Tag: small business

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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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Metro’s Housing Philosophy is Political, Not Practical

By Miranda Bonifield

Metro’s attempts to provide low-income public housing since last year’s $653 million bond measure passed have been stymied by the same problem encountered by cities from Portland to Stockholm: Metro’s preferred way of building housing is too expensive to be sustainable.

But instead of addressing the overwhelming costs of its projects, Metro is doubling down on ineffective practices which neither accomplish its goals nor increase the supply of so-called affordable housing.

For instance, Metro’s interest in “leading with racial equity” means they prioritize firms certified to be owned by minorities, women, or “emerging small businesses.” Members of Metro’s housing bond oversight committee recounted multiple stories in early meetings of contractors who circumvent the certification’s requirements by outsourcing their government work to other, non-certified contractors—rendering the certification nearly meaningless.

A local contractor pointed out that small businesses with limited capital avoid government contracts because the government doesn’t pay on time and requires mountains of time-consuming paperwork. Cutting red tape out of the process could improve the chances of small businesses bidding for contracts. But instead of emphasizing these practical considerations, the committee recommended local governments increase the number of meaninglessly certified contractors they hire. That’s not helping our community– it’s just virtue signaling.

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

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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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