Tag: Measure 26-210

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COVID-19 and New Business Taxes: Bayonetting the Wounded

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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Metro’s Housing Measure: Bad Policy, Terrible Timing

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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

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

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Ballot Measures with No Accountability Deserve a No Vote

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Rachel Dawson

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

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

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

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

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