunity and decided to start a business called Veggies2U. We would go door-to-door in our neighborhood and sell our products, and enough people liked them that our business continued for several summers.

It’s a good thing we lived in Ohio, because if we grew up in Oregon and started the same business here, we would have run into some problems. To begin with, we didn’t have a domestic kitchen license, kids were involved in making the food, and we didn’t have a separate storage facility for the materials and food we made for ourselves and those we intended to sell. We would have been in violation of several laws, subject to several thousands of dollars in fines, threatened with jail time, and would have begun our descent into a life of crime, one pickle jar at a time.

This is just a small example, but it points to a much larger problem. Occupational licensing (essentially, getting the government’s permission to work) has become a major roadblock for people who want to work but are deterred by excessive regulations. These laws reduce entrepreneurship, raise prices, and eliminate competition. Oregon is one of the worst states in the U.S. regarding this practice. While we likely would agree that some degree of oversight can be beneficial, the situation has gotten out of hand.

Nearly 25% of Americans need a government license for their occupation, up from five percent in 1950. A 2017 Institute for Justice report found that the national average for a low- or medium-income job requires a $200 fee, an exam, nine months of training, and often additional education. That’s a lot to ask of the 75% of American workers living paycheck to paycheck. Furthermore, some licensing requirements make little sense; and many occupations licensed in one state are not licensed in others, with equal quality of service. Even jobs licensed in many states exhibit inconsistency. For example, the four months of manicurist training required by Oregon are completed in nine days in Iowa.

Occupational licensing restrictions most hurt the people who are least able to bear it—lower-income workers, military families and veterans, and middle-class families. Occupational licensing has also become a way for special interests to cement their position by eliminating competition and raising prices on consumers. Nationwide, thousands of jobs and hundreds of billions of dollars are at stake. Florists, yard workers, even pet-sitters—among countless others—face being regulated out of a job by bureaucrats who have never been in their position.

Overall, Oregon has the eighth-most-burdensome licensing requirements for low- and medium-income occupations (not doctors and lawyers), costing workers more than $300 and a year of training—both higher than the national average—just to reach their first day of recognized work. The Oregon legislature may be starting to recognize this burden. In 2015, legislators passed the Home Baked Goods bill, allowing people to earn money selling products grown and baked at home like my brother and I did, without criminalizing them.

Given the stakes, Oregon should review all existing occupational licensing laws, and requirements not related to job and consumer safety should be eliminated. Farm labor contractors, bartenders, and locksmiths are licensed by only 13 states. Only 21 states license commercial floor sanding and painting contractors; but Oregonian contractors pay hundreds of dollars in fees and undergo 1,463 days of experience and education, triple the average in other licensed states. The legislature can open Oregon for business by de-licensing these industries. Since most licensing occurs on the state level, multi-state working groups could be formed to facilitate uniform licensing standards, enhancing economic mobility among states.

Oregon should focus on building an economy that provides a way out for the hopeless and a way forward for the hopeful, and one step in that direction is to tear down the barrier of occupational licensing.

Jakob Puckett is a Research Associate at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in The Newberg Graphic on August 29, 2018.

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Categories: Right to Work

Moving in the Wrong Direction

By Jakob Puckett

Oregonians have a proud tradition of giving back to distinguished or disadvantaged members of society. Businesses have broken barriers to provide better service to groups like seniors, veterans, new families, and vulnerable people, by offering discounted rates or donating services for a worthy cause.

In one particular and familiar industry, however, the state will not allow such generosity. Customers in the aforementioned groups looking to move from one home to another, who could benefit from special offers, would find themselves out of luck, thanks to an apathetic state agency with misaligned priorities.

Not everyone will accept this, though. 2 Brothers Moving and Delivery, a home moving business in Portland, has challenged the status quo of the residential moving industry for years. In addition to moving and rearranging homes, company founder Adam Sweet has been shifting the legal landscape of how to start a home moving company in the first place.

After a much-publicized state police sting operation embroiled Sweet in a legal tangle about whether he, then a college student, could move other people’s furniture without permission from established moving companies, he challenged the law and won. No longer would new moving businesses have to justify their existence to the competition. Now, Sweet wants to change another part of the law, one that’s just as unfair to even more people.

The state of Oregon treats home moving services like a public utility and regulates them similarly to commodities like water and electricity. Home movers painstakingly must organize, request, and publish their tariffs (the rates they charge on every aspect of their service). And they truly do “request” what prices customers will pay for their services. The Oregon Department of Transportation (ODOT) gives permission for their rates, under the guidelines of what is considered “fair and reasonable.”

However, those with the most influence in this oversight process rarely approach this standard from a customer’s perspective. What is “fair and reasonable” to industrial moving companies who rarely make residential moves (the companies with the loudest voices within ODOT) may not be “fair and reasonable” in terms of residential customer benefit.

Pressured by mountains of impending paperwork, small home moving businesses often find it easier to accept the proposed rates of these larger companies, rather than requesting individualized rates. ODOT employees end up determining what is fair and reasonable, on everything from the price of boxes to move your television to whether you pay per hour and miles moved or by the weight of your furniture.

The state tries to tell businesses what the consumer wants, and oftentimes they are simply wrong.

Leaving aside whether household moving services are a natural monopoly—defined as an industry with nearly insurmountable entry barriers that render competition almost impossible—ODOT, under a “fair and reasonable” cloak, prevents customers from having options that would be offered in any other industry.

Discounts are not allowed, meaning seniors, veterans, or any other group for any other reason cannot receive a lower price, even if the business wants to offer it. Donating services as a charity to individuals, such as transitioning homeless individuals or those with cancer, are prohibited. Undercharging a customer based on the published tariff rate results in a series of increasing fines, culminating in the state revoking the company’s ability to do business at all.

If the goal is to ensure that customers are not fleeced by moving companies adding hidden fees, Sweet sees a simple solution: include proposed exceptions in the published tariffs. “If it’s published in the tariff, you should be able to charge it,” he says, and that includes discount options. The Department of Justice already handles cases of business fraud, and law enforcement already has mechanisms for dealing with those situations. Why should ODOT make the process more complicated to the disadvantage of customers? Most Americans move eleven times during their lives, meaning this question usually arises nearly a dozen times.

Ultimately, it turns out that consumers really do need protection, but not from their own shortsightedness or from home moving businesses. Rather, the real risk comes from the anti-consumer mantras echoing through the halls of ODOT, determining how good or bad of a deal individuals and families can get during moving season.

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

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Categories: Transportation

Reform of Oregon’s Foster Care System Is Long Overdue

By Justus Armstrong

Are we failing Oregon’s foster kids? A January audit from the Secretary of State uncovered serious shortcomings in how Oregon’s Department of Human Services has handled foster care, including chronic mismanagement and irresponsibility, overburdened caseworkers, and a common practice of children with nowhere else to stay having to sleep in hotels or their caseworker’s office.

Oregon’s child welfare system is deeply flawed and in need of reform. Many internal reforms to Oregon’s DHS have been recommended, but Oregon could take additional steps to improve the situation by contracting out child welfare services to private agencies. Doing so would relieve the overburdening of the state agency and allow other organizations and members of the community to assume responsibilities that the state has failed to fulfill.

Other states have already implemented privatization with promising results. After shifting to a privatized child welfare system, Kansas saw a decrease in the average length of stay in foster care and an increase in adoptions; and Michigan was able to relieve their overburdened caseworkers while saving taxpayers’ money.

It will take careful effort to implement a similar system in Oregon, but making our state a safer place for foster kids is long overdue. Privatization provides an opportunity for substantial change in the right direction, and we need change now more than ever.

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

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Categories: Healthcare

When Did ODOT Become a Consumer Advocate?

By Jakob Puckett

Do you need to be protected from your own judgment? If you’re moving from one home to another, the state of Oregon thinks you do. The Oregon Department of Transportation thinks that you are not capable of finding a fair and reasonable price to pay a home moving business to move your furniture, so ODOT injected itself into the equation.

Home moving services have to painstakingly request permission from ODOT to determine what prices to charge, making it difficult for businesses to lower their prices or offer discounts.

Even when businesses want to offer a discount to veterans, senior citizens, or disadvantaged people, they are prohibited from showing such generosity under penalty of fines and business closure.

And why is this? ODOT thinks it knows what’s best for consumers and makes these decisions on its own, without much input from the businesses actually offering the services.

The person who suffers the most from this is you, because as long as ODOT gets to determine what a “fair and reasonable” price is, you are prevented from having options that would be offered in most other industries.

So when it comes to the regulation of the home moving industry, the situation is clear: It’s time for ODOT to leave the price-setting business, and move us in the right direction.

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

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Categories: Transportation

Plastic Straw Ban Isn’t Environmentalism—It’s Virtue Signaling

By Miranda Bonifield

What’s the deal with plastic straws?

 Heartbreaking images of sea turtles afflicted by soda straws may be distressing, but well-researched environmentalists know that the best way to save the seas isn’t banning Seattle’s straws. Not only are such bans a disadvantage to the disabled people who rely on plastic straws in their daily lives, but they don’t really clean up the oceans. (For instance, Starbucks’ move to straw-free lids will actually use more plastic.)

It’s estimated that more than a quarter of the ocean’s plastic pollutants originate in just ten rivers in Asia and Africa with insufficient waste management practices. So banning straws and other plastics isn’t environmentalism, it’s virtue signaling.

Expanding the nanny state won’t save the sea turtles. To really take the trash out of the oceans, we should be focusing our energies on promoting effective waste management practices. Organizations like the Asian Development Bank and the Asia Foundation inform local governments and empower local communities to mitigate their waste management problems. Meanwhile, proper recycling, voluntarily avoiding disposable plastics, and community beach cleanups are all accessible solutions for everyday environmentalists.

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

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Categories: Environment

Missing from Mayor Wheeler’s Homelessness Program: Long-Term Independence

By Rachel Dawson

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. This age-old saying seems to be lost on Portland Mayor Ted Wheeler, who just announced a $12 million pilot program to fund 50 units paired with mental health services and addiction treatment for the chronically homeless.

However, this program will have little effect on the homeless crisis in Multnomah County, where 4,177 people are homeless. At 50 units, only 0.01% of them will be helped.

This program may give the chronically homeless a roof over their heads, but it will not lift them from poverty. They will remain dependent on that unit and treatment indefinitely.

So, if throwing money at the homeless problem won’t solve it, what will?

A New York private charity known as the Doe Fund may have the answer. This organization gives food and shelter to the homeless in exchange for work at partnering profit-generating businesses like street cleaning and pest control. The Doe Fund teaches the homeless to fish rather than just giving them one.

This Portland pilot program will not help make the homeless independent or increase their economic mobility. Instead, we should be giving them “a hand up, not a hand out.”

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

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Metro’s Poorly Thought-Out Grants Program

By Justus Armstrong

Portland’s Metro Council plans to award grants for its Investment and Innovation program this fall. The program seeks to strengthen the local infrastructure for waste reduction; but with a combination of corporate welfare and vague performance measures, its methods are murky at best and unethical at worst.

With $9 million in funding over three years, Metro’s program offers grants of up to $500,000 to both non-profit and for-profit organizations for projects in line with Metro’s waste reduction goals. The grants are limited to costs tied to waste reduction projects; but padding companies’ expenses to benefit these projects goes outside the scope of Metro’s stated goals and undermines the competitive marketplace. Most citizens, and Oregon’s Constitution, would oppose tax funding for privately owned corporations. Apart from its good intentions and “green” packaging, what makes this project any different?

Metro’s Investment and Innovation program lacks clear direction and accountability to taxpayers for results. Since the grants outsource waste reduction to third parties, Metro can offer no estimates of the program’s ability to actually reduce waste. Metro is handing out taxpayer money for hypothetical benefits that are unlikely to match the price tag.

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

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23 Million Reasons for Metro to Repeal Its Construction Excise Tax

By Jakob Puckett

How much do we have to tax something to make it affordable? You might think that’s counterintuitive, and you’d be right. But that’s exactly what the Portland-area Metro Council is doing with affordable housing through their Construction Excise Tax. So what is this tax? For every construction project valued at over $100,000, Metro taxes 0.12% of its value, with most of the revenue directed to fund grants to plan for affordable housing.

That number may not sound like much, but the Portland City Council also has a Construction Excise Tax, only it’s eight times higher than Metro’s, also for housing land-use planning. So two councils levy the same tax on the same people for the same purpose.

And the money raised rarely goes to constructing housing units. Metro recently approved 10 new grants; and while all of them fund more land-use planning exercises, none of them actually build new housing. This extra paperwork often leads to construction delays, creating an expensive, redundant mess for land developers.

And just how expensive has it been? Metro has renewed this tax twice, raising over $23 million for these projects, which has just made housing construction $23 million more expensive. And, in a city where every dollar put towards new housing counts, that’s 23 million reasons why Metro should repeal its Construction Excise Tax.

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

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Private Developers Leading the Way for Affordable Housing

By Rachel Dawson

The Metro Council voted June 7 to place a housing bond measure of $652.8 million for only 3,900 units on the ballot this fall. The regional government estimates the cost of new projects will be around $253,000 per home. But as there is no cap on cost per dwelling, project costs could be much greater. This bond will spend too much money on too few homes. However, private developers in the Portland region have shown it’s possible to build more residences at a lower cost compared with Metro’s proposal.

There is no better example of this than local private developer Rob Justus. With Home First Development, Justus has helped build a total of 431 public units for an average cost of $90,230 since 2011. Home First likes to call this “affordable-affordable” housing. Before a project begins, the company keeps itself accountable by working backwards: They contain the costs of the project so apartments can be rented to tenants at a price that works for them. This philosophy has allowed Home First to increase the number of homes they are able to build.

In concert with the Portland Habilitation Center, Justus built 78 affordable residences in 2015 in Portland at $65,000 per unit. In 2017 he offered to build 1,000 homes in Portland at $85,000 per unit if the city could gather $20 million, but Portland officials rejected this proposal. These homes would have cost 66% less than Metro’s housing bond estimates.

Justus has made low costs possible by building in less expensive neighborhoods and using non-union labor. These homes may not be the largest dwellings in the best part of town, but they are affordable to those in the lower 30% of area median income who are in need of a home.

Along with wages and location, the materials used can greatly affect the price of a project. A Catholic charity attempted to build the complex known as St. Francis Park in 2015 using an inexpensive siding called HardiPlank. When the project went through Portland’s required design review, city regulators decided to choose a more expensive siding, which drastically increased the cost of the project. This additional cost caused the city to increase taxpayer subsidy to the building. Ironically, in 2006 a housing complex in Vancouver using the same inexpensive siding that was rejected by the city of Portland received a national development award.

The fatal flaw in this bond measure is that there is no cap on cost per home, which the city of Vancouver has demonstrated is possible to have. Vancouver passed their own Affordable Housing Fund in 2016 which caps the amount spent per housing unit at $50,000. Money from the fund would add to a project’s “capital stack,” rather than fully funding the complex. This forces project applicants (one of whom was Home First Development) to search for multiple sources of funding instead of relying on the Vancouver City Council to foot the bill.

The Metro Council could build cheaper apartments by using less expensive materials and contracting with private developers to decrease labor costs. Without a cap on cost per unit to keep themselves accountable, Metro is able to write a blank check with taxpayer dollars for every project.

Housing can be made affordable to both taxpayers and renters. Metro can do this by withdrawing the bond measure and redrafting it to include a cap on costs. Doing so would allow them to follow the lead of private developers like Rob Justus to make “affordable-affordable” housing a reality.

Rachel Dawson is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article appeared in The Portland Tribune on July 26, 2018.

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High Costs and Low Ridership Are Nothing New for Southwest Corridor Project

By Rachel Dawson

Decreasing ridership paired with increasing costs makes for a bad business decision for TriMet’s proposed Southwest Corridor plan. The TriMet proposal would add an additional light rail line stretching from downtown Portland to Bridgeport Village in Tigard. The project’s draft environmental impact statement predicts what TriMet thinks will happen, without taking into consideration what has occurred with past projects.

The plan estimates that rides on every current light rail line will more than double, and the total weekday rides will nearly triple by the year 2035. However, in recent years light rail rides have been decreasing or plateauing across the board.

But overpredicting ridership isn’t anything new: Every single past TriMet light rail plan overestimated the number of rides it would have.

Additionally, the capital costs of light rail projects historically have been underestimated, meaning projects have proven to be more expensive than what TriMet had predicted. This has already become evident with the Southwest Corridor plan: In 2016 the capital costs were predicted to be $1.8 billion dollars, which increased to $2.8 billion in 2018.

Increasing prices plus decreasing ridership sounds more like a recipe for economic disaster than a successful project. You have the opportunity to voice your opinion at the southwest corridor public hearing on Thursday, July 19 at the Tigard City Hall.

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

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Categories: Transportation

Metro’s Waste Reduction Program Lacks Direction and Accountability

By Justus Armstrong

This October, the Portland-area Metro Council will award the first round of grants for its Investment and Innovation program. The program’s goals include strengthening local waste reduction efforts and fostering economic benefits for those from marginalized communities; but with a combination of corporate welfare and vague performance measures, the means by which Metro hopes to obtain these goals are murky at best and unethical at worst.

The program, which sets aside $3 million a year from Metro’s solid waste reserve fund over a three-year pilot period, offers two tiers of grants—one tier ranging from $10,000 to $50,000, the other from $50,000 to $500,000—to nonprofit organizations and for-profit businesses alike. Metro directs the larger capital grants toward “investments in equipment, machinery and/or buildings” for projects in line with its waste reduction goals. In awarding capital to businesses, Metro seeks to improve regional recycling and disposal infrastructure, but seems to have no regard for the program’s marketplace consequences.

By matching assets with public funding, Metro grants an unfair advantage to businesses that follow its environmental agenda. While the grants program limits funding to costs tied to waste reduction projects, padding companies’ overhead and capital costs to benefit these projects goes outside the scope of Metro’s stated goals and undermines the competitive marketplace. Businesses should earn investment capital such as buildings and equipment by themselves, not through taxpayer handouts. Most citizens would oppose the use of their tax dollars to prop up privately owned corporations. Apart from good intentions and “green” packaging, what makes this project demonstrably different? How does it fit into Article XI, Section 9 of Oregon’s Constitution, which states that no municipality shall “raise money for, or loan its credit to, or in aid of, any such company, corporation or association?” Many questions have yet to be addressed.

Even for measuring success, the program’s standards are unclear; and Metro has been down this road before. Metro’s Community Planning and Development Grants program awarded around $19 million from 2006-2015 to help local governments prepare land for development. Like the Investment and Innovation program, these grants were intended to advance Metro’s long-term vision, but a 2016 report from Metro auditor Brian Evans found problems with clear direction. “The program has become less aligned with certain regional planning priorities over time,” Evans wrote. “Changes to the program reduced clarity about what was intended to be achieved and there was no process in place to evaluate the program’s outcomes.”

The Investment and Innovation program faces similar risks. Since the grants outsource waste reduction goals to third parties, Metro can only guess at their potential effectiveness. In a pre-proposal workshop for prospective applicants, Program Manager Suzanne Piluso could offer no estimate of the program’s effect on waste, saying it would take until after the pilot period to “determine if it’s moved the needle.” To be clear, that’s $9 million for a waste reduction program that can’t promise to actually reduce waste. Metro is handing out taxpayer money for hypothetical benefits that are unlikely to match the price tag.

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

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Categories: Tax and Budget

Gov. Brown, lawmakers, unions decry court ruling / Published in News Channel KTVZ

SALEM, Ore. – Top Oregon Democrats, including Gov. Kate Brown and Sen. Jeff Merkley, joined union officials Wednesday in expressing disappointment in a U.S. Supreme Court ruling that struck down an Illinois law allowing unions to assess fees against non-members to help fund collective bargaining efforts.

In reaction to the U.S. Supreme Court’s decision in Janus v. AFSCME, Governor Kate Brown, Tom Chamberlain (president of Oregon AFL-CIO), John Larson (president of the Oregon Education Association), Melissa Unger (executive director of SEIU Local 503), and Stacy Chamberlain (executive director of Oregon AFSCME), released the following joint statement:

“Oregon’s economy is thriving, but the rising economic tide is leaving too many behind. Every day, we hear from families struggling to make ends meet, single parents working two jobs to get by, young people buried by student loans, and seniors who’ve spent down their life savings to keep up with the rising cost of living.

“Today, Oregon families face new challenges, but unions are on the forefront, fighting for working families, fair pay, and more affordable housing. Our union members have led the fights to raise the minimum wage, ensure that women and …

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Local unions rally against SCOTUS union decision / Published in KOIN

PORTLAND, Ore. (KOIN) — Unions, and the people that make them up, headed to Portland City Hall on Wednesday night to rally against a Wednesday ruling by the U.S. Supreme Court that ended mandatory union fees that support government employees working in collective bargaining agreements.

Those people say they will not be beaten by the Supreme Court’s 5-4 decision in Janus v. AFSCME Council 31, a decision they say threatens organized labor.

“Our members know what is at stake,” said Stacy Chamberlain, the ex-director of AFSCME. “They know they need to stand together if we are going to be strong and negotiate good contracts and fight against privatization, some of the other things that we know that these anti worker groups are going to try to do.”

Gov. Kate Brown, along with other union leaders, issued a statement, calling the ruling …

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Supreme Court deals big setback to labor unions, local groups gather in Portland / Published in KATU

The Supreme Court issued a ruling in an Illinois labor case Wednesday that said public employees can’t be forced to pay fees to labor unions that represent them in collective bargaining.

Union organizers in the Portland area are expected to gather around 5:30 p.m. Wednesday in front of Portland City Hall.

Those in favor of the decision say it’s a victory for freedom of choice and speech for workers who may disagree with a union position and decide not to support the organization financially.

Others like Oregon Senator Jeff Merkley say it is a blow to workers represented by unions.

“This is another movement away from a nation that …

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Local unions react the ruling by the Supreme Court / Published in KVAL Eugene Oregon

EUGENE, Ore. – Top public employee unions in Oregon are less than pleased with the big decision on Wednesday when the U.S. Supreme Court ruled on union dues.

The case is called Janus versus AFSCME, and the high court’s ruling on Wednesday is causing a lot of reaction. Supporters of the ruling say that it’s a boost for first amendment rights, but detractors say it’s a big setback for working families.

The Supreme Court ruled that government workers cannot be compelled to contribute fees to labor unions that represent them in collective bargaining. It’s considered a significant financial blow to organized labor.

One of the chief free-market think-tanks in Oregon says that this decision was the right one.

“Public employees, as of today in Oregon and 22 other states that are not right-to-work states, do not have to pay dues to a union that they disagree with,” said Steve Buckstein, the Director of the Cascade Policy Institute.

Some local labor and management agencies refused to go …

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Supreme Court Decisions Deals Blow to Labor Unions / Published in KAST 1370AM

The Supreme Court ruled Wednesday that government workers can’t be forced to contribute to labor unions that represent them in collective bargaining, dealing a serious financial blow to organized labor.

The justices are scrapping a 41-year-old decision that had allowed states to require that public employees pay some fees to unions that represent them, even if the workers choose not to join.

The 5-4 decision fulfills a longtime wish of conservatives to get rid of the so-called fair share fees that non-members pay to unions in roughly two dozen states. The court ruled that the laws violate the First Amendment by compelling workers to support unions they may disagree with.

“States and public-sector unions may no longer extract agency fees from nonconsenting employees,” Justice Samuel Alito said in his majority opinion for the court’s five conservative justices.

President Donald Trump weighed in minutes after the decision was handed down, while Alito …

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Metro’s November Bond Measure Would Make All Housing More Costly

By John A. Charles, Jr.

Metro recently decided to refer a $652.8 million bond measure to the November ballot. If approved by voters, it would authorize Metro to borrow money either to purchase existing housing units or to subsidize the construction of new ones. The loans would be paid off by higher taxes on every property owner in the region for the next 30 years.

Unfortunately, of all the things Metro could do to reduce the price of housing, borrowing money is likely to be the least effective.

For one thing, new construction is expensive. Many public housing projects in recent years have cost more than $250,000 per unit. If Metro is lucky, the bond measure might pay for a total of 2,400-3,000 new apartments. Since the Portland region produces over 10,000 units of new housing every year, Metro’s intervention would not even be noticed.

In addition, borrowing $652.8 million and paying it back with interest (for a total of over $1 billion in debt service) would make every current home and apartment more expensive. We can’t tax ourselves to prosperity.

The basic weakness in the Metro bond measure is that it misdiagnoses the problem. When the Metro Council adopted its long-range growth management plan in 1995, it made a conscious decision to limit the physical size of the urbanized metropolitan region. That limit is imposed through Metro’s control of the Urban Growth Boundary. The planning goal was to “grow up, not out,” in order to prevent rural development and create the population density needed for light rail.

While that vision may sound appealing to some, there is a tradeoff: It limits the supply of new housing. Metro has always known this. As the agency’s economists wrote in 1994, “…the data suggest a public welfare tradeoff for increased density, more transit use, and reduced vehicle miles traveled. The downside of pursuing such objectives appears to be higher housing prices and reduced housing output.”

Metro controls the regional land supply and doesn’t want lots of cheap land for housing. Metro actually needs land to be scarce and expensive, because that’s the only way to justify its vision of high-density housing projects and light rail transit. Inevitably, this will be self-defeating; higher home prices will push more and more people out of Portland, where they will become even more auto-dependent.

In addition to its control of the regional land supply, Metro also imposes a tax of 0.12 percent on all new housing construction, with the exception of projects where the value of land improvements is less than $100,000. The tax revenues are used to pay for planning required on lands that might be used for housing in the future. The City of Portland also imposes its own tax for a similar purpose, at a much higher rate. It should be obvious that taxing new construction makes the housing problem worse.

Metro’s November Bond Measure Would Make All Housing More Costly The best thing Metro could do would be to systematically inventory every artificial barrier to housing production, such as zoning ordinances, planning requirements, building codes, system development charges, and hidden taxes—and figure out a way to reduce or eliminate them.

In other sectors of the economy where supply is unregulated, the market does a wonderful job of providing us with the products we want at reasonable prices. The same thing will happen in housing, if we allow it.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article appeared in The Portland Tribune on July 3, 2018.

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Categories: Land Use

Direct Primary Care Puts Patients First, Lowers Health Care Costs

By Justus Armstrong

Could forgoing health insurance make health care more affordable? That’s the approach taken by many physicians practicing direct primary care, or DPC, an emerging medical movement that seeks to cut out the middleman and put patients first. Instead of billing insurance for individual services, physicians charge a regular fee as low as $60 a month directly to patients, increasing patient access and letting doctors focus on quality of office visits over quantity. Under a direct primary care model, your doctor is more available, with easier appointment scheduling and direct access to medical advice via phone, text, or email. A better doctor-patient relationship allows more personalized care, and research into DPC has yet to find a single instance of malpractice.

Health care without a third party brings entrepreneurship to medicine and saves patients money. While most direct primary care providers recommend patients carry a high-deductible insurance plan to protect against emergencies, taking insurance out of the equation for regular medical expenses allows physicians to reduce their overhead and provide better quality at a lower price.

Oregon is home to many direct care facilities; but current law requires direct providers to obtain a separate license through the state insurance agency, making direct primary care unnecessarily difficult. Let’s get rid of the red tape and take health care in a new direction.

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

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Supreme Court Janus Decision Upholds Public Employees’ First Amendment Rights

By Jakob Puckett

When’s the last time you went to a store, and the store forced you to buy something you didn’t want? That’s ridiculous, you might think. Sure, someone else might want it, but they can’t spend my money for me on something I’m not looking to buy.

For the past 40 years, this is how public sector unions had been operating, having the legal right to collect what are called “agency fees” (or union dues) for any employees they wish to bargain for, even if that person didn’t want to join the union.

But thanks to the recent Supreme Court decision in Janus v. AFSCME, workers now have the right to choose whether they want to pay union dues. Mark Janus successfully argued that since public sector unions operate by interacting with public officials, everything they do is inherently political, and forcing employees to be a part of it would violate their First Amendment rights of free speech and association.

Now, instead of involuntarily funding a union they don’t agree with, workers are finally empowered to make their own decisions with their own money for their own purposes.

Like the grocery store example, nothing in this ruling prevents unions from existing and continuing to offer their services. We’re just free to choose whether or not to purchase them.

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

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Categories: Right to Work

U.S. Supreme Court Rules in Favor of Public Employee Worker Freedom

By Steve Buckstein

On June 27 the U.S. Supreme Court restored First Amendment rights of free speech and free association for public employees in Oregon and nationwide. This is truly a victory for everyone who values the freedom of workers to associate with and financially support only those organizations with which they agree.

Ruling in favor of Illinois public employee Mark Janus in Janus v. American Federation of State, County, and Municipal Employees (AFSCME), the Court said he, and all other public employees nationwide, do indeed have Constitutional Rights that have been violated by the collection of so-called “fair share” or “agency” fees from their paychecks to pay for services the employees don’t want, or from unions whose political goals they oppose.

The union compulsion the Court just ended for public employees brings to mind the well-known statement by Thomas Jefferson:

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

The Janus case is the latest to come before the Supreme Court pitting individual workers against the powerful unions that seek to take their money without their consent. In Abood v. Detroit Board of Education (1977), public sector unions were allowed to impose fees on all workers for collective bargaining purposes.

Then, in Communications Workers of America v. Beck (1988), the Court found that unions could not compel fees for political purposes that workers opposed. Finally, in 2014 the Court went further in Harris v. Quinn and ruled that at least some workers could opt out of both the political and bargaining portions of public sector union dues.

This set the stage for freeing all public sector workers from forced union dues as Mark Janus successfully argued that everything his public sector union does, including collective bargaining with public bodies, is inherently political, and therefore he should not be compelled to support that organization with his money.

Union arguments that they should collect fees from all workers because they represent them all increasingly ring hollow because unions aren’t really required to represent all workers; they want to represent them so they can collect more dues revenue. They could just as well lobby to represent only those workers who voluntarily agree to pay them, but they haven’t done so─yet. Now, with this Court decision public sector unions may change their tune, not because they want to, but because the law of the land makes it the best option for these unions to retain relevance with workers who do want their services.

The Janus decision comports with the sentiments of most Oregonians. Several scientific surveys have been conducted in recent years to see how the public and members of union households feel about these issues. A 2013 survey found that more than 30 percent of Oregon union households would opt out of union membership if they could do so without penalty. In 2014, more than 80 percent of all Oregonians surveyed agreed that employees should be able to choose whether or not to join a union or pay union dues.

In 2015, members of Oregon union households were asked, “Are you aware that you can opt-out of union membership and of paying a portion of your union dues without losing your job or any other penalty?” Over 27 percent of Oregon union household members surveyed answered “no.” This implies that over 65,000 of Oregon’s some 243,000 union members that year didn’t realize that membership and some dues are optional. This is even more surprising given that their so-called “Beck rights,” granted by the Supreme Court in the 1988 CWA v. Beck case are named after Harry Beck, who is now retired in Oregon and is still advocating for worker freedom.

Nothing in the Janus decision prohibits unions from organizing and collecting voluntary dues from public employees. The ruling simply restores the First Amendment rights of public employees to say “no” to unions with which they don’t want to associate.

Cascade Policy Institute stands with Mark Janus and with Oregon public employees, including public school teachers, who believe as he does that they want their Constitutional rights to free speech and free association protected. Now, the Supreme Court has done just that.

Steve Buckstein is Senior Policy Analyst and Founder at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in The Portland Tribune on July 2, 2018.

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Categories: Right to Work

U.S. Supreme Court Rules Today in Favor of Public Employee Worker Freedom

For Immediate Release

Media Contact:
Steve Buckstein

(503) 242-0900

Cascade Policy Institute stands with Mark Janus and with all Oregon public employees who want their rights to free speech and free association protected.

Portland, Ore. – The U.S. Supreme Court today restored First Amendment rights of free speech and free association for public employees in Oregon and nationwide. This is truly a victory for everyone who values the freedom of workers to associate with and financially support only those organizations with which they agree.

Ruling in favor of Illinois public employee Mark Janus in Janus v. American Federation of State, County, and Municipal Employees (AFSCME), the Court said he, and all other public employees nationwide, do indeed have Constitutional Rights that have been violated by the collection of so-called “fair share” or “agency” fees from their paychecks to pay for services the employees don’t want, or from unions whose political goals they oppose.

The Court has long allowed both public and private sector employees to opt out of union membership and the political portion of union dues, but it has allowed unions to collect fees for bargaining and representation purposes.

Now, Mark Janus has successfully argued that in the public sector, everything his union does is inherently political. Therefore, he should not be compelled to support that organization with his money.

The union compulsion the Court ended for public employees today brings to mind the well-known statement by Thomas Jefferson:

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

Cascade Policy Institute stands with Mark Janus and with Oregon public employees, including public school teachers, who feel as he does that they want their rights to free speech and free association protected.

Nothing in the Janus decision prohibits unions from organizing and collecting voluntary dues from public employees. The ruling simply restores the First Amendment rights of public employees to say “no” to unions with which they don’t want to associate. Today is truly a day to celebrate the restoration of rights long denied a large group of citizens in Oregon and nationwide.

Founded in 1991, Cascade Policy Institute is Oregon’s premier policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity.

For more information, visit cascadepolicy.org.

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Categories: Right to Work

Is Metro’s Affordable Housing Plan Really That Affordable?

By Rachel Dawson

The Metro City Council voted June 7 to place a housing bond measure of more than $600 million dollars on the ballot this fall. The regional government estimates the cost of new projects will be around $253,000 per unit. There is no cap on cost per unit, so project costs could be much greater, and have proven to be with past bonds.

However, it is possible to decrease the costs of these projects. Rob Justus, with Home First Development, has built a total of 431 public units for an average cost of $90,000 since 2011. He offered to build the city 1,000 homes at $85,000 per unit in 2015, but Portland officials rejected his proposal.

The city could build cheaper apartments by using less expensive materials and contracting with private developers to decrease labor costs. Placing a cap on how much is spent per unit would ensure that the city held itself accountable on project costs. Doing so would decrease the size of the bond and the burden it places on taxpayers.

There is a way to make housing affordable to both taxpayers and renters, and following the lead of private developers like Rob Justus is a way Portland can do just that.

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

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Time to Stop the PERS Pac-Man from Eating Teachers’ Salaries and Taxpayers’ Pocketbooks

By Steve Buckstein

What do Pac-Man and public pensions have in common? An intriguing 2016 national study of pension debt and teacher salaries recently answered this question. Depending on what economic assumptions are made, it’s likely that unfunded public pension liabilities for all states and local governments exceeded $6 trillion in 2017. Based on the same assumptions, Oregon’s share of those liabilities likely approached $50 billion.

The study, The Pension Pac-Man: How Pension Debt Eats Away at Teacher Salaries, by Chad Aldeman of Bellweather Education Partners, concluded that unfunded public pension liabilities were eating away at teacher salaries in every state—just like the old arcade game Pac-Man. This happens because the school districts teachers work for have to pay an increasingly larger share of their budgets into retirement funds for teachers who are no longer teaching, at the expense of those currently in the classroom.

In effect, America’s public school teachers are being charged on average about $6,800 a year—money that could be boosting their paychecks—to preserve what are becoming increasingly inequitable public pension systems. The inequality stems from the shifting nature of state pension systems that compensate older (and currently retired) teachers at higher rates than they will younger ones.

So where do Oregon teachers stand? Compared to the national average of about $6,800 per teacher, Oregon basically has to charge our teachers $7,398 a year to cover our unfunded PERS liabilities. That’s more than in all but 14 other states.

One might conclude that Oregon teachers consequently have lower salaries than teachers around the country because of this large pension hit. Not true. The nation’s largest teachers union reported that the average Oregon teacher earned $61,862 a year in 2016-17, compared to the national average of $59,660. That put our teachers in thirteenth place for average teacher pay among the 50 states.

Then again, Oregon teachers might be expected to earn more because, again according to that recent union report, in 2017 Oregon had more revenue per student in its public school system than 30 other states. We had $14,827 per student in average daily attendance, compared to the national average of just $13,900.

So, even though Oregon teachers are being hurt by our large public pension debt, they still earn more than teachers nationwide, and even more relative to their Oregon neighbors who pay the taxes to fund those higher teacher salaries while earning less than the national average themselves. All-in-all, Oregonians compensate our public school teachers relatively well.

Even though the latest, so-called Tier 3 or OPSRP PERS system has a less generous defined-contribution element than Tier 1 PERS workers earned, taxpayers should not be on the hook for unknown, and unknowable, pension costs going forward. It’s unknowable costs like these that have led to the current, nearly $7,400 annual debt burden on our teachers, districts, and taxpayers.

If Oregon had no unfunded PERS liabilities, three things could happen. Teachers might argue they should see an average raise of almost $7,400 per year, while school districts might want to put that money toward other district expenses that benefit students. Taxpayers might expect to see their Oregon personal income tax bills reduced if the state managed its public pension funds responsibly.

But none of these outcomes will occur because Oregon hasn’t managed PERS responsibly. As long as this continues, the outcome will be what’s unfolding now: higher taxes and greater school district payments to fund pension liabilities that few saw coming—and that threaten to continue, like Pac-Man, to eat away at teacher salaries, school district budgets, and taxpayer pocketbooks.

To stop the PERS Pac-Man, our Governor and legislators need to get serious about PERS reform, specifically by ending the “defined-benefit” elements of PERS for all work done in the future, either by new employees or current ones. Instead, the legislature should move all public employees, including teachers, to 401(k)-style defined-contribution retirement plans, which are the only kind of plan available to most taxpayers. The costs to future teachers, schools, and taxpayers will only get worse if we don’t end the PERS Pac-Man once and for all.

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

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Stop Waiting for Superman—Be a Voice for Choice Instead

By Miranda Bonifield

Are we waiting for Superman? In 2010, a documentary by that name chronicled the struggles of five kids trying to get a quality education in the American public school system. Despite the $634 billion dollars Americans funnel into public education, these kids’ choices were between enrollment in an ill-fitting public school or winning the charter school lottery. Kids’ talents aren’t determined by their ZIP codes; and their educations shouldn’t be, either. Oregonians should take up Superman’s mantle ourselves and expand students’ horizons via school choice.

Education Savings Accounts, or ESAs, would put some of the funds that the state otherwise would spend to educate a student in a public school into accounts associated with the student’s family. The family could use the funds for approved educational expenses like tuition, tutors, online courses, and other services and materials. This would empower parents and give kids the freedom to thrive in the best educational program for them. Imagine kids with disabilities having more access to some of the best programs in the state, or gifted young artists with more access to the fine arts programs outside their home school district. ESA’s help make that happen. They could even save taxpayers thousands of dollars.

This year alone, 466,000 students were served by school choice programs in 29 states. Oregon should be among them. Stop waiting for Superman—he isn’t coming. Instead, be a voice for choice.

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

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Categories: Education

How the PERS Pac-Man Eats Teacher Salaries

By Steve Buckstein and Kathryn Hickok

What do Pac-Man and public pensions have in common? An intriguing 2016 national study of pension debt and teacher salaries recently answered this question. Depending on what economic assumptions are made, it’s likely that unfunded public pension liabilities for all states and local governments exceeded $6 trillion last year. Based on the same assumptions, Oregon’s share of those liabilities likely approached $50 billion.

The study, The Pension Pac-Man: How Pension Debt Eats Away at Teacher Salaries, by Chad Aldeman of Bellweather Education Partners, concluded that unfunded public pension liabilities are eating away at teacher salaries in every state—just like the arcade game. This happens because the school districts teachers work for have to pay an increasingly larger share of their budgets into retirement funds for teachers who are no longer teaching, at the expense of those currently in the classroom.

To stop the PERS Pac-Man from eating teacher salaries, Oregon’s Governor and state legislators need to get serious about PERS reform. They should end the “defined-benefit” elements of PERS for all work done in the future. Instead, public employees, including teachers, should move to 401(k)-style retirement plans. The costs to future teachers, schools, and taxpayers will only get worse if we don’t end the PERS Pac-Man once and for all.

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

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Right to Try Goes National

By Steve Buckstein

Last week President Trump signed a national Right to Try law, allowing terminally ill patients the right to try drugs that have gone through part of the FDA testing process but are not yet approved.

In 2015 Cascade Policy Institute helped craft Oregon’s Right to Try law, but with two troubling restrictions. First, patients must be 18 years of age or older; and second, “in a physician’s reasonable medical judgment” patients will die within six months.

Neither of these restrictions is in the new federal law. One of the witnesses at the bill signing was Diego Morris of Arizona. Diagnosed with a deadly form of cancer when he was just 11 years old, Diego was denied a possible treatment because it was not approved in the U.S. It was, however, approved in other countries; so his family spent months in England where Diego was treated. Years later, he is still cancer-free.

Diego came to Oregon in 2015 to help us pass Oregon’s law. When someone asked him whether such laws offer false hope to desperate patients, this then-fourteen-year-old teenager answered: “There is no false hope, only hope.”

We hope that as legal issues are clarified, the new national law will “trump” Oregon’s law and offer all terminally ill Oregonians real hope for a better future.

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

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Categories: Healthcare

Children’s Scholarship Fund Gives Low-Income Parents Real Education Choices

By Kathryn Hickok

This spring, the Children’s Scholarship Fund-Oregon program sponsored by Cascade Policy Institute is celebrating twenty years of giving low-income parents more choices in education through partial-tuition grade school scholarships.

The Children’s Scholarship Fund was founded by the late Ted Forstmann and John Walton, who donated $100 million together and partnered with scholarship organizations across the country, raising money from supporters in each community, to award the initial 40,000 scholarships in 1999. Here in Oregon, the parents of more than 6,600 children applied for the first 550 scholarships.

Over the last two decades, CSF and CSF partner program scholarship alumni have gone on to higher education or career training and are pursuing jobs in fields as diverse as business and finance, law, advertising, computer science, and the arts.

An Oregon scholarship recipient once said: “What [the Children’s Scholarship Fund has] given me is so much more than money; you have given me opportunity, confidence, faith, and trust that life has meaning, and that I am meant to succeed no matter what obstacles come my way.”

Our founders often said, “If you save one life, you save the world.” By offering parents the opportunity to choose which school best fits their child’s needs, the Children’s Scholarship Fund puts the power of education back in the hands of parents, where it belongs.

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 partial tuition scholarships to Oregon elementary students from lower-income families.

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Categories: Education

New Transportation Tax Is on the Wrong Side of History

By John A. Charles, Jr.

Oregon employers began receiving notices this week regarding the new statewide transit tax that goes into effect on July 1. The law requires all employers to withhold, report, and remit one-tenth of one percent of wages paid to their employees to the Oregon Department of Revenue. The money will go into a Statewide Transportation Improvement Fund to subsidize public transit agencies.

The new tax is being imposed at exactly the wrong time in history. Transit ridership is declining across the country, and it’s not because transit agencies lack money. The problem is that their service models are obsolete.

The ride-hailing revolution brought about by Uber, Lyft, Sidecar, and other start-ups has raised the expectations of customers. People now want on-demand, door-to-door service that they can order through their phones. The coming revolution in driverless cars will only accelerate that change.

The traditional service offered by legacy transit agencies—fixed-route, limited-schedule service on slow buses—just isn’t good enough anymore.

Subsidizing transit with one more tax will simply delay the inevitable. The legislature should repeal this tax as soon as possible.

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

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School Choice Leads to Student Success

By Kathryn Hickok

Parents know a solid education prepares their children for life, and that path begins in grade school. But many Oregon families are trapped in public schools that don’t meet their kids’ educational needs. While families with greater means can move to neighborhoods with public schools they like, or pay twice for education by opting for a private school, lower-income families often don’t have those options.

And those families’ children are at the greatest risk of not graduating from high school. According to the National Association of Education Progress, only 33% of Oregon fourth-graders tested “proficient” in reading in 2017. Our state continues to have the third-lowest graduation rate in the country. Nearly half the children born into poverty will stay in poverty as adults. Changing those outcomes requires a solid early education leading to graduation and employment.

This spring, the Children’s Scholarship Fund-Oregon program sponsored by Cascade Policy Institute is celebrating twenty years of giving low-income parents more choices in education, so their children can have a better chance. As director of the Children’s Scholarship Fund-Oregon, I’ve watched how partial tuition scholarships, funded by private donors in our community, have changed the trajectories of our students’ lives, sparking their passion for learning and helping them fulfill their potential.

One of the Children’s Scholarship Fund-Oregon’s first scholarship recipients described her experience this way: “My parents…wanted my brother and me to be placed in an environment where we would be academically challenged and be able to succeed….What [the Children’s Scholarship Fund has] given me is so much more than money; you have given me opportunity, confidence, faith, and trust that life has meaning, and that I am meant to succeed no matter what obstacles come my way.”

Every child should feel that way, and with school choice they can.

In 1998, philanthropists Ted Forstmann and John Walton wanted to jumpstart a national movement that would support low-income parents wanting alternatives to faltering government schools. Pledging $100 million of their own money, Forstmann and Walton challenged local donors across the U.S. to match their gift and help them offer 40,000 low-income children the chance to attend the tuition-based schools of their parents’ choice. That challenge became the Children’s Scholarship Fund and a national network of independently operating private scholarship programs for K-8 children.

But instead of 40,000 applicants, the Children’s Scholarship Fund heard from 1.25 million low-income parents nationwide. Here in Oregon, parents of more than 6,600 children in the Portland tri-county area applied for 500 available scholarships. Forstmann and Walton found out quickly that low-income parents were desperately seeking a quality education they couldn’t find in their local public schools.

They believed that if parents had meaningful choices among educational options, children would have a better chance at success in school. Twenty years of data have proven this true. Studies of college enrollment and graduation rates of scholarship alumni have shown that, despite coming from socioeconomic backgrounds associated with lower rates of college enrollment, Children’s Scholarship Fund students enroll in college at an average rate that is similar to or higher than the general population.

In other words, education in private grade schools is closing the achievement gap for kids from less advantaged backgrounds.

Ted Forstmann was known to say, “If you save one life, you save the world,” and “if you give parents a choice, you will give their children a chance.” Thanks to Forstmann, John Walton, and private donors in Oregon and 18 other states who have supported low-income parents in their quest for a quality education, more than 166,000 children have been a given that chance through scholarships worth more than $741 million. By offering parents the opportunity to choose which school best fits their child’s needs, the Children’s Scholarship Fund puts the power of education back in the hands of parents, where it belongs.

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 partial tuition scholarships to Oregon elementary students from lower-income families. A version of this article was originally published by the Pamplin Media Group and appeared in The Gresham Outlook on April 24, 2018.

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Categories: Education

Charters Schools Are a Laboratory for Innovation Within Public Education

By Kathryn Hickok

This is National Charter Schools Week. Did you know almost half of Washington, D.C.’s public school children attend tuition-free charter schools? In fact, our nation’s capital now has 120 charters, run by 66 nonprofit organizations.

President Bill Clinton signed the legislation authorizing D.C.’s charter schools more than twenty years ago. Since then, D.C. charter school students have made significant academic gains. A 2015 study on urban charter schools by the Center for Research on Education Outcomes at Stanford University found that D.C. charter students are learning the equivalent of 96 more days in math and 70 more days in reading than their peers in traditional public schools.

David Osborne, director of the project Reinventing America’s Schools at the Progressive Policy Institute, has called D.C. “the nation’s most interesting laboratory” for public education. In an article for U.S. News and World Report, Osborne compares the traditional public school system with a Model T trying to compete on a racetrack with 21st century cars. “…[F]or those with greater needs,” he writes, “schools need innovative designs and extraordinary commitment from their staffs.”

Charter schools’ entrepreneurial governance model allows them to innovate, adapt, and specialize to meet the particular needs of students. Their success in educating children who face the greatest challenges to academic achievement is fueling an even greater demand for the kind of choice in education that charter schools have come to represent.

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

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Categories: Education

Throwing Money at Homelessness Is a Failed Strategy

By John A. Charles, Jr.

Portland Mayor Ted Wheeler hopes to spend $31 million next year addressing homelessness. This is ten percent more than Portland is spending this year. According to the Mayor, the goal is to help place people in permanent housing.

Of course, ending homelessness has been a goal of Portland mayors for decades. They never solve the problem because they conceptualize the homeless as an amorphous blob. But every person who lacks housing has a unique set of circumstances, and that background has to be understood.

It’s much more complicated than simply building more housing. Some people don’t want to live in a traditional home. They may have a psychological need to be outside. Others don’t want the responsibilities that come with home ownership, such as maintaining a yard and paying taxes. Some people have drug addictions that prevent them from earning enough income to afford housing.

While specific facts change, certain principles don’t; and the most important one is that simply giving people free stuff doesn’t work. Everybody deserves a hand up; no one benefits from a handout.

Before spending another $31 million, the Mayor should tell us what will be different this time around. If he can’t answer the question, he shouldn’t get the money.

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: Tax and Budget

What’s Better for Low-Skilled Workers: Higher Minimum Wages or Lower Taxes?

By Kathryn Hickok

What’s better for welfare recipients and low-skilled workers: a higher minimum wage, or a larger Earned Income Tax Credit (EITC)? David Neumark, director of the Economic Self-Sufficiency Policy Research Institute at the University of California, Irvine, explains in a recent op-ed in the Wall Street Journal why the EITC benefits low-income single parents more over time than does a higher minimum wage.

The Earned Income Tax Credit is a tax benefit for low-to-moderate-income wage earners who have dependent children. By reducing the amount of taxes owed, the EITC lessens the impact of taxation on earned income when people enter the workforce, and therefore can provide a strong incentive to transition off public assistance.

“The minimum wage does, of course, provide an immediate boost to earnings of employed workers,” Neumark writes. “But evidence indicates that minimum wages reduce employment among young workers, costing them work experience that generates earnings growth in the long run. One of my recent studies shows that the shift to higher minimum wages since 2000 has contributed significantly to declines in employment among teens in school, which can reduce adult earnings later.”

“Because it promotes work,” he adds, “the EITC should do the opposite among those eligible for its most generous benefits—low-skilled single mothers….The evidence shows that exposure to a more generous EITC leads to markedly higher earnings in the long run among less-educated single mothers.”

Neumark recommends that if lawmakers want to pursue policies “that help turn government assistance…into economic self-sufficiency,” they should incentivize work. Rather than make it harder to enter the workforce, lawmakers should make it easier for working parents to keep more of the money they earn. They’ll not only take home more of their paychecks, but they’ll also increase the skills and experience that will raise their wages. That combination is a winning path out of poverty and government dependence for working parents and their children.

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

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Amateur Hour at the State Land Board

By John A. Charles, Jr.

Oregon owns 1.5 million acres of School Trust Lands that must be managed for the benefit of public education. When profits are earned, the money goes into the Common School Fund, an endowment. Last year, the Fund distributed more than $70 million to local schools.

The Trust Lands are managed by the State Land Board, comprised of the Governor, the State Treasurer, and the Secretary of State. By policy, they are supposed to sell money-losing lands and keep the profitable ones.

Unfortunately, they tend to do the opposite. At its April meeting, the Board voted to sell a 3-acre industrial parcel in Washington County. There was no compelling reason to sell, as the property had an internal rate of return of 8% since it was purchased in 2012.

The state also owns 74,000 acres of timberland within the Elliott State Forest, near Coos Bay. Earnings on the Elliott have been spiraling downwards since the 1990s. In 2013, it finally started losing money and is expected to continue doing so for the foreseeable future. These losses take money directly out of public school classrooms.

In November 2016, the Board received an all-cash offer of $221 million dollars for the Elliott from a consortium of private landowners and tribal nations. That offer was rejected last year.

Students deserve professional management of their assets. They will never get it from the State Land Board because it’s made up of politicians. It’s time to amend the Oregon Constitution to remove trust land management from the Board’s jurisdiction.

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

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End PERS—For a Day!

By Steve Buckstein

Most Oregonians know that our state’s Public Employees Retirement System (PERS) is some $25 billion to $50 billion under water. Promises made to past and present government workers, primarily those hired before 1996, were simply way too generous for taxpayers and entities like school districts to afford.

A misreading of the so-called Contracts Clause in the U.S. Constitution by the Oregon Supreme Court has meant that once a government employee was hired in the state, the terms of his or her employment could not be altered, even for work done in the future.

One remedy for this situation might be to fire all public employees for a day, thus canceling their PERS contracts, and then hire them back the next day under new, less generous terms. If you think that’s a non-starter, something similar actually happened in Oregon before.

In 1953 the Oregon legislature passed a law ending the PERS system—for one day—so that the new system could include public employees in the (then) relatively young federal Social Security program. That one-day change was for the benefit of the workers. But it just might be a precedent to do something similar today for the benefit of taxpayers and public agencies. Let’s see who picks up this controversial ball and runs with it.

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

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TriMet Shows Pension Reform Is Possible

By Scott Shepard and John A. Charles, Jr.

The Oregon legislature recently adjourned its 2018 session and once again took no action to reduce the long-term financial obligations of the Oregon Public Employee Retirement System. Conventional wisdom in Salem is that significant pension reform is impossible, so we should just quietly accept our fate that the PERS crisis will lead to layoffs at public schools and other service providers.

The conventional wisdom is wrong.

The Portland regional transit district, TriMet, is not part of PERS and has been slowly reforming its pension program since 2002. As a result, 100 percent of all new employees are now in 401(k)-style pensions that have no long-term liabilities for employers. These are referred to as “defined-contribution” pensions in which monthly payments are made by management into personal accounts owned by employees. Once those payments are made, the employer has no further financial obligations.

This stands in contrast to “defined-benefit” programs like PERS in which employees are promised various levels of retirement payments calculated through arcane formulas that leave management clueless about the major level of funding obligation they’ve agreed to.

The advantages for taxpayers of moving public employees into defined-contribution pensions is now evident in the actuarial projections done for TriMet. According to the most recent valuation, estimated annual benefit payments for TriMet defined-benefit pensions will peak in 2034 at $74.6 million, then drop to $24 million in 2060 and $6 million by 2072. They will hit zero by the turn of the century.

This was not something that TriMet did casually. Management was forced into it because of decisions made in the 1990s that caused long-term retiree obligations to explode. The TriMet Board realized that changes were necessary and voted to move all new, non-union hires into defined-contribution pensions after 2002.

Resistance from the bargaining unit kept TriMet from moving its new unionized workers to defined-contribution plans for another decade, by which time a citizens’ committee had issued a report declaring TriMet “on the brink” of disaster. During a protracted negotiation with the union in 2012, TriMet CFO Beth deHamel testified at a binding arbitration hearing that unless changes were made, “TriMet could be forced to default on its pension obligations or its other financial obligations in the future.”

Union leadership eventually agreed to move all new members to defined-contribution pensions by 2013. As a result, the number of active employees still accruing defined-benefit pension benefits fell from 1,580 to 1,460 during 2016. Last year, the unionized workers’ defined-benefit account reached nearly 80 percent funding; and the long-term, unfunded pension liability dropped by nearly $50 million.

The defined-contribution plan to which TriMet moved new workers has been recognized as one of the best in the country. It features low costs, high returns, and a guaranteed employer contribution that is paid irrespective of employee matching contributions.

TriMet’s pension reform offers a valuable guide to the Oregon legislature on how to contain and reverse the spiraling PERS disaster. The unfunded liabilities for PERS have grown from $16 billion to more than $25 billion in less than ten years.

Some reduction in PERS benefits will have to happen, and all parties will benefit from an orderly transition while there is still time. The state should emulate TriMet by moving its employees from defined-benefit to defined-contribution plans as soon as possible.  However, the legislature will be obliged to make bigger changes than would have been required years ago. It will have to move all current workers, whenever they were hired, to defined-contribution plans for all work performed after the date of the effective legislation.

The sooner this is done, the less painful later steps will be. As former TriMet General Manager Neil McFarlane noted recently, solving a pension crisis “doesn’t get any easier with passing time.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. Scott Shepard is a lawyer who recently authored a new case study of TriMet’s pension reform for Cascade Policy Institute. The study, “Following in TriMet’s Tracks: Defined-Contribution Pensions a Necessary First Step to Oregon’s Fiscal Health,” is available here. A version of this article originally appeared in The Portland Tribune.

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Categories: Transportation

In 9 Years, WES Hasn’t Decreased Westside Congestion

By John A. Charles, Jr.

February marked the nine-year anniversary of the Westside Express Service (WES), the commuter rail line that runs from Wilsonville to Beaverton. Sadly, there was little to celebrate.

A central problem is that WES never had a clear mission. At various times the train was promoted as: (1) a congestion relief tool for Highway 217; (2) a catalyst for so-called “Transit-Oriented Development;” or (3) a way of providing “another option” for travelers. None of these arguments has panned out.

During legislative hearings in Salem, representatives from Washington County claimed WES would take 5,000 motor vehicles per day off of nearby highways. But WES is not capable of that because it only runs eight times (each direction) in the morning, and eight times in the afternoon. Unlike traditional commuter trains pulling eight or nine passenger cars, WES travels only in one- or two-car configurations.

During its best hours of performance, the total number of passengers is less than 0.5% the number of motorists traveling on Highway 217/I-5 at those hours, so there has been no congestion relief.

Prior to WES, two TriMet bus lines provided more than 4,000 boardings per day in parallel routes. Commuter rail has replaced inexpensive bus service with a massively subsidized train. Taxpayers would be better served if we canceled WES and moved commuter rail customers back to buses.

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

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WES at 9: Time to Admit the Mistake

By John A. Charles, Jr.

February marked the nine-year anniversary of the Westside Express Service (WES), the 14.7-mile commuter rail line that runs from Wilsonville to Beaverton. Sadly, there was little to celebrate.

In the first few years of operation, ridership grew and it was at least plausible that WES eventually could become a productive transit line. However, average daily ridership peaked in 2014 at 1,964 daily boardings, then dropped in each successive year. During fiscal year 2018, WES ridership has averaged only 1,668 daily boardings.

A central problem is that WES never had a clear mission; it was always a project in search of a purpose. At various times the train was promoted as: (1) a congestion relief tool for Highway 217; (2) a catalyst for so-called “Transit-Oriented Development;” or (3) a way of providing “another option” for travelers. None of these arguments make sense.

During legislative hearings in Salem, representatives from Washington County claimed that WES would take 5,000 motor vehicles per day off of nearby highways. But WES is not even capable of doing that because it only runs eight times (each direction) in the morning, and eight more times in the afternoon. Unlike traditional commuter trains pulling eight or nine passenger cars, WES travels only in one-car or two-car configurations. The train stations themselves are so short that even if TriMet started running eight-car trains, most passengers would have no way to get on or off.

During its best hours of performance, the total number of passengers traveling on WES is less than 0.5% the number of motorists traveling on Highway 217/I-5 at those same hours, so there has been no congestion relief.

Moreover, WES crosses more than 18 east-west suburban arterials four times each hour. On busy commuter routes, such as Highway 10 or Scholls Ferry Road, each train crossing delays dozens of vehicles for 40 seconds or more. Since the train itself typically only carries 50-60 passengers per run, this means that WES actually has made Washington County congestion worse than it was before the train opened.

WES has not been a catalyst for “transit-oriented development” and never will be because the train stations are a nuisance, not an amenity. The noise associated with train arrivals was always underestimated and is not likely to induce new residential construction.

As for the hope that WES would provide “another transit option,” there were already two TriMet bus lines providing over 4,000 boardings per day in parallel routes prior to the opening of WES. Commuter rail simply replaced inexpensive bus service with a massively subsidized train.

Several key statistics summarize the problems with the train:

  • WES was originally projected to cost $65 million and open in 2000. It actually cost $161.2 million and opened in 2009.
  • TriMet projected an average daily ridership of 2,500 weekday boardings in the first year; actual weekday ridership was 1,156. It grew over time to 1,964 in 2014, but dropped to 1,771 in 2016 and 1,668 in 2018. Since each rider typically boards twice daily, only about 850 people actually use WES regularly.
  • The WES operating cost/ride is roughly five times the cost of average TriMet bus service.

Ridership and Cost Trends for WES

2009-2018

(inflation adjusted, 2015 $)

2009 2010 2011 2012 2014 2016 2018 % Change since 2014
   
Avg. daily boardings 1,156 1,313 1,571 1,700 1,964 1,810 1,668 -15%
Operating cost per ride $27.41 $24.46 $20.43 $18.39 $15.85 $13.55 $16.73 +6%
Cost/

train-mile   

$54.70 $54.12 $53.30 $53.79 $51.12 $53.82 $60.56 +18%
Cost/

train hour

$1,180 $1,166 $1,171 $1,180 $1,109 $1,178 $1,307 +18%
Average subsidy/ride $26.18 $23.00 $19.01 $17.64 $14.36 $12.07 $15.30 +7%

In June 2016 TriMet staff persuaded the Board to approve the purchase of two used rail cars to expand the WES fleet. The estimated cost for the purchase was $1.5 million, plus $500,000 more for retrofitting.

TriMet claimed that this purchase was necessary to satisfy the “expected demands for growing WES service.” That demand was a fantasy.

WES is destined to be a one-hit wonder―an expensive monument to the egos of TriMet leaders and Westside politicians. Taxpayers would be better served if we simply canceled WES, repaid grant funds to the federal government, and moved the few commuter rail customers back to buses.

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

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TriMet Shows Public Pension Reform Is Possible

By John A. Charles, Jr.

The Oregon legislature recently adjourned and once again took no action to reduce the unfunded liabilities of the Oregon Public Employee Retirement System (PERS). The reason is that most legislators think PERS reform is impossible. 

That belief is wrong. 

TriMet is not part of PERS and has been slowly reforming its pension program since 2002. As a result, 100% of all new employees are now in 401(k)-style pensions that have no long-term liabilities for employers. These are referred to as “defined-contribution” (DC) pensions in which monthly payments are made by management into retirement accounts owned by employees. Once those payments are made, the employer has no further financial obligations. 

This stands in contrast to “defined benefit” (DB) programs like PERS in which employees are promised high levels of retirement payments regardless of how investment funds are performing. 

The success of the TriMet reforms can be seen in its latest pension fund valuation, which shows that annual benefit payments for pensions will peak in 2034 at $75 million, then drop to zero by about 2085.           

TriMet’s pension reform offers a guide to the legislature on how to reverse the spiraling PERS disaster, where unfunded liabilities have grown to $25 billion. The state should move all employees to defined-contribution plans as soon as possible. 

This essay summarizes a new Cascade study of TriMet’s successful pension reform program. “Following in TriMet’s Tracks: Defined-Contribution Plans a Necessary First Step to Oregon’s Fiscal Health” can be found here.

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

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Study: School Trust income would go up by 600% if lands were sold

FOR IMMEDIATE RELEASE

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

PORTLAND, Ore. – Cascade Policy Institute released a study today showing that revenue generated for schools by the Oregon Common School Trust Lands (CSTL) likely would go up by 600% if the lands were sold and the net income added to the existing Common School Fund.

The study, A Proposal to Generate Adequate Returns from Common School Trust Lands, also showed that Oregon is only making $4.25/acre from its CSTL portfolio, the lowest among nine Western states. The state of Washington is earning the most, at $37/acre.

Management of Oregon’s 1.5 million acre portfolio of CSTL has long been a contentious issue. In 1992 Oregon Attorney General Charles S. Crookham issued an opinion clarifying that CSTL must be managed primarily for revenue maximization. Advocacy groups representing non-school interests have worked to subvert that directive ever since.

Environmental groups have repeatedly lobbied and litigated to eliminate revenue generation from the Trust Lands, claiming that commodity production is an outdated concept. They finally succeeded during the three-year period of 2013-15, when Oregon’s Trust Land portfolio actually lost $360,000/year in net operating income. Those losses had to be paid for by Oregon public school students.

The Oregon Land Board voted in 2015 to sell most of the Elliott State Forest in order to remedy this problem. However, the Board reversed itself in 2017, and Governor Kate Brown subsequently sought bonding authority from the Legislature to allow her to borrow $101 million (requiring $199 million in debt service) in order to “buy out” a portion of the Elliott so that it no longer would be subject to the Constitutional mandate to earn money for schools.

Those bonds have not yet been sold, and the Elliott is expected to incur more losses during 2018.

Last year Cascade Policy Institute commissioned economist Eric Fruits, Ph.D. to do a comparative analysis of nine Western states with large CSTL portfolios to determine under what circumstances it might make sense for states to sell these lands and invest the net proceeds into stocks, bonds, and other financial instruments. Dr. Fruits concluded that six states (including Oregon) likely would be better off selling CSTL assets; two states would be better off maintaining ownership; and one state likely would benefit from divestment, but more information is needed.

Cascade President John A. Charles, Jr. stated, “The Oregon Land Board has a fiduciary obligation to manage CSTL assets for the benefit of schools. Losing money every year violates that obligation. The Trust Lands have a market value of over $700 million, and students would be best served if the Land Board simply sold its real property portfolio and turned the proceeds over to the Oregon Investment Council, which has earned an average of 8.2% annually from the Common School Fund since 2010. In fact, there is no management option that would earn more money for students than selling these lands.”

The full report, A Proposal to Generate Adequate Returns from Common School Trust Lands, can be downloaded here.

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

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Oregon Small Businesses Deserve the Tax Break They Expected

By Steve Buckstein

While most Americans are reaping the benefits of the recent federal income tax cut, the Oregon legislature has just passed SB 1528 on a partisan vote that could deny several hundred thousand Oregon small businesses an equivalent state income tax cut they should expect.

Proponents of the bill argue that some of these businesses already got a state income tax break in 2013 and therefore shouldn’t benefit any further. But fewer than ten percent of the businesses the bill will hurt got that break. More than 90 percent won’t get any state break if Governor Kate Brown signs the bill.

Oregon is a small business state. Many are family businesses that depend on their business income to support their households.

Governor Brown says of the bill, “We’re looking at the implications for Oregon’s small businesses and Oregon’s economy.” She has until mid-April to sign it into law. Small business groups like NFIB are urging her to veto it.

If she does sign the bill, opponents might gather signatures referring it to voters in November. And hundreds of thousands of those voters will be the very people the bill impacts.

Oregon doesn’t need more tax revenue from small businesses to balance its budget, and giving them a tax break should be good for our economy. If you agree, call the Governor at 503-378-4582 and ask her to veto SB 1528.

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

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Time to Decentralize Oregon’s Education Reform Efforts

By Kathryn Hickok and Steve Buckstein

Three years ago, Oregon state government killed off what should have been the last of three big education reform efforts since 1991. Each promised to solve the unsolvable: how a one-size-fits-all public K-12 school system could educate all Oregon students and launch them onto a lifelong path of educational and career success. The fatal flaw in these reform efforts was that they relied on centralizing control over education policy.

Now, the Oregon legislature is embarking on what may turn into a fourth “impossible mission” to achieve student success in our public school system. Members of the Joint Committee on Student Success will travel around the state asking everyone they meet what constitutes success in their communities. They then will return to the State Capitol and recommend that every school do “what works” somewhere—most likely at a higher cost to taxpayers than they are paying today.

But rather than wait years to judge this latest reform effort a failure, why not try another path: the school choice path? School choice allows students and their families to choose where and how to get the educational opportunities that are right for them. School choice recognizes that children learn in different ways and at different paces and puts parents, not bureaucrats, in the driver’s seat of their kids’ education. That truly would be a revolutionary movement in the direction of student success.

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

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Categories: Education

TriMet Shows That Public Pension Reform Is Possible

By Scott Shepard and John A. Charles, Jr.

The Oregon Legislature is currently meeting, and the conventional wisdom is that reform of Oregon’s overly generous Public Employee Retirement System (PERS) is impossible. According to Governor Kate Brown, we signed contracts with public employee unions, a deal is a deal, and we should just quietly accept our fate that the massive cost of PERS will lead to layoffs and service cuts at schools and other service providers.

There is another way.

The Portland regional transit district, TriMet, is not part of PERS and has been slowly reforming its pension program since 2002. As a result, 100% of all new employees are now in 401(k)-style pensions that have no long-term liabilities for employers. These are referred to as “defined-contribution” (DC) pensions in which monthly payments are made by management into personal accounts owned by employees. Once those payments are made, the employer has no further financial obligations. The eventual pension payouts will be a function of the market performance of whatever investments are chosen by individual employees.

This stands in contrast to “defined benefit” (DB) programs like PERS in which employees are promised various levels of retirement payments calculated through arcane formulas that leave management mostly clueless about the level of funding obligation they’ve agreed to. In many cases, those liabilities turn out to be much larger than expected.

The advantages for taxpayers of moving public employees into DC pensions is now evident in the actuarial valuations done for TriMet. According to the most recent valuation, projected annual benefit payments for TriMet DB pensions will peak in 2034 at $74.6 million, and then steadily decline to $6 million in 2072. They will hit zero by the turn of the century.

This was not something that TriMet did casually. Management was forced into it because of decisions made a decade earlier that caused long-term retiree obligations to explode. TriMet Board members are appointed by the governor. In the early 1990s, Governor Barbara Roberts and TriMet General Manager Tom Walsh wanted public approval of a massive expansion of TriMet’s light rail empire and the tax funding to pay for it. They feared that controversy about a union contract could endanger public support.

In their efforts to avoid strife, in 1994 they granted expensive concessions to the Amalgamated Transit Union Local 757 (“the ATU”) on behalf of its represented employees. Loren L. Wyss, the long-serving president of TriMet, objected and his battle with Walsh became public. In back-channel communications with Gov. Roberts, Walsh made it clear that either he or Wyss needed to go. In August 1994, Wyss met with Gov. Roberts, where he submitted his resignation.

As later explained in The Oregonian,

“…the contract just approved by Tri-Met union employees will protect all its members from additional contributions to their pensions for 10 years. It will also guarantee 3 percent minimum wage increases in the future…every single dollar of health, welfare, dental and vision plans will be paid for by the public employer; [and] the retirement age will decline to 58 within 10 years….”

The die was set for cost escalation. In the decade from 1994 to 2004, salaries and wages increased 72 percent; annual pension costs went up 160 percent; and the cost of health care benefits rose 116 percent. These increases plus stagnant revenues in the latter half of the period resulted in a tripling of unfunded pension liabilities, from $38 million in 1993 to $112.4 million in 2002.

Fred Hansen followed Tom Walsh as General Manger; and he moved new, non-union hires into DC pensions after 2002. This was a first step towards fiscal sanity. Resistance from the ATU kept TriMet from moving its new unionized workers to DC plans for another decade, by which time a citizens’ committee of Portlanders had issued a report declaring TriMet “on the brink” of disaster.

During a protracted negotiation with the union in 2012, TriMet CFO Beth deHamel testified at a binding arbitration hearing,

“TriMet’s union defined benefit plan would be placed on critical status and under federal oversight if it were a private pension plan subject to ERISA.” She also stated that unless something was done to shore up the plan, “TriMet could be forced to default on its pension obligations or its other financial obligations in the future.”

Union leadership eventually agreed to move all new members to DC pensions by 2013, while protecting existing members from reform. As a result of this delay, the union workers’ DB fund remained only 59 percent funded in 2013.

Nevertheless, the trends were now moving in the right direction. The number of active employees still accruing DB pension benefits fell from 1,580 to 1,460 from 2016 to 2017 alone. In 2017 the unionized workers’ DB account reached nearly 80 percent funding, with unfunded liability falling by nearly $50 million in a single year.

Neil McFarlane was TriMet General Manager during that era. He commented recently, “The shift [to DC pensions] has been a success. TriMet is paying more than the required annual contribution every year right now” because the system is closed. “We will be fully funded within the next few years: five to ten for the union plan, fewer for the non-union.”

The DC plan to which TriMet moved new workers has been recognized as one of the best in the country. It features low costs, high returns, and a guaranteed employer contribution that is paid irrespective of employee matching contributions. As a DC plan it does not create open-ended, unpredictable public liabilities to be paid by generations as yet unborn.

TriMet has not fully banished the ghosts of unsustainable employee-benefit promises past. It still faces a massive and escalating unfunded liability driven by health care costs, known in accounting jargon as “other post-employment benefits,” or OPEB. The health care benefits that TriMet granted away in the 1994 contract debacle have been described as “universal health care into the afterlife.”

The description is only a minor exaggeration, as the plan offered TriMet’s unionized employees health care without premiums and with mere $5 co-pays, and benefits that ran not only throughout retirement, but to the employees’ spouses and dependents for fully 16 years after the employees’ deaths. Total unfunded liability for OPEBs reached an astonishing $769 million dollars in 2016.

Compare: State Paralysis on PERS 

TriMet’s pension reform efforts offer a valuable guide to the Oregon legislature on how to contain and reverse the spiraling PERS disaster. The unfunded liabilities for PERS have grown from $16 billion to more than $25 billion in less than ten years, even with the far-too-optimistic 7.2 percent assumed-savings rate (i.e., discount rate) in place. Were the rate adjusted down to its actuarially appropriate level, PERS’ unfunded liability would explode to $50 billion or more at a stroke.

Even at the current recognized rate, funding status has fallen below 70 percent, even while mandatory payments to PERS by government employers have passed 26 percent of payroll.

Municipalities are laying off workers, depleting public services, and raising fees in order to fund the present level of recognized PERS unfunded liabilities. Some reduction in pension benefits will have to happen, one way or another. All parties will benefit from an orderly effort to reform benefits while there is still time. 

The Way Forward

The state should follow the tracks laid by TriMet by moving its employees from DB to DC plans as soon as possible. As TriMet has demonstrated, this move will begin to stanch the fiscal wounds that have been inflicted by a generation of recklessly overgenerous pension benefit promises.

Unfortunately for everyone, PERS reform has been hamstrung for more than 20 years by a wayward state Supreme Court, which has thwarted previous attempts at thoughtful change with erroneous interpretations of the federal Contract Clause. The legislature will be obliged to make bigger changes than would have been required years ago. It will have to move all current workers, whenever they were hired, to DC plans for all work performed after the date of the effective legislation.

While this reform will be significant, it also will be deeply equitable. Right now, older workers are receiving higher benefits for each hour worked than ever will be available to younger workers. This isn’t fair, and it may violate civil rights laws: Younger workers are more diverse than their older peers, which means that benefit reductions that affect only new workers have a disparate impact on women and minorities.

The reform will also pass constitutional muster. As the Oregon Supreme Court finally recognized in its Moro decision, correcting its long-held error, the legislature may change any benefits for work not yet performed, even for current employees.

The Oregon Legislature can and must follow TriMet’s example. The sooner this is done, the less drastic any later steps will be. According to TriMet General Manager McFarlane, solving a pension crisis “doesn’t get any easier with passing time.”

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free-market research center. Scott Shepard is a lawyer and was a visiting law professor at Willamette University during 2016. This essay is a summary of a case study of TriMet’s pension reform written by Mr. Shepard for Cascade Policy Institute. The full report is available here. This essay was originally published in the February 2018 edition of the newsletter “Oregon Transformation: Ideas for Growth and Change,” a project of Third Century Solutions.

Click here for the full report, Following in TriMet’s Tracks: Defined-Contribution Plans a Necessary First Step to Oregon’s Fiscal Health:

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Following in TriMet’s Tracks: Defined-Contribution Pensions a Necessary First Step to Oregon’s Fiscal Health

By Scott Shepard

Scott Shepard is a lawyer and was a visiting law professor at Willamette University in Salem, Oregon during 2016. He is the author of “A Lost Generation but Renewed Hope: Oregon’s Pension Crisis and the Road to Reform,” an academic study on Oregon state pensions published August 1, 2017 by the Mercatus Center at George Mason University. He is an Academic Advisor to Cascade Policy Institute, Oregon’s free-market public policy research center.

Introduction 

As recently as 2012, TriMet faced a pension funding disaster. Indefensibly overgenerous pension benefits granted in the early 1990s threatened to bankrupt the public transit system and to cripple the Portland metro area. While TriMet still has difficult reform ahead of it (regarding its other post-employment benefits promises), it has achieved pension fund stability by replacing its unsustainable defined-benefit pension promises with a well-designed, defined-contribution retirement plan.

“Defined-contribution” (DC) pensions are retirement benefit plans in which monthly payments are made by management into personal accounts owned by employees. Once those payments are made, the employer has no further financial obligations. The eventual pension payouts will be a function of the market performance of whatever investments are chosen by individual employees.

This stands in contrast to “defined-benefit” (DB) programs like Oregon’s Public Employees Retirement System (PERS). Under DB programs, employees are promised various levels of retirement payments calculated through arcane formulas that leave management mostly uninformed as to the level of funding obligation to which they have agreed. In many cases, those liabilities turn out to be much larger than expected. 

TriMet has brought its pension funding liabilities under control by moving its employees from defined-benefit plans to defined-contribution plans: first its management employees hired after 2002, then its unionized employees hired after 2012. The shift followed the lead of most private sector businesses, the federal government, and an increasing number of states. As a result of the change, TriMet’s pension obligations are moving steadily and reliably toward full funding within the near to medium term. This glide path to full funding is allowing the organization to focus on other vital personnel issues such as managing the cost of other post-employment benefits (“OPEBs,” which are primarily health care benefits for unionized workers) for current workers and retirees.

Oregon and its municipalities can only envy TriMet in this regard. The defined-benefit PERS funding costs continue to spiral out of control. These unbridled expenses are crushing local governments and school districts, forcing layoffs, hiring and wage freezes, bigger class sizes, reduced government services, and increased taxes. The failure to reform harms younger and more diverse workers at the expense of their older colleagues, and private-industry workers in favor of their government-employee neighbors. Taxpayers have said “enough,” voting 60-40 in 2016 against significant state tax hikes that inevitably would have been dedicated to helping to fund the PERS shortfall.

One necessary step toward addressing this problem is for the state of Oregon to follow in TriMet’s tracks, moving PERS workers from DB to DC plans. TriMet started down this road fully 15 years ago, while the state has dithered. Oregon must play catch-up by moving all PERS-covered workers to DC plans for work to be performed after the changeover.

This move by itself likely will not be enough to solve Oregon’s public pension crisis. The state has already promised more than it can reasonably pay. But moving to DC plans for all work not yet performed is a necessary first step. And the faster the legislature acts, the less severe—and the less upsetting to retirees and current and future employees—will be the other reforms required later.

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TriMet Needs a Broader Definition of Diversity

By John A. Charles, Jr.

TriMet has been recruiting a new General Manager for the past six months. At its January meeting, the Board announced the name of the leading contender and offered the public a chance to ask questions.

Before the questioning began, however, an executive search firm hired by TriMet summarized the recruiting process. Celia Kupersmith of KL2 Connects said that more than three dozen applications had been vetted, and a significant number of them were women or racial minorities. A black woman was one of three finalists.

However, the top applicant was Doug Kelsey, a white male currently employed by TriMet.

Many activists in the audience criticized the process. They complained that TriMet had proceeded too quickly and with not enough transparency. In particular, they were upset that virtually all applicants requested privacy in order to protect the jobs they already had. Soon thereafter, the TriMet Board announced that it would delay a final hiring decision while it reassessed its process.

Many of TriMet’s critics have a naïve view of the business world, and it shows in the self-contradictory nature of their demands. They want a deep pool of talent, rich with ethnic and gender diversity, but they also want a very public process. The two goals are mutually exclusive. Complete transparency means most qualified candidates will not apply.

They also have a narrow concept of “diversity.” Race and gender are just two attributes the Board should consider. What about intellectual diversity?

TriMet has been working off the same philosophical playbook for over 35 years. The focus has always been two-fold: (1) building a network of low-speed, low-capacity light rail lines; and (2) maintaining “labor peace” by agreeing to wage agreements that include expensive retiree benefits. That vision is looking very stale these days.

TriMet’s ridership is in a steady decline. It peaked in fiscal year 2012 and ridership has dropped in each of the last three years. Only 2.4% of total travel in the Portland region takes place on transit, making it irrelevant or even a nuisance to most taxpayers.

Light rail has lower ridership today than before the Orange line to Milwaukie was built. During FY 2017, boarding rides per-hour on MAX reached the lowest level since light rail opened in 1986.

TriMet’s financial position would be unsustainable were it not for massive and growing subsidies. During the past two decades, TriMet has promised so much to employees in the form of pensions and post-employment health care benefits that the agency now has unfunded liabilities of nearly $1 billion.

At the TriMet hearing in January, I asked Mr. Kelsey whether he saw any possibility that TriMet’s next light rail project—a multi-billion line to Bridgeport Village—might be canceled under his leadership, given the problems stated above. He responded that light rail was still a very important part of TriMet’s planning and he was not about to abandon it.

That answer concerned me because TriMet seems wedded to an outdated business model. Both in Portland and elsewhere, ridesharing companies such as Uber and Lyft are steadily eroding the market share of both regulated taxis and transit operators. This trend will only accelerate as autonomous vehicles become a reality.

Over the next 20 years, shared driverless cars likely will revolutionize the transit industry. Capital-intensive light rail and streetcar systems will face rising costs with declining ridership, creating a fiscal death spiral.

TriMet and its executive search consultants have done a commendable job of recruiting a diverse field of CEO candidates when measured by race and gender. What is lacking is a broader concept of “diversity” to include new ways of thinking about transit.

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

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Categories: Transportation

Four Strikes and You’re Still Out: Oregon’s Ongoing Quest to Centralize Education Policy

By Steve Buckstein 

In 2015 Oregon state government killed off what should have been the last of three big education reform efforts since 1991. Each promised to solve the unsolvable: namely, figuring out how a one-size-fits-all public Kindergarten-through-high-school virtual monopoly system could educate all Oregon students and launch them onto a lifelong path of educational and career success.

First came the Education Act for the Twenty-First Century in 1991. With its Certificates of Initial and Advanced Mastery (CIM and CAM), it aimed to produce “the best educated citizens in the nation by the year 2000 and a work force equal to any in the world by the year 2010.” After it failed, the Quality Education Model arose in 1999 and is still limping along primarily to justify arguments for spending billions of additional taxpayer dollars to achieve the successes no such plan can deliver.

In 2012 Oregon made its third big reform effort. The Oregon Education Investment Board (OEIB), headed by its creator, Governor John Kitzhaber, promised to centralize education policy more than either of the two big reform efforts it followed. Kitzhaber concluded that those previous reforms simply didn’t control a broad enough swath of the education spectrum to work. Kindergarten through 12th grade simply wasn’t a grand enough vision. So, his OEIB effort sought to control everything from pre-Kindergarten through graduate school. But by 2015, “…the ease with which lawmakers…agreed to dismantle it reflects the widely shared view that the board did more wrong than right in its three-plus years of operation.…” This would have been the perfect time to adopt the “three strikes and you’re out” concept for Oregon’s education policy efforts.

The fatal flaw in all these reform efforts was that they relied on “smart” people centralizing control over educational policy and decision making. As I discussed in “Forced Participation: Public Education’s Fatal Flaw” and “The Oregon Education Investment Board: Top Down on Steroids,” centralizing control over education policy and forcing students to attend schools chosen for them by others are destined to fail because they fly in the face of one of America’s most cherished values: choice. Parents don’t appreciate politicians, bureaucrats, or experts making decisions for them about what is best for their children. Advise? Sure. Command? No way.

Today, rather than call a halt to this inevitable string of big reform failures, the Oregon legislature is embarking on what may turn into a fourth “impossible mission” to achieve student success in our public school system. Members of the Joint Committee on Student Success will spend this year traveling around the state asking everyone they meet what constitutes success in their communities. They will then return to the marble halls of the State Capitol and recommend that every school be mandated to do “what works” somewhere—of course, at a higher cost to taxpayers than they are paying today.

Rather than wait years to judge this latest big reform a failure, it is time to try another path: the school choice path. Of source, school choice is in conflict with the command-and-control efforts that are central to the big reform efforts Oregon has tried since 1991.

Instead, the school choice path allows students and their families to chose where and how they get the educational opportunities that our advanced society is now capable of providing. No longer would students be required to attend schools based on their ZIP codes. No longer would the tax dollars Oregonians pay to educate students be spent only in schools built by local governments and populated by public employees.

The school choice path recognizes that different children learn in different ways. They learn at different paces, too. And, they no longer need to be assigned to one brick building for years and years, only to be moved by the system into another building when they reach a certain age or grade level.

Today, most families, even low-income families, have the tools they need to explore the many educational options available for their children. They want to pick and choose from a wide assortment of options: from traditional neighborhood schools, to public charter schools, to private schools, to online learning, to home schooling.

The school choice path is being carved out in other states much faster than it is here in Oregon. The latest and most versatile school choice programs being enacted elsewhere are Education Savings Accounts. Unlike vouchers, which only let parents pay for private school tuition, ESA funds may also be used for other approved educational expenses, such as online learning programs, private tutoring, community college costs, and other customized learning services and materials.

Also, while voucher funds all go to private school tuition or are lost to the families, funds remaining in ESA accounts each year may be “rolled over” for use in subsequent years, even into college. This creates incentives for families to “shop” for the best educational experiences at the lowest cost, as well as incentives for schools and educational programs to price their services as low as possible.

On the school choice path, if a school fails students it doesn’t get more money, it gets less as students leave and take their allocated money with them to other schools. This is the path that finally will put students first.

Before Oregon’s fourth education reform strike inevitably fails and takes a further toll on students and taxpayers, let’s decide to take another path—the school choice path.

(This Commentary is an update of a 2012 Commentary, “Three Strikes and You’re Out: Replacing Top-Down Education Control with School Choice.”)

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

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Categories: Education

Oregon Can Help Young Oregonians Be “Future Ready” by Reducing Red Tape

By Kathryn Hickok

Governor Kate Brown opened this month’s legislative session with her State of the State speech February 5. She focused on the need for better education and workforce training for young Oregonians, so they can achieve the American Dream and raise families. To close the “skills gap” between workers and employment opportunities, she proposed a new job-training initiative called “Future Ready Oregon.” 

The governor’s vision is laudable, but what young Oregonians need most isn’t another state program. What often stands between young workers and moderate-income jobs is government red tape in the form of burdensome occupational licensing requirements and fees that can be significant barriers to entry. 

According to the Institute for Justice, “[l]icensing laws now guard entry into hundreds of occupations, including jobs that offer upward mobility to those of modest means….” In fact, Oregon ranks 8th in the nation in the number and expense of regulatory burdens and restricts numerous occupations licensed in few other states, such as farm labor contractors, bartenders, and locksmiths. 

Oregon could make it easier for job-seekers by reducing license and fee requirements for jobs that have little or no impact on public safety and by replacing some occupational licenses with less restrictive credentialing options. Reducing government red tape that stands between Oregonians and the jobs and training they need to climb the economic ladder would truly help young adults become “future ready.”

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

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Categories: Economic Opportunity

Climate Change Alarmists Can’t Get Their Story Straight

By John A. Charles, Jr.

Relying on computer models to predict the future has always been risky. Now we know it’s the basis of climate change securities fraud as well. 

The Competitive Enterprise Institute (CEI) recently wrote the Securities and Exchange Commission (SEC) that several California cities have claimed in lawsuits against oil and gas companies that those companies failed to disclose known climate risks associated with fossil fuel use. Yet those same cities have made bond offerings in which they tell potential investors that it is impossible to predict future risks of climate change. 

For example, San Francisco predicts in its lawsuit against the oil industry that it will be subjected to as much as 0.8 feet of additional sea level rise by 2030, with short-term costs of $500 million and long-term costs of $5 billion. Yet the City tells potential bond investors, “The City is unable to predict whether seal-level rise will occur.” 

The County of Santa Cruz claims in its fossil fuel lawsuit that there is “a 98% chance that the County experiences a devastating three-foot flood before the year 2050.” Meanwhile, in efforts to sell its own municipal bonds, the County reassures investors that it is unable to predict such floods. 

This confirms what has long been suspected: Climate change alarmists just make stuff up to scare the public.

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: Environment

If Health Care Becomes a “Fundamental Right,” Who Pays for It?

By Steve Buckstein

The Oregon House of Representatives has voted for HJR 203, which would add a section to the Oregon Constitution making health care a “fundamental right.” If passed by the Senate, voters will be asked in November to put this language in our Constitution:

“It is the obligation of the state to ensure that every resident of Oregon has access to cost-effective, medically appropriate and affordable health care as a fundamental right.” 

I object to defining health care as a right on a philosophical level, because in America rights don’t come from government; government protects our natural or God-given rights. But on a political level, I understand that government tries to grant such rights all the time.

A key argument against this proposal is the recognition that a “fundamental right” to health care would seem to trump everything else, since the Oregon Constitution doesn’t currently recognize any other “fundamental rights.” If the legislature tries to make good on this “fundamental right,” what happens when voters reject the new taxes needed to pay for it?

The unintended consequences of codifying health care as a “fundamental right” are almost endless. But that’s the way the game is played for now, and the next inning will play out in the Oregon Senate before the end of this short legislative session.

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

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Why Health Care Should Not Be Defined as a “Fundamental Right”

By Steve Buckstein

The Oregon House of Representatives has voted for HJR 203, which would add a section to the Oregon Constitution making health care a “fundamental right” of every Oregonian. If passed by the Senate, Oregon voters will be asked in November to put this language in our Constitution:

“It is the obligation of the state to ensure that every resident of Oregon has access to cost-effective, medically appropriate and affordable health care as a fundamental right.”

Cascade Policy Institute board member Michael Barton, Ph.D. and I testified in opposition to earlier versions of this legislation. Dr. Barton gave us a history and philosophy lesson, explaining how the American government was founded on the principle that government does not grant rights, it simply protects our inalienable rights such as those to life, liberty and the pursuit of happiness. He explained that our rights define what we are free to do without interference; they are not goods or services that others must provide for us. He expounded on these concepts in his 2006 Cascade Commentary, “Right to Health Care Violates Individual Rights.”

While I object to defining health care as a right on a philosophical level, on a political level I understand that government tries to grant such positive rights all the time. In this case, passing this constitutional amendment will make some people feel good. It may say that we care deeply about the uninsured; but it only gives intellectual lip service, if that, to the matter of future costs.

More and more people will say, “I have a right to not care about the costs, because I have an unqualified right to health care.”

Define health care as a fundamental right, and cost control will go out the window. Witness Oregon’s public school system, where education is supposedly “free” and yet taxpayers are asked to pay more and more for little (if any) improvement in real quality. As in education, health care innovation will become mired in bureaucratic process.

And who will have the task of controlling the economics? Is the Oregon legislature going to assume responsibility for that? An elegantly composed commission? A superhuman future governor? Or do we assume private insurance companies will simply figure it out?

A key argument against this proposal is the recognition that a “fundamental right” to health care would seem to trump everything else in the Oregon Constitution. If the legislature comes up with a plan to make good on this “fundamental right,” what happens when voters reject the new taxes needed to pay for it?

Since neither education, transportation, criminal justice, nor any other state government service is defined as a “fundamental right” in our Constitution, then funding for these services might be cannibalized to fund the one “fundamental right” in that document, health care. But voters won’t be presented with this reality when marking their ballots in November. This potential clash of essential services may make for strange bedfellows in future election battles. Will the teachers union, for example, want to lose funding to the health care providers?

The unintended consequences of this proposal are almost endless. But that’s the way the game is played for now, and the next inning will play out in the Oregon Senate before the end of this short legislative session. Stay tuned….

(This article is an update on a legislative post, published here, regarding an earlier version of this legislation which was considered in 2008.)

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

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Categories: Healthcare

Testimony on HB 4001/SB 1507 Regarding Energy Rationing for Environmental Quality

Testimony of John A. Charles, Jr.

President & CEO, Cascade Policy Institute

 Regarding HB 4001/SB 1507

February 7, 2018

Members of the Committee: I have spent the last 45 years of my life promoting environmental quality. I began my career working for the Environmental Defense Fund, a group that was an early innovator in market-based mechanisms. From 1980 through 1996 I was CEO of Oregon Environmental Council, where I helped pass dozens of environmental laws. Since 1997 I have worked for Cascade Policy Institute, promoting concepts such as congestion pricing of roads.

If I thought that HB 4001 and SB 1507 could deliver significant pollution reductions at reasonable cost I would support them, but they will not. To summarize the problem in one sentence, the bills require Oregonians to pay a significant tax that will be certain, immediate, and local; for benefits that are speculative, long-term, and global.

This stands in sharp contrast to environmental policies such as drinking water regulations. Provision of safe drinking water does have a major cost, but the benefits are substantial and they accrue 100% to those who pay. Oregonians are quite willing to bear the expense of such programs because they demonstrably make us all better off. This will never be the case with carbon dioxide regulation.

Moreover, even assuming that reducing CO2 has some local benefit, the relevant trends are already moving in the right direction. According to the most recent legislative report from the Oregon Global Warming Commission, the “carbon intensity” of Oregon’s economy – that is, greenhouse gas emissions/unit of state GDP – dropped 64% from 1990 through 2015. This is a spectacular achievement, and it is driven almost entirely by market forces.

Last week the Environmental Protection Agency released its latest update of automobile emissions trends for carbon dioxide. The report shows that CO2 emissions per mile for all motor vehicles sold in 2017 were the lowest since the agency began collecting data in 1975.

For truck SUVs, the reduction since 1975 was 50%. For minivans it was 51%. For standard passenger cars it was 55%. Almost miraculously, automakers have produced the cleanest cars in history while also making them safer and more pleasant to drive than the 1975 models.

There is no crisis in Oregon regarding CO2 emissions. The trends are positive and long-term. This is a case where you should simply “do no harm” by staying out of the way.

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: Testimony

For Green Activists, the Cleanest Cars in History Are Bad News

By John A. Charles, Jr.

The Oregon Legislature convened again this week. A top priority for some officials is SB 1507,

which would create an energy rationing program that likely would increase the cost of gasoline to more than $7 dollars per gallon by 2035. This is being promoted as a means of reducing carbon dioxide, which some people think is a pollutant.

Coincidentally, the Environmental Protection Agency just released its latest update of automobile emissions trends for carbon dioxide. The report shows that CO2 emissions per mile for all motor vehicles sold in 2017 were the lowest since the agency began collecting data in 1975.

For truck SUVs, the reduction since 1975 was 50%. For minivans it was 51%. For standard passenger cars it was 55%. Almost miraculously, automakers have produced the cleanest cars in history while also making them much safer and more pleasant to drive than the 1975 models.

One would think that environmental advocates would be pleased with this success story, but good news is actually bad news for activists. They can only pass onerous legislation when everyone thinks we have a crisis.

We don’t have a crisis, and we don’t need this bill.

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

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What’s at the Root of Oregon’s Education Problems? (Steve Jobs Already Told Us the Answer)

By Steve Buckstein

The Oregon legislature will embark on an “impossible mission” to achieve student success in our public school system. Members of the Joint Committee on Student Success will travel the state this year, asking everyone they meet what constitutes success in their communities. They then will return to the marble halls of the State Capitol and recommend that every school be mandated to do “what works” somewhere—of course, at a higher cost to taxpayers than they’re already paying.

Read the rest of the article here.

 

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

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Categories: Education

Oregon Parents Deserve to Be the Voice for Kids’ Education Options

By Bobbie Jager

For the second year in a row, Oregon has reported the third-lowest graduation rate in the country. With a four-year adjusted public high school graduation rate of 74.8% (2015-16), Oregon only beats Nevada and New Mexico, according to the National Center for Education Statistics.

The typical response to this kind of bad news is for teachers unions and legislators to claim that taxpayers are “underfunding” public schools; and that’s why so many kids don’t make it to graduation. But Oregon already spends more on K-12 education than 33 other states. According to the National Education Association’s Rankings & Estimates report for 2016 and 2017, revenue per Oregon student in Average Daily Attendance is nearly $14,000, including local, state, and federal funding. That puts Oregon more than four percent above the national average in school spending.

Read the rest of the article here.

 

Bobbie Jager, Oregon’s 2012 “Mother of the Year,” is a parental choice advocate and the School Choice Outreach Coordinator for the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article was originally published by the Pamplin Media Group and appeared in The Portland Tribune on January 25, 2018.

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Categories: Education

School Choice Is More Than “Just Choosing a Different Brick Building”

By Kathryn Hickok

This week is National School Choice Week, the world’s largest celebration of educational choice. Held nationwide every January, the Week raises awareness about the K-12 possibilities available to children and families, while spotlighting the benefits of parental choice. More than 313 events will take place in Oregon alone, sponsored by private schools, charter schools, and other organizations. The Week is nonpartisan and nonpolitical.

Read the rest of the article here.

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

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Categories: Education

Innovative Technology Can Reduce Tobacco Harm and Save Oregonians Tax Dollars

By Steve Buckstein

To eventually end cigarette use in America, rather than rely on tobacco taxes, public service announcements, and restrictions on cigarette use, we might look toward innovation. New technologies hold out the promise of ending deadly cigarette use altogether. The biggest impediment standing in the way is the federal government.

That might soon change, however, as the Federal Food and Drug Administration (FDA) is considering approval of a tobacco product that relies on battery-powered heat, instead of fire, to deliver aerosolized nicotine-containing vapor. The distinction is important because, as the late Professor Michael Russell wrote, “people smoke for the nicotine but they die from the tar.”

Traditional options for quitting tobacco use have included nicotine patches, lozenges, and gum, which have relatively low success rates. New “heat-not-burn” technology is proving promising at getting smokers around the world to quit cigarettes in favor of heated tobacco products known as IQOS, sometimes referred to as “I Quit Ordinary Cigarettes.” Using an electronic device to heat a small piece of tobacco without fire or combustion is the purest form of an electronic cigarette. Currently available in nearly three-dozen countries—including Italy, Switzerland, Japan, Germany, and Canada—these products have helped nearly four million adults quit smoking.

According to a recent article in The Economist, “Britain’s Committee on Toxicity recently found that people using heat-not-burn products are exposed to between 50% and 90% fewer ‘harmful and potentially harmful’ compounds compared with conventional cigarettes.”

Such harm reduction could save not only many American lives, but billions of American tax dollars. Between Medicaid, Medicare, and Veterans Affairs, conventional cigarette use may cost American taxpayers more than $100 billion per year.

The Oregon Health Authority (OHA) estimates that some 7,000 people die annually from cigarette use; and harm reduction could help reduce the costs associated with our growing Medicaid program, known as The Oregon Health Plan. Thirty-eight percent of adults on Medicaid smoke cigarettes—more than three times the percentage of Oregonians insured by other providers who smoke. Also, the OHA believes the cost to taxpayers for tobacco-related Medicaid health care is substantial.

If Oregon smokers transitioned to less harmful alternatives, whether by quitting entirely or by switching to a product like IQOS, that would be a win for both public health and public tax expenditures.

In 2009, President Obama signed the Family Smoking Prevention and Tobacco Control Act, a law that gave the FDA authority to regulate tobacco products in the United States. It went further and created a process for introducing new tobacco products that might be less harmful than cigarettes and even created a process for obtaining FDA approval to market those products as such. Permission to sell IQOS and market it as less harmful to adults is what the product’s makers are currently seeking from the FDA.

The FDA has noted that modified-risk tobacco product provisions “may be valuable tools in the effort to promote public health by reducing the morbidity and mortality associated with tobacco use, particularly if companies take advantage of these provisions by making bold, innovative product changes that substantially reduce, or even eliminate altogether, either the toxicity or addictiveness of tobacco products, or both.”

The Tobacco Products Scientific Advisory Committee will meet January 24 to discuss IQOS and make a recommendation to the FDA regarding approval of the product. It should examine the science and consider the importance of providing adult smokers with an alternative to cigarettes, because innovation and consumer choice may prove to be a great incentive to finally quit. The rest of the world has already embraced this technology, and the FDA should also.

Steve Buckstein is Senior Policy Analyst and Founder at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in The Bend Bulletin on January 17, 2018.

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Road Policy Belongs to Those Who Show Up

By John A. Charles, Jr.

The Oregon Department of Transportation is hosting three Open Houses this month to discuss the possibility of changing how several local highways are managed.

Currently, we finance roads through gasoline taxes. However, a growing number of cars use little or no gasoline. Therefore, the legislature is requiring ODOT to study an alternative finance mechanism for I-205 and part of I-5 that would rely on user fees collected electronically.

In addition, those fees would vary in price depending on the time of day, direction of travel, and day of the week.

While this may sound punitive, the fact is that a single highway lane can move anywhere from 700 vehicles per lane, per hour, to more than 2,000 vehicles, depending on the density of traffic. At times of hyper-congestion, throughput drops dramatically as we sit in stop-and-go conditions.

An alternative would be to use variable toll rates to even out demand, thereby tripling the number of cars per lane while averaging about 45 miles per hour.

Is it a good idea to make our highways three times more productive through congestion pricing? That’s what the Open Houses will explore. Interested motorists should attend, because policy belongs to those who show up.

 

This is the schedule for ODOT’s community conversations, according to the department’s press release:

  • Tuesday, Jan. 23, 4:30 to 7:30 p.m., Clackamas Town Center Community Room (Level 1 near Buckle and across from Macy’s), 12000 S.E. 82nd Avenue, Happy Valley
  • Saturday, Jan. 27, 10 a.m. to 1 p.m., Lloyd Center (Level 1 between Ross and the ice rink), 2201 Lloyd Center, Portland
  • Tuesday, Jan. 30, 4:30 to 7:30 p.m., Vancouver Community Library, 901 C Street, Vancouver.
  • 17 to Feb. 5, the Online Open House will be active at odotvaluepricing.org. The public can see materials, view video recordings of the project Policy Advisory Committee meetings and leave comments for the project team.

 

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

Cascade Policy Institute Celebrates National School Choice Week 2018

January 16, 2018 

For Immediate Release 

Media Contact:
Steve Buckstein

503-242-0900

Oregonians will participate in nation’s largest celebration of education reform

Portland, Ore. – Cascade Policy Institute will hold a special event in celebration of National School Choice Week 2018, organizers announced today. Cascade’s January 24 “Policy Picnic” roundtable will highlight the diversity of education options for K-12 students and call for expanded access to school choice for all Oregon children.

Read the rest of the article here.

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Categories: Education

Poll Shows Voters Are Smarter Than Politicians Think

By John A. Charles, Jr.

In November the regional government, Metro, released the results of a new public opinion poll of 800 registered voters living in the tri-county region.

One of the questions was, “In a few words of your own, what is the most important change that could be made to improve the quality of life in the Portland region?”

The top three responses were: dealing with the homeless/poverty (25%); affordable housing (17%); and traffic congestion (14%).

Environmental issues tied for last place (2%), and global warming did not even make the list.

This is roughly the opposite of what we frequently hear from many of the political talking heads. Listening to them, one would think that environmental Armageddon is upon us, especially because Donald Trump is President.

For instance, the top legislative priority for Senator Michael Dembrow (D-Portland), who chairs the Senate Environment Committee, is a bill he hopes to pass in early 2018 that would create a $700 million/year tax on carbon dioxide by establishing a convoluted industrial regulatory program. The ambient environment would not be improved one bit by this tax, but all of our basic necessities—food, clothing, shelter, and energy—would become more expensive.

Sen. Dembrow’s biggest supporter on this issue is Governor Kate Brown, who recently flew to Bonn, Germany to hobnob with celebrities at a United Nations conference on global warming. The two of them are convinced that if they can make energy more expensive, we’ll all use less of it and the world will be saved from “global warming.”

Most voters intuitively know that this is a scam. The term “global warming” doesn’t even have a useful definition. Voters know that the pain-versus-gain equation of global warming taxes is heavily one-sided: the “benefits” of reducing fossil fuel use are highly speculative (and may not exist at all); long-term (potentially thousands of years away); and global in nature. Yet the costs will be known, immediate, and local.

As the Metro poll shows, there is very little grassroots support for this kind of punishment.

It’s not surprising that homelessness, housing, and traffic congestion rank as the top three issues in the Metro poll because these are problems most of us confront daily. They are also things we can take action on.

Unfortunately, government itself has caused much of the mess, so voters will need to think carefully before signing on to more tax-and-spend programs. Almost every time regulators intervene in real estate markets, the result is some combination of less housing production and higher housing prices.

Take the most obvious intervention: urban growth boundaries. Since 1980, the population of the Portland metro region has increased by about 78%, but the available land supply for housing has only gone up by 10%. Making buildable land artificially scarce and thus more expensive is not a winning strategy if you’re trying to provide more housing.

But lack of land is just the start. After you add in ubiquitous farm and forestland zoning, extortionist system development charges, tree protection ordinances, inclusionary zoning requirements, prevailing wage rules on public housing projects, and numerous other interventions, the result is that we have a serious shortage of housing.

Even the government is trapped in government regulation. Last spring the Portland City Council approved spending $3.7 million to purchase a strip club on SE Powell Boulevard near Cleveland High School. The City plans to tear down the building and build 200 to 300 units of low-income public housing on the 50,000-square-foot property. City officials have admitted that it will take two years just to obtain the necessary permits for the redevelopment.

If it takes this long to get the permits for one of Mayor Ted Wheeler’s top priorities, imagine the delays facing a private sector developer.

The housing woes in such cities as Portland, San Francisco, New York, and Seattle are mostly self-inflicted. Housing supply is lagging demand because we’ve created so many barriers to housing construction. Removing those barriers should be a top priority for the state legislature when it convenes in February.

Global warming legislation does not even deserve a hearing.

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 by the Pamplin Media Group and appeared in The Portland Tribune.

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Measure 101 Deserves Your No Vote

By Steve Buckstein

By now you should have your ballot for the January 23rd statewide election asking you to vote Yes or No on Measure 101. It would let Oregon state government raise some additional $300 million this biennium on health care after it has already misspent several times that amount in recent years.

In addition to wasting $300 million on the Cover Oregon website that failed to sign up one person for health insurance, the state has been paying $280 million a year for nearly 55,000 Medicaid recipients recently found to no longer qualify or who failed to respond to an eligibility check. The state also overpaid health care organizations some $74 million over three years to provide expanded Medicaid coverage to some Oregonians.

More recently we learned that the state may have “erroneously paid, allocated, inaccurately recorded or over-claimed $112.4 million in health care funds.”

Measure 101 will tax some hospitals and add a tax to the health care premiums of many Oregonians. It will raise the cost of health care as these taxes are passed on to consumers and patients. These taxes are unfair, hitting some while exempting others. Furthermore, based on the recent failures of the state to spend health care monies properly, there is no assurance that this new money will be spent properly, either.

Measure 101 deserves your No vote.

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

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National School Choice Week Celebrates Diversity in K-12 Education

By Kathryn Hickok

National School Choice Week is the world’s largest celebration of educational options for all children. Held nationwide every January, National School Choice Week raises awareness about the K-12 education options available to children and families, while spotlighting the benefits of school choice. This year’s celebration will be January 21-27.

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Categories: Education

Give Oregon Kids the Power of Educational Choice, Like Kids in Florida

By Kathryn Hickok

Denisha Merriweather failed third grade twice. Today, she is finishing her master’s degree, thanks to Florida’s Tax Credit Scholarship Program. The key to Denisha’s success was her godmother’s ability to remove Denisha from a school that was failing her, and to send her to the school that provided her with the support she needed.

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Categories: Education
Taxpayers Aren’t at Fault for Oregon’s Abysmal Graduation Rate

Taxpayers Aren’t at Fault for Oregon’s Abysmal Graduation Rate

By Kathryn Hickok

Willamette Week recently reported that, sadly, Oregon has the third-lowest graduation rate in the country, according to the National Center for Education Statistics. Oregon’s four-year adjusted public high school graduation rate was 74.8% in 2015-16. Only Nevada and New Mexico have lower graduation rates.

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dont allow skimming of medicaid funds for unions

Don’t Allow the Skimming of Medicaid Funds for Unions

By Aaron Withe and Steve Buckstein

Each year, hundreds of millions of dollars are skimmed off the top of Medicaid payments intended for some of society’s most vulnerable citizens and used for purposes never envisioned by the program’s supporters. Most of us can agree this is wrong.

After all, the whole point of Medicaid is to help low-income individuals—particularly the elderly and disabled—whose lives, dignity and comfort all benefit from the program.

Unfortunately, many politicians don’t see it this way. Oregon is one of nine states that allow labor unions to get a slice of the Medicaid pie by skimming union dues from the Medicaid paychecks of home-based caregivers.

The home-care program allows Medicaid-eligible individuals to avoid institutionalization by receiving daily living assistance in their own homes. In Oregon, Medicaid clients employ approximately 30,000 home-care and personal-support workers (HC/PSWs)—often their own family members—who are compensated through the program for providing basic assistance.

In 2000, however, the Service Employees International Union (SEIU) successfully inserted itself into that arrangement.

It funded a ballot measure that allowed HC/PSWs to be unionized on the shaky logic that their Medicaid payments made them “public employees.” As a result, the state deducts an average of $500 per year in SEIU dues from each caregiver’s Medicaid payments and sends it to SEIU before the assistance money ever reaches the caregiver.

In states where this is happening, caregivers and their clients are understandably upset. Because unions have a limited role to play between family members in a home-based setting, many feel the idea of paying for traditional union services just doesn’t make sense.

Some have pursued legal action to prevent the worst of the dues-skimming abuses. In 2014, the U.S. Supreme Court took up the Harris family’s case and ruled that “partial-public employees” like HC/PSWs could no longer be forced to pay a union against their will.

But it hasn’t been enough. Although the Harris decision technically allows HC/PSWs to make their own choice about whether to pay union dues, Gov. Kate Brown’s complicit administration has continued skimming dues from the Medicaid payments, making it easy for SEIU to keep thousands of caregivers paying dues against their will.

Kyle Osburn, a Portland resident who cares for his disabled son, was one such caregiver. Kyle never signed up for SEIU membership, but the state confiscated dues from his Medicaid checks anyway. Others, like Diana Berman, tried to cancel their union payments after Harris but were told they weren’t allowed to resign until an arbitrary 15-day annual window.

Thousands of caregivers in Oregon remain victimized by the SEIU’s dues-skimming scheme.

And Oregon isn’t alone. At least eight other states deduct dues from Medicaid checks and divert the money into union bank accounts. This practice inevitably goes hand-in-hand with shocking reports of what unions will do to obtain “authorization” for such payments, including forging caregivers’ signatures and pressuring them to sign union cards.

It’s clear federal action is needed to protect the integrity of Medicaid, its beneficiaries and caregivers nationwide.

The U.S. Department of Health and Human Services should immediately adopt administrative rules to ensure that Medicaid dollars are not misdirected toward union dues. Congress could also make it illegal to skim Medicaid funds in this way.

Either move would protect caregivers’ freedom to join a union if they chose to. Preventing state governments from deducting dues from Medicaid checks would make it far easier for caregivers to exercise their rights under Harris, but would in no way prevent caregivers from joining a union and paying dues on their own.

Medicaid dollars should be preserved for improving the lives of disabled, elderly and other Americans in need. They shouldn’t be diverted to special interest groups that often use those dollars for political gain, like propping up the politicians who skim dues for them in the first place.

Federal policymakers should take action now.

Aaron Withe is the Oregon director of the Freedom Foundation, a think and action tank in Salem. Steve Buckstein is Senior Policy Analyst and Founder of Cascade Policy Institute, Oregon’s Portland-based free market public policy research organization. This article originally appeared in The Bend Bulletin on December 8, 2017.

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Winning Is Not the Only Thing That Matters

By John A. Charles, Jr.

Last Friday the Republican-controlled Senate passed a 479-page tax reform bill in the dark of night without holding any public hearings.

Moreover, the bill itself was not in final form during the floor debate. The legislation was amended on the fly with handwritten changes. The only way to know what the Senate did was to read the bill after it had been voted on.

The same tactic was used by Democrats in 2016, when the Oregon Legislature passed a complex energy bill that was drafted behind closed doors and passed with almost no public input, in the space of three weeks. Not a single legislator understood what the bill actually would do because many sections, including those dealing with billions of dollars of utility assets, were never discussed.

This kind of behavior is a disgrace. The process is more important than any particular bill. If we tolerate mob rule just because “our team” is in charge, it guarantees that we will be treated the same way when the “other team” has power.

Federal tax reform has been needed for decades. There is no crisis. Congress should slow down, invite public input, and make sure the legislation is actually worth passing.

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: Tax and Budget
Oregon Ranks 8th Worst in Regulatory Burden on Lower-Income Occupations

Oregon Ranks 8th Worst in Regulatory Burden on Lower-Income Occupations

By Kathryn Hickok

Oregon ranks 8th in the nation in “burdensome” occupational licensing laws, according to the Institute for Justice’s new report License to Work. The report examines the regulatory burden of state licenses and fees on 102 lower-income occupations. Oregon is also the “8th most broadly and onerously licensed state,” requiring licenses for occupations that most other states don’t.

According to the authors of License to Work, “more Americans than ever must get a government permission slip before they can earn an honest living….Licensing laws now guard entry into hundreds of occupations, including jobs that offer upward mobility to those of modest means, such as cosmetologist, auctioneer, athletic trainer and landscape contractor. Yet research provides scant evidence that licensing does what it is supposed to do—raise the quality of services and protect consumers. Instead, licensing laws often protect those who already have licenses from competition, keeping newcomers out and prices high.”

The Wall Street Journal editorial board pointed out that “stiff licensing requirements are often prohibitive for America’s working poor, keeping them trapped in low-wage, low-skill jobs.” Oregon could make it much easier for job-seekers and potential entrepreneurs to make an honest living by reducing license and fee requirements for occupations that have little to no impact on public safety, and by replacing some occupational licenses with less restrictive credentialing options.

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

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Categories: Economic Opportunity
Income

Straightforward policy reforms can reverse Oregon’s lower-than-average incomes and high cost of living

By Eric Fruits, Ph.D.

Oregon’s economy seems to be chugging along, yet many of us feel like we’re losing steam. Employment and incomes are up since last year, but when we compare Oregon with other states, things don’t look so good here.

Oregon’s median family income is about the same as the national average. But according to the Census Bureau, we are 14 percent below our northern neighbor. Oregon’s per capita personal income—another measure—is more than 8 percent lower than the national average. Oregon is not a rich state.

At the same time, according to one widely used survey, Oregon’s cost of living is about 25 percent higher than the national average and 17 percent higher than in Washington. Oregon’s Consumer Price Index has increased 20 percent since 2007, while prices nationwide only increased 16 percent. Much of this disparity is due to Oregon’s increased cost of housing. In addition, prices for food, gasoline, and health care are also higher here.

It’s expensive to live in our state. When adjusting incomes for the cost of living, Oregon goes from the middle of the pack to the bottom of the bunch. Accounting for purchasing power, Oregon’s median family income is 20 percent lower than the nation and 27 percent lower than Washington’s.

While our incomes are lower, they are more evenly distributed. By various measures, Oregon has less income inequality than most other states. Our top one percent of income earners has a smaller share of total incomes, and our poverty rate is lower than the national average.

On the one hand, our state does not have enough deep pockets to feed soak-the-rich tax policies. On the other hand, our below-average incomes mean we don’t have the resources to feed soak-the-middle-class tax policies like the health insurance and provider taxes that a “no” vote on Measure 101 in the upcoming January 23 election would repeal.

It also means we don’t have the resources to feed soak-the-poor tax policies like the carbon tax the legislature is almost certain to take up next February.

Regulations regarding paid time off, employee scheduling, and occupational licensing increase the cost of employing people without directly adding money to workers’ paychecks. The result is reduced employment and lower wages.

Oregon’s land use laws—as well as regulations regarding design review, historic preservation, and inclusionary zoning—have stifled residential development. Demand for housing is outpacing construction, driving up housing prices. The Oregon Office of Economic Analysis estimates that over the past 10 years, the Portland area has underbuilt by 27,000 units.

The application of Oregon’s land use laws has also limited commercial development. While local areas are supposed have a 20-year supply of vacant industrial land, too often much of that land is not development-ready. Modern companies operate in globally competitive markets and cannot wait for a years-long planning process. Instead of waiting, they locate and expand elsewhere, taking jobs with them.

Anyone who drives through the Portland area knows that congestion has worsened over the past few years. It affects more than just commuters. The Oregon Department of Transportation concludes that congestion is affecting freight traffic and businesses throughout the state, threatening their national and international competitiveness. Higher transportation costs result in higher prices for consumers.

With the decline in water traffic in the Port of Portland and increased railway congestion, highway traffic is a key transportation mode for freight. As highway conditions worsen, Oregon is more likely to get crossed off the list of places to do business, resulting in a loss of potential middle-income jobs.

A recent study of income and cost-of-living data between states concludes: “Cost of living is clearly impacted by state policies [such as those noted above].” Oregon can move from being a poor state to a rich state through straightforward policy reforms. These must address our high cost of living as well as our lower incomes. Reforms to speed up and expand real estate development will relieve housing price pressures and attract employers. Construction to relieve congestion will improve our competitiveness while reducing roadway accidents and alleviating commuter stress. Labor market reforms will increase employment and boost Oregonians’ paychecks.

Do these things, and Oregon can meet its promise to all of us.

Eric Fruits, Ph.D. is an Oregon-based economist, adjunct professor at Portland State University, and Academic Advisor for Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article was originally published by the Pamplin Media Group and appeared in the Gresham Outlook and The Portland Tribune.

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This Thanksgiving, Are You Part of the One Percent?

This Thanksgiving, Are You Part of the One Percent?

By Steve Buckstein

You may not have learned this in school, but prior to the 1623 Thanksgiving celebration in the Plymouth colony it had the equivalent of a modern-day socialist economy. Land and crops were held in common; and food was distributed based on need, not on production. Able young men were often unwilling to work hard for the benefit of other men’s families.

After several disastrous harvests, each household was given its own plot of land. They could keep what they produced, or trade their crops for things they needed. Private property and a free market economy resulted in a truly bountiful harvest in 1623 and beyond.

Today, most Americans are actually rich, thanks in large part to retaining those private property and free market traditions. Perhaps not rich in relation to other Americans, but rich in relation to people around the world.

If your family earns more than $32,400 per year, you are in the top one percent of all income earners worldwide. Recently, half of all American families earned more than $59,039, and the average family earned $73,298. Even the lowest family income group by race, African Americans, had a median income of $39,490. Looked at this way, most Americans are part of the world’s one percent.

Things are far from perfect, but most of us have a lot to be thankful for this Thanksgiving.

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

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Categories: Economic Opportunity
Vote NO on Health Care Tax Measure 101

Vote NO on Health Care Tax Measure 101

By Steve Buckstein

Oregonians will have the opportunity in January to vote No on Ballot Measure 101, thus rejecting new taxes that the state legislature and the governor tried to impose on health insurance premiums and hospital services. While these and other taxes are meant to shore up state funding of Medicaid services to low-income Oregonians, it has become clear that the state has been misspending such funds for years.

Voters’ Pamphlet statements for and against Measure 101 were due by November 13, and Cascade Policy Institute submitted an Argument in Opposition which you can read below. In it, we noted three ways that the state has mismanaged over $650 million in health care funds entrusted to it by state and federal taxpayers. But, that may be far from the final number.

On November 17, four days after the Voters’ Pamphlet deadline, Oregonians learned that the state may have “erroneously paid, allocated, inaccurately recorded or over-claimed $112.4 million in health care funds, according to a letter Oregon Health Authority (OHA) Director Pat Allen sent to Oregon Gov. Kate Brown. Allen also told state legislators that “the state was likely to see more processing problems come out of the state’s health agency.”

These revelations were too late for Cascade, or anyone else, to include in our Voters’ Pamphlet statements. So voters will need to keep up with all the reasons to vote No on Measure 101. More reasons may emerge when the Secretary of State releases an expected audit of the OHA by early December.

An early version of the Voters’ Pamphlet for Measure 101, including the full text of the Measure and Arguments in Favor and in Opposition can be found at the Secretary of State’s website.

Here is Cascade’s Argument in Opposition:

STOP NEW SALES TAXES ON HEALTH INSURANCE PREMIUMS
AND HOSPITAL SERVICES

Vote No on Measure 101.

Oregon state government has a long history of mismanaging “other people’s health care dollars,” including:

  • Wasting $300 million federal tax dollars building a website, Cover Oregon, that wasn’t able to sign up a single person for health insurance.
  • Paying $280 million a year for nearly 55,000 Medicaid recipients recently found to no longer qualify or who failed to respond to an eligibility check.
  • Overpaying health care organizations $74 million over three years to provide expanded Medicaid coverage to some Oregonians. The state initially only asked for $10 million of those overpayments back, and under political pressure eventually asked for the rest.

As one Oregon economist notes about the taxes in Measure 101:

“The law explicitly allows the new taxes on health insurance providers to be passed on to consumers. With these new taxes, that Silver ACA plan will cost about $625 more in 2019 than in 2018. It’s not just 40-year-olds who will get hit with the insurance tax. Nearly 12,000 college students…will pay the tax. Small group employers…will pay the new tax.

“Taxes on hospitals will raise the costs of care across the board….The cost of these taxes also will be passed on in the form of higher deductibles and premiums. Even if you don’t go to the hospital, you will be paying the hospital tax through higher insurance prices.”*

The cost of health care is already too expensive for many Oregonians. Don’t let the state add even more taxes onto services that are expensive enough already, especially when it has such a poor track record spending the health care tax money it already gets from us.

Say No to these new health care sales taxes.

Vote No on Measure 101.

*source: Health Care Tax Would Hurt Middle Class
at: CascadePolicy.org/Health-Care

(This information furnished by Steve Buckstein, Cascade Policy Institute.)

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

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Tolling People on to Portland’s Highways

Tolling People on to Portland’s Highways

By John A. Charles, Jr.

Earlier this year the state legislature passed a bill requiring the Oregon Transportation Commission (OTC) to apply for federal authorization to implement “value pricing” on two regional highways: I-205, and I-5 from the Washington border to the intersection with I-205. The OTC must apply by December 31, 2018.

Although value pricing may sound vague or somewhat ominous, motorists should be happy with this new policy. It has the potential to eliminate traffic congestion and create a revenue stream that will allow us to build the new highways and bridges that we need.

First, some background. “Value pricing” is a bureaucratic term for electronic tolling of highways where the toll rates vary based on the density of traffic. Usually, the rates change based on time of day, direction of travel, and day of the week. The rates are set to ensure 45 MPH driving conditions at all times of the day, hence the “value” offered to motorists.

There are many possible variations on this theme. In most cases, value pricing is used on new highway lanes, allowing drivers the option of staying in the unpriced, general purpose lanes. That probably will not be feasible in the Portland region because there is no room for an entire new network of priced lanes on I-5.

In some ways this is a blessing, because variable tolling will make our current lanes more productive. If priced properly, it’s possible that new lanes will not even be needed, saving us the expense of construction.

Value pricing is necessary because our current system cannot address congestion. Our highway network is an open access system, where each trip appears to be “free.” Of course, it’s not free—it’s being paid for by various back-door mechanisms such as motor fuel taxes, vehicle registration fees, and random federal grants. But we think it’s free, so during peak hours we see a “stampede” effect.

When too many people try to get on at the same time, per-lane throughput drops substantially. The carrying capacity for most highways is roughly 1,800 vehicles per-hour in each lane. At times of hyper-congestion, this can drop to 900 vehicles or fewer.

By using variable pricing, we can clear up the stampede and get per-lane travel back to 1,600 or 1,800 vehicles per-hour. In essence, value pricing allows us to “toll on” more people than we “toll off.”

The effect of this was seen recently when tolls on the Port Mann Bridge in Canada were removed on September 1. The Port Mann is a 10-lane bridge over the Fraser River near Vancouver. After tolls were removed, the result was a huge increase in congestion. One driver saw her daily commute increase by 25 minutes each way. She told a news reporter, “Absolutely, it’s terrible. It’s selfish but I want those tolls back on.”

In addition to the benefits of free-flow driving conditions, variable tolling will also create the dedicated revenue stream we need for future highway expansion. There is no doubt that we need several new bridges over the Columbia River, plus additional highway lanes elsewhere. Value pricing will tell us where to build, when to build, and who is willing to pay.

Fortunately, the Oregon Constitution does not allow toll revenues to be siphoned off for non-highway uses such as light rail construction. Therefore, money paid by motorists will benefit them directly.

The new law mandates value pricing on two specific highways but also authorizes the OTC to implement pricing anywhere else. Since the Portland highway network is an integrated system including I-84, I-5, I-405, HW 26, HW 217, and I-205, it would be better to implement value pricing region-wide to ensure that motorists get what they want: free-flow driving conditions, at all times of the day.

Most new highways being built around the world are using electronic tolling with variable rates. The new Oregon law is an opportunity for us to learn from that experience and to implement a Portland highway pricing system that truly delivers “value” for motorists.

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 originally published by the Pamplin Media Group and appeared in the Wilsonville Spokesman and The Portland Tribune.

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