Tag: payroll tax

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Metro’s Mission Creep

By Vlad Yurlov

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

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

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

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

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

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

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Pinocchio Politics on the November Ballot

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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Metro Pushes Transportation Bond While Acknowledging Serious Problems

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

By Vlad Yurlov

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Portland Politicians Suffer From the Edifice Complex

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Metro’s Broken Promise of Racial Equity

By Helen Doran

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

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

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

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

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

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

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

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

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

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

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Metro’s Transportation Package: Progressive Politics Mask Regressive Tax

By Eric Fruits, Ph.D.

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

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

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

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

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

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

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

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

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

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

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

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