The Ghost of Willis Hawley, Good Intentions and Trade Tariffs

Donald Trump said he would tear up trade deals and negotiate new ones that put America first. He might revisit what happened when an Oregon congressman had the same good intention, but not so great an outcome.

Donald Trump said he would tear up trade deals and negotiate new ones that put America first. He might revisit what happened when an Oregon congressman had the same good intention, but not so great an outcome.

House Speaker Tina Kotek will have a featured place at this week’s Democratic National Convention. Former Oregon Congressman Willis Hawley played a key role at the Republican National Convention.

Kotek, a Democrat, can be expected to talk about inclusion, a higher minimum wage, family leave and free college education. Hawley, a Republican, provided the RNC with an example of what can happen when America erects trade walls.

Of course, Hawley wasn’t actually in Cleveland for the convention. He represented Oregon in Congress from 1907 to 1933 and died in 1941. But his ghost was there.

Former Oregon Congressman Willis Hawley lost his bid for re-election in 1932 after the bill he passed quadrupling U.S. trade tariffs deepened the Great Depression.

Former Oregon Congressman Willis Hawley lost his bid for re-election in 1932 after the bill he passed quadrupling U.S. trade tariffs deepened the Great Depression.

Hawley’s legacy is the Smoot-Hawley Tariff Act, which was passed in 1930 and triggered a trade war that most economists credit for deepening the Great Depression and Henry Ford called “economic stupidity." 

Senator Reed Smoot was a Republican senator from Utah and chaired the Senate Finance Committee. Hawley, who had been president of Willamette University where he taught history and economics, was chairman of the House Ways and Means Committee. The first signs of a global depression had emerged in 1929 as countries trying to rebound from the devastation of World War I lacked currency reserves and gold, so relied heavily on trade to pay their bills. Farmers and workers felt threatened.

The United States had passed a tariff bill in 1922. The League of Nations attempted as late as 1928 to persuade nations to end tariffs, to no avail. Smoot and Hawley pressed their tariff bill in the name of protecting U.S. farmers and workers from unfair foreign trade.

President Herbert Hoover agreed with higher tariffs on farm commodities, but wanted lower tariffs for manufactured goods. Hoover called the Smoot-Hawley Tariff Act, which raised tariffs on farm and manufactured goods, “vicious, extortionate and obnoxious.” But he declined to veto it, despite desperate pleas from 1,028 economists who signed a petition and many industrial leaders.

Oregon House Speaker Tina Kotek will speak at the Democratic National Convention about how to move a liberal agenda at the state level.

Oregon House Speaker Tina Kotek will speak at the Democratic National Convention about how to move a liberal agenda at the state level.

The first country to retaliate was America’s most loyal trading partner at the time, Canada, which directed more of its commercial attention to Great Britain. European nations looked to each other to bolster trading relationships as tariffs on more than 3,200 U.S. products quadrupled.

The result: U.S imports dropped 66 percent and exports declined 61 percent. Unemployment rose from 8 percent when the tariffs were imposed to 16 percent by 1931.

By 1932, the Depression was in full swing. Workers were thrown out of jobs. Farmers struggled and many lost their farms. Meanwhile, Smoot and Hawley were defeated in their re-election bids.

This chart shows the strong relationship to Gross Domestic Product and international trade. When trade drops, so does GDP, forcing job reductions, business closures and consumer belt-tightening.

This chart shows the strong relationship to Gross Domestic Product and international trade. When trade drops, so does GDP, forcing job reductions, business closures and consumer belt-tightening.

Generally speaking, people think of globalization rising in the late 20th century. The Smoot-Hawley Tariff Act is evidence that globalization was a significant economic factor much earlier.

Trump and Democrat Bernie Sanders didn’t exactly call for trade walls in their presidential primary campaigns, but they argued that existing multi-national trade deals are bad for American workers. Sanders focused his attention on not allowing the Trans-Pacific Partnership go into effect. Trump went further and said he would tear up previous trade deals such as the North American Free Trade Act (NAFTA) and renegotiate them, putting American interests first. While possibly unintended, those actions could trigger the eruption of a trade war, adding to the people and regions of the country suffering most from economic dislocation.

Oregon and other West Coast states have benefitted economically from international trade. The Port of Portland is known as an “export” port, with much of its outgoing cargo in the form of bulk agricultural commodities. Oregon manufacturing has declined, but not disappeared because of productivity advances by basic industries and diversification into high tech manufacturing. Consequently, Oregon’s political landscape is more favorable to international trade and trade deals, such as the TPP.

No one from the Oregon delegation to the RNC was likely to hold up a sign saying “Willis Hawley was our hero.” Maybe no one in the delegation ever heard of Willis Hawley. It’s likely Trump doesn’t know who Hawley is.

Too bad, though, because Hawley was a politician who thought he was helping everyday Oregonians and Americans, but wound up compounding their already bad situation so much that he lost his job and slipped into historical obscurity. He might have been a useful delegate at the convention to remind his colleagues that good intentions don’t always equate to great outcomes.

Gary Conkling is president and co-founder of CFM Strategic Communications, and he leads the firm's PR practice, specializing in crisis communications. He is a former journalist, who later worked on Capitol Hill and represented a major Oregon company. But most importantly, he’s a die-hard Ducks fan. You can reach Gary at garyc@cfmpdx.com and you can follow him on Twitter at @GaryConkling.

Trump Tackling the Left Coast

As Republicans open their national convention in Cleveland, Donald Trump has pledged to put some surprising states in play in November, including Oregon and Washington. What does Trump know that most political observers in the Pacific Northwest fail to see? (Photo Credit: Christopher Dolan/The Times & Tribune via AP) 

As Republicans open their national convention in Cleveland, Donald Trump has pledged to put some surprising states in play in November, including Oregon and Washington. What does Trump know that most political observers in the Pacific Northwest fail to see? (Photo Credit: Christopher Dolan/The Times & Tribune via AP) 

Presumptive GOP presidential nominee Donald Trump raised eyebrows when he told Republican congressmen that he expects to run competitively in November on the Left Coast, especially in Oregon and Washington.

Trump didn’t give away his secret formula for turning dark blue states into electoral votes for him, but it is interesting to speculate on what is behind his audacious claim.

The Statesman Journal reported what it called a “surprise result” from the latest batch of party affiliation sign-ups from motorists automatically registered to vote under Oregon’s new Motor Voter law – more people registered as Republicans than Democrats. Some 3,455 new voters aligned with the GOP compared to only 3.023 with the Democrats.

Before you get too excited over that news, note that 124,912 Oregonians have been registered to vote under the new law, but only about 8,500 declared a party preference, according to the secretary of state’s elections division. The small gain in voter registration by Republicans hardly makes a dent in the overwhelming Democratic majority in Oregon. Trump carried Oregon with 252,748 votes in the Republican primary, which was fewer votes than Hillary Clinton received (269,846) in soundly losing to Bernie Sanders (360,829).

But primary results and new voter registrations may not be what Trump and his lieutenants are pondering. They see a whole lot of people, including a vast majority of new voters, who don’t align with either party. There are more non-affiliated voters in Oregon than registered Republicans and almost as many as registered Democrats. This pool of voters could represent just the kind of uncharted electoral waters Trump plans to ply this fall.

Trump also may be planning to appeal to Democratic and independent voters in Oregon and Washington who voted for Bernie Sanders and are disenchanted with Hillary Clinton. Despite national polls showing nearly three-quarters of Sanders Democratic primary voters plan to vote for Clinton, that still leaves the other 25 percent for Trump to court.

Sanders did well in more than just Portland, so Trump’s campaign may try to pry away voters who oppose trade deals and still harbor ill feelings toward the Clintons on timber policies that reduced cuts on public forests and forced mills to close. He might even reach out to “Rust Belt” manufacturing workers in Portland and Seattle who feel left behind.

An active Trump campaign in Oregon and Washington, whatever that turns out to be from this unconventional politician, could give a boost to down-ballot Republican candidates. GOP gubernatorial candidate Bud Pierce seems disinclined to hook his hope to Trump, but Dennis Richardson, who is running for secretary of state, might find some common cause with the Trumpster.

Even if Pacific Northwest Republicans don’t enthusiastically embrace Trump and his message, they might still be willing to collaborate on campaign basics such as get-out-the-vote efforts, aiming to turn out voters who aren’t exactly in the political mainstream.

Win or lose in November, Trump has given the Republican Party a jolt and potentially set the stage for a larger, longer-term political realignment affecting both major parties. His unpredictability as a candidate has allowed doubt to creep in about the reliability of old political maxims, like red states and blue states.

Voter turnout, and to some degree voter mood, can be influenced in Oregon and Washington by ballot measures. Oregonians will be voting on a major tax increase on large corporations, which Republicans generally oppose, but also may fetch opposition from lower-income voters who fear the tax increase will be passed along to them in higher prices for groceries and gas.

Portland-area voters will be asked to approve a major a $750 million bond for Portland Public School renovations, a City of Portland gas tax increase and renewal of a Metro levy to fund regional natural areas. The cumulative impact of tax measures on the ballot could make Portland voters poutier than usual and more open to the kind of messages Trump traffics in.

Washington voters will decide on measures that would impose a carbon emission tax and urge a constitutional amendment that limits constitutional rights to people, not corporations. A gun control measure also may qualify for the fall ballot.

A Republican hasn’t won the governorship of Washington since the 1980s, but the last three elections have been tight. Governor Jay Inslee is seeking re-election, but with sagging approval ratings. He only won in 2012 by a whisker over his Republican rival, former state attorney general Rob McKenna. Pundits predict a vigorous battle for legislative control in the House, where Democrats hold a thin two-seat majority, and the Senate, where Republicans cling to an even thinner one-seat advantage.

If you were betting, you would be smart to keep your chips on blue in Oregon and Washington. But you might not want to lift your finger off the chips just quite yet.

Summer IP 28 Polls May Not Mean Much

IP 28 would substantially raise taxes on corporations with large sales in Oregon to fund schools and other public services. Polling so far shows the high-profile, big-stakes initiative winning easily and losing miserably. Stay tuned because summer polls aren’t very telling.

IP 28 would substantially raise taxes on corporations with large sales in Oregon to fund schools and other public services. Polling so far shows the high-profile, big-stakes initiative winning easily and losing miserably. Stay tuned because summer polls aren’t very telling.

According to the polls, IP 28, which would raise taxes for large corporations with more than $25 million in annual sales in Oregon, either has strong support, withering support or a large bunch of undecided voters. Who knows at this point?

So it is with high-profile, big-stakes initiatives in mid-summer. Voters may be vaguely aware of them, but a good chunk of the electorate has postponed thinking too much about them until closer to the November election. They have vacations to take and lawns to mow.

Reading too much into summer poll results on initiatives is like depending on the Farmer’s Almanac to tell you whether it will rain next weekend. The polls regarding IP 28 hardly tell any story at all.

The latest public poll, conducted online in late June by iCitizen, shows 65 percent of Oregonians favor IP 28, while 19 percent oppose and 16 percent are undecided.

A poll done by DHM Research in May found 51 percent in favor, 32 percent opposed and 18 percent undecided. Action Solutions released a poll early in June showing only 41 percent support IP 28, while 32 percent oppose and 35 percent are undecided.

Differing questions and polling techniques can account for some of the variation among the polls, but the differences are pretty stark and most likely reflect that a lot of people really haven’t made up their minds yet.

In addition, the campaigns for and against IP 28 are just ramping up. Most competent opposition campaigns erode initial initiative support, sometimes dramatically.

The battle lines on IP 28 are pretty clear, however. Proponents argue big corporations pay too little tax in Oregon, which results in inadequate funding for schools and other public services. Opponents will contend IP 28 is really a gigantic sales tax that will raise consumer prices and cost Oregonians jobs. Both arguments have relatively broad appeal in Oregon, which also may account for some lingering voter indecision.

The iCitizen poll showed support for IP 28 drops, especially among Republican voters, when the the “sales tax” label is applied to it. But DHM Research found strong residual support, even among Republicans, with the claim that corporations pay too little in taxes in Oregon.

Pollsters agreed that views on the controversial measure are fluid. They may fluctuate in the course of the next few months as campaigns mount their best arguments in the most places. The 2016 election has already revealed itself as out of the ordinary, with populist surges on both the political left and right.

The IP 28 campaign will be worth watching. But don’t count on the polls, at least quite yet, as much of a guide for what the eventual outcome.

Payers Fret Over ‘Lowballed' EPA Cleanup Cost for Portland Harbor

The business and public agencies criticized an earlier EPA cost estimate to clean up the Portland Harbor Superfund site as too high. Now they worry a revised estimate is too low, while environmental activists think the EPA plan doesn’t go far enough. (Photo courtesy: The Oregonian/Oregonlive)

The business and public agencies criticized an earlier EPA cost estimate to clean up the Portland Harbor Superfund site as too high. Now they worry a revised estimate is too low, while environmental activists think the EPA plan doesn’t go far enough. (Photo courtesy: The Oregonian/Oregonlive)

Businesses and public agencies that will foot the bill for cleaning up Portland Harbor find themselves in the awkward position of questioning whether the Environmental Protection Agency lowballed a cost estimate in its plan released in June.

Some 150 potentially responsible parties who are on the hook to pay for pollution remediation earlier complained the price tag was too high. EPA officials say they agreed and lowered the Superfund cleanup cost estimate from $1.4 billion to  $746 million. An even earlier EPA estimate was pegged at $2 billion.

Payers worry because they say the EPA didn’t alter its cleanup recommendations that much to justify cutting the cost in half. The Portland Harbor Community Advisory Group, which advises the EPA, has a similar concern, as the Portland Tribune's Steve Law reported this week.

“We asked them how can costs suddenly be so much less,” said Barbara Quinn, a member of the advisory group who lives near Portland Harbor, “and we really didn’t get any good answers.” EPA officials say they have refined the cost estimate for the cleanup, which is expected to take seven years to complete, after making adjustments to their recommendations.

Meanwhile, environmental activists have chastised the EPA plan as a “capitulation to industrial polluters,” a violation of tribal fishing rights and something far short of what is needed to clean up the Willamette River.

Environmental discontent with the EPA plan stems largely from its reliance on natural recovery, rather than dredging, to cleanse a significant portion of the Superfund site. The EPA defended natural recovery as “the most cost-effective approach” to cleaning up 1,900 acres of the 2,200-acre site. Activists want the EPA to require dredging for half or more of the site.

The EPA is accepting comments on its plan and cost estimate. The 30-day window for comments also irked environmental activists who complained it was foolish to rush public input after the EPA took 16 years to study the problem and come up with its recommendation.

While business and public sector payers aren’t rooting for higher costs, they also don’t want to sign on to a plan only to discover later that the actual cost is much higher, plus the cost of litigation to settle who pays what.

Based on other Superfund cleanups, initial cost estimates have been off by as much as 100 percent, according to Michael Jordan, the director of Portland’s Bureau of Environmental Services. Jessica Hamilton, who manages the Port of Portland’s harbor environmental activities, said the new price tag appears “artificially too low.”

The challenge for any major project like this is to find the sweet spot where investments generate the maximum benefits. At some point, additional investment only drives diminished benefits. By way of example, Jordan said Portland spent $1.44 billion on the Big Pipe project to keep 96 percent of city sewage from spilling into the Willamette River. He said it would have cost $4.5 billion to achieve a 100 percent reduction.

A Barnstorming Debate for Secretary of State

Democrat Brad Avakian and Republican Dennis Richardson may be missing their only window of opportunity this summer to make their case on why each should become Oregon’s next secretary of state – and the person next in line to become governor.

Democrat Brad Avakian and Republican Dennis Richardson may be missing their only window of opportunity this summer to make their case on why each should become Oregon’s next secretary of state – and the person next in line to become governor.

How quickly we forget that Oregon’s secretary of state is next in line to become governor. Oregon’s sitting governor, Kate Brown, is a case in point. Yet the general election battle for this significant statewide post hasn’t generated even a water fight so far.

A Google search showed no news stories about the race between Democrat Brad Avakian and Republican Dennis Richardson since election night when each won contested primary fights.

The candidates are undoubtedly busy raising campaign cash, but that doesn’t explain why Avakian and Richardson, who couldn’t be further apart on the political spectrum, haven’t taken their campaigns to the airwaves to earn valuable – and basically free – media coverage.

Avakian, a former legislator and currently Oregon’s Labor Commissioner, and Richardson, a former legislator and unsuccessful gubernatorial candidate, aren’t shy and retiring personalities. These former trial lawyers seldom hesitate to share their views. This summer may be their only window to talk to and be heard by Oregonians before the sprawling, brawling presidential race overwhelms all else political this fall.

Richardson and Avakian have nothing to lose and potentially a lot to gain. They certainly have a lot to debate. Richardson is viewed as an arch conservative, while Avakian has projected himself as an all-in progressive. Avakian wants to prosecute polluters. Richardson wants to strip away regulation that he says strangles business growth.

Avakian took flak in the Democratic primary for expressing views on issues that go well beyond the immediate purview of the secretary of state’s office in Oregon, but not necessarily beyond what we expect from a governor. A wider canvass of policy issues wouldn’t be a challenge for Richardson, who campaigned better than most expected against former Governor John Kitzhaber who sought and won an unprecedented fourth term in 2014 before resigning amid a scandal in early 2015.

An early poll suggests Richardson is leading the race against Avakian and Independent Party candidate Paul Damian Wells. In fact, Richardson received 60,000 more votes in the primary than Avakian, though total Democratic votes cast in the primary dwarfed Republican ballots by around 130,000 votes.

There may be some tactical advantage in running a “dark” campaign during the summer, but it isn’t advantageous for Oregonians who would benefit by a round of statewide hot weather debates by the three secretary of state candidates, who could in the blink of an eye wind up as governor. There apparently won’t be gubernatorial debates between Brown and GOP challenger Bud Pierce until the fall, so the coast is clear for Avakian, Richardson and Wells.

It might take some creative staging to draw crowds, like teaming the debate with a summer concert series featuring bands from different parts of the state. The prospect of two major candidates in shirtsleeves barnstorming through Oregon’s warmer summer weather to talk about the future of the state might be a lot more compelling than you think. Political passions are running high, so why not put on a movable political passion play.

Like we said, there is a lot to debate, despite the relatively confined role of secretary of state, but with an officeholder with the potential to play a much bigger, consequential role. And no one could say they didn’t have a chance to see and hear the candidates in the flesh when voting time rolls around in November, which is a real possibility if this race stays invisible.

Trump’s Bad News is Every Republican’s Bad News

Former Oregon Senator Gordon Smith lost his seat in 2008 in part because GOP presidential candidate John McCain pulled out of the state while Barack Obama pursued a vigorous grassroots campaign that boosted Democratic voter turnout. Similarly, the absence of a national campaign structure in Oregon this year will be a huge loss for the state's Republicans.

Former Oregon Senator Gordon Smith lost his seat in 2008 in part because GOP presidential candidate John McCain pulled out of the state while Barack Obama pursued a vigorous grassroots campaign that boosted Democratic voter turnout. Similarly, the absence of a national campaign structure in Oregon this year will be a huge loss for the state's Republicans.

News this week that Donald Trump’s presidential campaign war chest is down to $1.3 million is sounding alarms for Oregon Republicans.

In stark contrast, Hillary Clinton raised nearly nine times more money than Trump in May, and she entered June with about $42 million to spend. Corey Lewandowski, Trump’s campaign manager through the primaries who was fired on Monday, has called Trump’s campaign lean, with only 30 paid staffers. What cash and manpower there is will likely go to swing states, but Oregon isn’t viewed as one of those.

Donald Trump's decision to fire embattled campaign manager Corey Lewandowski is one of many signs of trouble for the presumptive Republican nominee's campaign leading into the November general election. 

Donald Trump's decision to fire embattled campaign manager Corey Lewandowski is one of many signs of trouble for the presumptive Republican nominee's campaign leading into the November general election. 

The bad news for Oregon Republicans is they won’t get much if any help from Trump to bolster their own campaigns. The absence of a national campaign structure is a huge loss. Just ask former two-term Oregon Senator Gordon Smith, who lost in 2008 to Jeff Merkley.

Smith became the first incumbent Oregon senator to lose re-election in 40 years. A key reason for his loss was the near absence of a campaign in Oregon by GOP presidential nominee John McCain compared to a vigorous grassroots effort by Barack Obama. What Republican apparatus there was got pulled in the latter stages of the campaign when McCain, strapped for money, concentrated on other states instead.

There is virtually no chance Trump will even try to score an upset victory in Oregon, which casts an even darker shadow over the nearly invisible campaigns of Republicans running for statewide office this year.

Donald Trump has less cash on hand than Ben Carson and Ted Cruz, whose campaigns have been suspended. (Source: NPR)

Donald Trump has less cash on hand than Ben Carson and Ted Cruz, whose campaigns have been suspended. (Source: NPR)

What seemed not that long ago to be a blockbuster election year in Oregon has turned into a bust. There are little known challengers trying to unseat Senator Ron Wyden and Governor Kate Brown. Dennis Richardson, the best known Republican running for statewide office after a better-than-expected challenge in 2014 to John Kitzhaber’s re-election, has so far run a low-profile campaign for secretary of state.

Figures from the FEC show Hillary Clinton with a robust campaign war chest approaching the general election. (Source: NPR)

Figures from the FEC show Hillary Clinton with a robust campaign war chest approaching the general election. (Source: NPR)

Without the oomph of a national campaign, these GOP candidates may be left further in the fumes to their Democratic counterparts who will have the benefit of added fuel from an expected Hillary Clinton campaign team in Oregon.

The other political sparks that can incite higher voter turnout are ballot measures. Those don’t look too good for Republicans either. So far, only two measures have been certified for the November general election ballot in Oregon – one to repeal the mandatory 75-year-old retirement age for judges and the other to slap a major tax increase on corporations with $25 million or more in annual sales in the state. IP 28 is more likely to generate voter enthusiasm on the political left than the political right, even if it winds up losing.

A number of other measures, such as ones dealing with a higher minimum wage that might have bumped up turnout, have been scrapped because of the anticipated electoral brawl over IP 28. It's expected to suck up a lot of campaign cash.

Many of Trump’s most ardent supporters are voters who have hung out in the fringes of politics, many without casting ballots. Fundraising, campaign organizations and message discipline aren’t important to them and may even be antithetical to their vision of an ideal “tell-it-like-it-is" candidate. For political insiders who know through experience what it takes to win big-time races, Trump is a nightmare unfolding in slow motion.

Trump’s puny fundraising, his tiny staff and his ubiquitous media appearances in lieu of political advertising will affect more than his own poll numbers. They will affect many down-ballot candidates seeking re-election or, in Oregon’s case, trying to get noticed. Just ask Trump's 16 frustrated and defeated primary opponents.

Voters May Decide 'Fake Emergencies Act'

Opponents say “emergency clauses” are added to bills by lawmakers who want to thwart voter referrals. Others say the Oregon Constitution shouldn’t be cluttered with provisions to hamstring the legislature and enshrine bad policy.

Opponents say “emergency clauses” are added to bills by lawmakers who want to thwart voter referrals. Others say the Oregon Constitution shouldn’t be cluttered with provisions to hamstring the legislature and enshrine bad policy.

In addition to deciding on a major corporate tax hike, Oregonians may have a chance this fall to cast a vote on the “No More Fake Emergencies Act.”

Wilsonville attorney Eric Winters is the chief petitioner for IP 49, a proposed constitutional amendment that would make it harder for Oregon lawmakers to slap “emergency clauses” on legislation. Winters says lawmakers use emergency clauses to deny opponents a 90-day window to refer controversial legislation, such as a measure to extend the life of the low-carbon fuel standard.

This is campaign literature from NoFakeEmergencies.org in support of IP 49, which seeks to limit use of emergency clauses on legislation in the Oregon legislature.

This is campaign literature from NoFakeEmergencies.org in support of IP 49, which seeks to limit use of emergency clauses on legislation in the Oregon legislature.

Supporters are still collecting signatures on IP 49, which must top 117,578 to qualify for the November election ballot.

There is a case that legislators use emergency clauses liberally for what you might describe as non-emergencies. The Oregonian editorial about IP 49 poked fun at emergency clauses attached in the 2016 session to innocuous bills expanding the Travel Information Council, creating a Trail Blazers license plate and authorizing an ODOT study to boost ridership on passenger rail.

Under IP 49, lawmakers would need a two-thirds majority to approve a bill with an emergency clause, which Winters thinks would be a deterrent to frivolous use of the technique. IP 49 creates exceptions for biennial spending measures and bills passed during emergency legislative sessions called to address actual disasters.

Tax-raising measures are already off limits for emergency clauses, and they have been referred to voters fairly often. Tax measures also require a three-fifths majority to pass in the Oregon House and Senate, which translates into 36 House votes and 18 Senate votes.

IP 49 follows criticism about the 2016 session that critics complained went far beyond the bounds of a short 35-day legislative session. Annual sessions were sold as a way to give lawmakers a chance to tweak the state’s biennial budget, make technical corrections to legislation passed in the longer regular session and address emergencies. As they have evolved, annual sessions have become a vastly expedited miniature of regular sessions, dealing with substantive and often controversial topics.

In fairness, some of the controversial measures, such as a higher minimum wage, were aimed at heading off costly, divisive ballot measures. That may or may not constitute a true emergency, but timing was important.

Oregon has had mixed experience with cluttering the state Constitution with requirements like this, which may prompt some political observers to oppose the ballot measure, while urging lawmakers to exhibit more discipline in the use of emergency clauses.

Liberal-leaning Blue Oregon notes the U.S. Constitution has been amended 27 times in more than 200 years, but the Oregon Constitution has been routinely tinkered with, turning it into “an ugly, lengthy, wide-ranging and ridiculous document.” Amendments, the group says, have been “shamelessly used to hamstring the legislature, enshrine poor policy and indict differences of opinion.”

EPA Superfund Plan Pleases Business, Irks Enviros

The EPA’s “balanced” Portland Harbor cleanup plan, combining ideas from multiple sources, has to please business groups while irking environmental activists who pressed for a more aggressive cleanup before President Obama leaves office.

The EPA’s “balanced” Portland Harbor cleanup plan, combining ideas from multiple sources, has to please business groups while irking environmental activists who pressed for a more aggressive cleanup before President Obama leaves office.

The Environmental Protection Agency just issued a long awaited plan to clean up the Portland Harbor, which pleased business interests, but irked tribes and environmental activists.

Even so, the plan isn’t a walk-over, nor is it cheap, with a $746 million price tag that will be paid by more than 150 companies and public agencies and take at least seven years. However, it is much more modest than the $2 billion estimate the EPA floated a while back, which galvanized business interests to push for alternative approaches.

The alternative EPA promulgated would rely on "natural recovery” to cleanse 1,900 acres of the 2,200-acre Superfund site. The 291-acre balance of the site would be dredged, capped and seeded to remove, isolate or speed the dilution of pollutants trapped in riverbed soils. 

EPA officials called their alternative “balanced” and a hybrid of approaches recommended in substantial testimony. The federal agency expects a lot more advice in the 60-day comment period that extends into August.

Environmental activists view the EPA plan somewhere between disappointing and a disaster. They felt they had the regulatory momentum for a more aggressive plan, which would be put into effect while President Obama remains in office. Now they face a challenge to stiffen the plan in a shrinking political time frame. Some community groups say the 60-day comment period is too short for them to absorb what has been proposed and make meaningful suggestions.

The Lower Columbia Group, the coalition of potentially responsible parties that congealed when it appeared a more draconian and expensive plan would come from EPA, assumed a reserved posture in its reaction to the plan. Privately, they had to be smiling and popping corks on champagne.

The Portland Harbor Superfund issue has swum around for more than 16 years, and it probably isn’t over.

Oregon Floodplain Regulations to Become More Restrictive

Development in Oregon floodplains will be restricted under a federal court ruling pushing tougher building criteria that a state agency and local jurisdictions will be required to implement.

Development in Oregon floodplains will be restricted under a federal court ruling pushing tougher building criteria that a state agency and local jurisdictions will be required to implement.

Few people would conflate floodplain insurance with endangered species. But that conflation is about to rewrite the rules of development in Oregon floodplains, with the help of an unlikely agent, the Oregon Department of Land Conservation and Development.

Whoa, how did flood insurance, fish facing extinction and LCDC get in the same sentence, let alone the same policy discussion? It’s an interesting story, with a potentially devastating punchline.

In 1990, environmental groups sued the Federal Emergency Management Agency (FEMA) and U.S. Fish and Wildlife Service for failure to consult under a section of the Endangered Species Act. Environmentalists asserted FEMA’s National Flood Insurance Program involved “discretionary agency actions” that subjected it to consultation on its impacts on endangered species. A similar lawsuit was filed in federal court in Washington in 2003.

Federal judges in both cases found FEMA must consult. The Washington decision resulted in the 2008 Biological Opinion (BiOp) issued by the National Marine Fisheries Service (NMFS) that included “reasonable and prudent alternatives” for implementing the flood insurance program in Puget Sound. Environmental groups filed suit in 2011 alleging FEMA wasn’t following through. 

A similar pattern occurred in Oregon. Environmentalists sued FEMA in 2009. FEMA settled and began consultation with NMFS, which issued its BiOp for Oregon on April 14. It has been a slow-motion bombshell.

The 400-page BiOp concludes that implementation of the national flood insurance program in Oregon could jeopardize the habitat for 16 listed anadromous fish species and adversely affect Southern Resident killer whales. The “jeopardy determination” triggers a need for interim and permanent “reasonable and prudent alternatives” that will be enforced by a local jurisdiction. In Oregon’s case, that means the Department of Land Conservation and Development (DLCD) and cities and counties.

FEMA and DLCD are required to conduct an “education and outreach” effort to affected jurisdictions, which includes “all river sub-basins in Oregon that contain ESA-listed anadromous fish” cited in the BiOp. That applies to all of Western Oregon and central and eastern parts of the state with streams that eventually feed into the Columbia or Snake rivers.

FEMA must revise its regulatory floodplain management criteria, relying on updated mapping, as early as January 1, 2019, with the goal of avoiding, minimizing and mitigating adverse effects of floodplain development.

DLCD has two years to implement its “interim” measures, which include a “no-touch” zone extending 170 feet horizontally from the ordinary high-water mark of perennial or intermittent streams. There also is a broad definition of development, which includes vegetation removal. Repairs or remodeling of existing structures within that zone would be okay, as long as there is footprint expansion. 

Lots of questions remain. How to do you calculate the 170-feet when there is a slope? Do restrictions apply to subterranean development, such as water intakes and pipes? How far up mountains and into remote valleys will mapping of flood-prone areas be required? What kind of data will be required to monitor FEMA’s compliance and who will collect it and pay for it? Will projects underway or in the permitting pipeline be affected?

DLCD’s role will include workshops, technical assistance and a model ordinance. The workshops are scheduled to begin this summer. But it also will be ground zero for landowner reaction, which can be expected to be huge, perhaps rivaling the reaction to Measure 37, which entitled landowners to compensation for regulatory takings under Oregon’s land-use laws.

So far, the NMFS BiOp has received little public notice, despite its far-ranging impact. Expect that to change fairly soon when people realize what’s afoot and what it could mean.

(Information in this blog was taken from a Stoel Rives presentation entitled “Oregon Floodplain Regulation in Flux,” featuring comments by attorneys Steve Abel, Sarah Stauffer Curtiss and Greg Corbin)

IP 28 Would Boost Taxes and May Dampen Economy

The Legislative Revenue Office released its long-awaited analysis of an initiative to impose a gross receipts tax on large corporations selling in Oregon. It says taxes would definitely go up and the overall economy might take a hit.

The Legislative Revenue Office released its long-awaited analysis of an initiative to impose a gross receipts tax on large corporations selling in Oregon. It says taxes would definitely go up and the overall economy might take a hit.

The initiative to impose a gross receipts tax on larger corporations selling in Oregon would raise $6.1 billion in revenue in the next biennium, while pushing up consumer prices and dampening income, employment and population growth in the next five years.

The Legislative Revenue Office (LRO) shared its findings today on IP 28, which will simultaneously cheer its public sector supporters and send shudders down the backs of its business opponents. Lawmakers and others have been clamoring for weeks for the findings, which will confirm fears and hopes, depending on your point of view.

The $6 billion in new tax revenue would fortify the state’s ability to boost funding for education, health care and senior services and make Oregon’s corporate tax system less volatile in down economic cycles, according to LRO.

Because the tax change falls heaviest on as few as 274 larger corporations with more than $25 million in annual sales in Oregon, LRO says they may find it worthwhile to restructure their businesses here to avoid high taxes. The retail and wholesale trade sectors would be hit the hardest by the tax increase, which could put upward pressure on consumer prices, shrink job creation and possibly even discourage some people from moving here, LRO projects.

There are other variables that complicate the analysis. One is the definition of a sale in Oregon. Another is the exemption of S-corporations, partnerships, proprietorships and benefit corporations, known as B-corps.

Then there are anomalies that arise in the interaction between existing corporate income tax rates and a corporate minimum tax in the form of a gross receipts tax. LRO provides an example of two hypothetical companies, each with $60 million in Oregon sales. For Corporation A with only $3 million of net income apportioned to Oregon, its tax would rise from $218,000 to $905,001 under IP 28. For Corporation B with $18 million of net income apportioned to Oregon, its current tax of $1.358 million would be the same under IP 28. 

It appears certain Oregonians will vote on IP 28 this fall after backers submitted far more signatures to the Secretary of State than required to qualify for the general election ballot. The specter of IP 28 and a boisterous political showdown between labor and business has caused others to back off potential initiatives, citing a lack of support and campaign cash, which is being sucked into the IP 28 vortex.

The LRO report doesn’t contain a smoking gun data point. Oregon tax revenue would rise as a result of IP 28, moving up the state’s per capita rate of taxation from 28th to 20th nationwide. The ratio of taxes to income would climb from 10.1 percent to 11.6 percent, with Oregon jumping from 26th to 9th nationally in that category.

LRO predicts the marginal impact of IP 28 will be to make Oregon’s tax system more regressive, but not by that much. Income, employment and population growth would be dampened, but only slightly. Larger negative impacts would be offset by higher public sector expenditures that tend to circulate in local economies.

LRO projects a net loss of 20,000 Oregon jobs – 37,000 in the private sector and reduced by a gain of 17,000 public sector jobs. Employment would decrease most sharply in the retail and wholesale sectors. Income would decrease $430 million, with income dropping 0.8 percent for households earning less than $100,000 annually.

The biggest “if” in the LRO report is now affected corporations will respond. “Both the large size of IP 28’s revenue impact and its concentrated impact on a small group of large corporations adds considerable uncertainty to the estimates,” LRO concludes.

Oregon’s Primary a Microcosm of the National Election

  Political outsiders dominated in the Oregon primary as Democrat Bernie Sanders scored a double-digit win over frontrunner Hillary Clinton and newcomer Bud Pierce captured the GOP gubernatorial nomination.

 

Political outsiders dominated in the Oregon primary as Democrat Bernie Sanders scored a double-digit win over frontrunner Hillary Clinton and newcomer Bud Pierce captured the GOP gubernatorial nomination.

Oregon’s presidential primary Tuesday serves as a microcosm of the national election. Democrat Bernie Sanders keeps winning to complicate frontrunner Hillary Clinton’s pivot to the general election and Republican Donald Trump glided to victory even though 32 percent of Oregon GOP voters cast ballots for candidates who had dropped out of the race.

Republicans chose Bud Pierce, a first-time candidate who largely self-funded his campaign, to challenge incumbent Democratic Governor Kate Brown. Portland voters swept in Ted Wheeler as mayor-elect, Brad Avakian won a hotly contested race as the Democratic nominee for secretary of state, and Clackamas County will see a fall runoff for commission chair pitting Jim Bernard against incumbent John Ludlow.

Hood River County voters approved a ban on a water bottling plant, parting ways with voters in Cascade Locks who supported Nestlé Waters plan to build the facility there. Meanwhile, Klamath and Grant county voters rejected marijuana-related businesses, Portlanders narrowly okayed a 10-cent gas tax increase and Multnomah County voters gave solid approval to an Oregon Historical Museum bond.

The Sanders victory in Oregon defied widely published polling results that showed Clinton holding a double-digit lead. With almost 90 percent of the vote counted, Sanders posted a 12 percent lead, and his dominance didn’t stop in Portland and Eugene. He outpolled Clinton in every Oregon county except Gilliam.

Sanders’ success in Oregon sends a troubling message to Clinton’s campaign. He likely would have done even better here if independents and non-affiliated voters could have voted for him in the primary.

Trump carried all Oregon counties, which isn’t surprising since no one else was campaigning. A year ago, when Trump announced his candidacy, it was unimaginable he would still be in the race at this point, let alone on what amounts to a victory lap to the GOP presidential nomination. 

Pierce handily defeated Allen Alley, a former Oregon GOP chairman, by running a campaign as a fresh outsider face. In his campaign victory speech, Pierce, who is a Salem medical doctor, told supporters, “I am not corrupt. I am not corruptible."

Raw vote totals confirm that Oregon is a blue state. Sanders and Clinton received around 550,000 votes compared 350,000 GOP votes for a presidential candidate. Brown, who faced only marginal opposition in the Democratic gubernatorial primary, racked up more than 400,000 votes while all GOP candidates received a combined total of 286,000 votes. 

Avakian overcame strong opposition from fellow Democrats Val Hoyle and Richard Devlin in what emerged as the most bruising campaign in Oregon’s primary. Avakian, who is state labor commissioner, now will face Republican Dennis Richardson, who lost to John Kitzhaber in the 2014 gubernatorial race. The wounds inflicted on Avakian in the primary may make this a more interesting race in the fall, giving Republicans at least a glimmer of hope to capture a statewide office.

Wheeler, who is state treasurer, will be in an interesting position as Portland’s mayor in the wings until he is officially sworn in next January. Wheeler was recruited by a coalition of business and labor to challenge Mayor Charlie Hales, who decided not to seek re-election. Hales has continued to fester a contentious relationship with groups such as the Portland Business Alliance, which Wheeler may be asked to mediate over the next few months.

Democrat Tobias Read will face Republican John Gudman to succeed Wheeler, who was term-limited as state treasurer.

Portland Commissioner Amanda Fritz easily won re-election, but Steve Novick will be forced into a fall runoff, probably against architect Stuart Emmons, after capturing only around 43 percent of the vote.

Clackamas County Chairman John Ludlow finds himself in the same situation, only he trailed fellow Commissioner Jim Bernard who collected 37 percent of the vote to Ludlow’s 28 percent. They will scramble to win the other 45 percent of votes cast that were split between Commissioner Paul Savas and Oregon City Mayor Dan Holladay. Clackamas County Commissioner Tootie Smith also will compete in a fall runoff against challenger Ken Humbertson. Commissioner Martha Schrader won re-election.

Victories in November by Bernard and Humbertson would change the tilt on the Clackamas County Commission to more middle-of-the-road politics.

Incumbent Washington County Commissioners Roy Rogers and Dick Schouten were re-elected, as were Metro Councilors Craig Dirksen, Sam Chase and Bob Stacey. Schouten and Stacey ran unopposed.

Perhaps the most interesting legislative primary race saw newcomer Rich Vial capture the GOP nomination in Oregon House District 26 over former Rep. Matt Wingard who sought a comeback. Wingard faced stinging opposition centered on his previous conduct that forced him to resign.

House Speaker Tina Kotek turned back a primary challenge from Sharon Nasset, whose campaign was tied to questionable tactics involving misleading mailings.

Oregon Senator Ron Wyden won the Democratic nomination after threats failed to materialize for a challenge to his re-election from the political left. Congressman Kurt Schrader overcame a challenge from progressive candidate Dave McTeague. Congressmen Peter DeFazio and Greg Walden and Congresswoman Suzanne Bonamici walked over token opposition in their respective primary contests.

Results on local school elections were mixed. Bond measures in Gaston and McMinnville won, but ones in the Corbett, Molalla and Centennial districts lost. Clackamas County voters gave the green light to commissioners to explore funding for road improvements. Rogue Valley Transit won voter approval for a property tax increase and Rogue Community College passed a $20 million bond measure.

Secretary of State Jeanne Atkins predicted 1 million votes would be cast in this year’s primary, marking only the second time that threshold has been reached. The first was in 2008, sparked by the Democratic presidential runoff between Clinton and Barack Obama.

The primary was the first statewide election since Oregon’s Motor Voter law went into effect, which automatically registered people to vote when they took out a driver’s license. Atkins previously reported that many newly registered voters affiliated with a political party, with Democratic registration far outstripping Republican registration. 

Oregon Liquor Privatization Shaken, Not Stirred Again

For the second election cycle in a row, a grocer coalition has backed away from an initiative to privatize Oregon liquor sales. Grocers say they will focus on defeating a gross receipts ballot measure, but opponents say they ditched their initiative because polling showed it would fail.

For the second election cycle in a row, a grocer coalition has backed away from an initiative to privatize Oregon liquor sales. Grocers say they will focus on defeating a gross receipts ballot measure, but opponents say they ditched their initiative because polling showed it would fail.

The grocer coalition, pushing for liquor privatization in Oregon, has withdrawn its initiative and says it will focus instead on defeating a labor-backed initiative to impose a gross receipts tax on corporations with large revenues. 

Opponents of the liquor privatization measure say the real reason Initiative Petition 71 was pulled is because it didn’t poll well enough to win in this November’s general election.

This is the second consecutive election cycle that Oregon liquor privatization boosters have backed off initiatives after Washington voters approved a similar measure in 2011.

Meanwhile, the Oregon Liquor Control Commission has expanded its pilot program by allowing liquor sales in 14 additional Portland-area grocery stores. The OLCC said the 14 retail licenses it issued represent the largest liquor expansion in Oregon since Prohibition.

For those unfamiliar with liquor regulation, Oregon is considered a “control” state. The OLCC, which is a state agency, buys and distributes distilled spirits through state-licensed liquor stores. The arrangement dates back to post-Prohibition and is rooted in a policy mindset that liquor consumption can be moderated through limited access and higher prices. Those higher prices feed generous amounts of cash into the state General Fund and city and county budgets and fund mental health and substance abuse services. 

As you might imagine, liquor sales is big business. In the 2013-2015 biennium, distilled spirit sales in Oregon totaled $1.06 billion. After paying for inventory and compensating state liquor store agents, there were net revenues of $435 million. The lion’s share ($247 million) went to state coffers, $77 million went to cities and $39 million went to counties. More than $17 million went directly to community mental health and substance abuse service providers.

Those revenue numbers explain the reticence of public officials to surrender control of the liquor supply chain. They don’t explain why Oregonians are ambivalent about moving liquor sales in part or totally over to private enterprise.

Nigel Jaquiss of Willamette Week reports that Oregonians for Competition dropped IP 71 because after spending $1 million it still didn’t poll well enough to win in the fall election. Jaquiss obtained four relatively recent polls, all funded by opponents of liquor privatization, that showed support for privatization ranging between 32 and 41 percent. The most recent poll, which surveyed 800 Oregonians last month, showed 54 percent opposed IP 71, while only 41 percent favored it.

Dan Lavey, who is advising privatization opponents, said grocers should be concerned about the gross receipts tax, but added, “There are two reasons why people abandon or never start campaigns – lack of money or you don’t believe you have a path to victory. The grocers don’t lack for money.”

Pat McCormick, spokesman for the coalition that pushed for IP 71, said its polling showed “voters are ready to allow Oregonians to buy liquor in grocery stores, alongside beer and wine, like consumers in most states.”

Grocers can be expected to take another run at legislation in the 2017 session. But it does seem clear the landscape for privatizing liquor in Oregon is different than it was in Washington. First off, the Washington initiative passed – opponents would say rammed through – because of a $20 million contribution to the campaign from Seattle-based Costco. Second, privatization in the Evergreen State has been met with mixed reviews. Liquor is available in more places, but at higher prices.

Another factor is the flexibility being shown by OLCC, under the leadership of Chair Rob Partridge, to experiment with different approaches to enhance consumer convenience, including permitting the state’s craft distillers to operate tasting rooms.

“I don’t think Oregonians want a liquor store on every corner. I don’t think they want every gas station and convenience store to have bottles of liquor – that’s not what I hear from Oregonians,” Partridge told KATU News.

He said Walmart, which received four of the 14 new retail licenses, says it plans to offer a limited variety of liquor in its stores compared to what is available in state liquor stores. “Sometimes you buy things for convenience,” Partridge said. “Other times, you’re shopping for that great unique specialty product. So, there’s room in the market for both.”

The Oregon Primary Will Matter. Almost.

  Coming to the game late in the primary, Oregon voters may not feel like their votes count on May 17, but the state's handful of delegates could be enough to put Donald Trump at or near the 1,237 delegates he needs for the GOP nomination. 

 

Coming to the game late in the primary, Oregon voters may not feel like their votes count on May 17, but the state's handful of delegates could be enough to put Donald Trump at or near the 1,237 delegates he needs for the GOP nomination. 

Oregonians voting in the May 17 primary will almost feel like their ballots mattered. Almost.

After primaries in five Eastern states today, including delegate-rich Pennsylvania, Donald Trump and Hillary Clinton may be close to locking up their respective parties’ presidential nominations. The Oregon primary may not matter after all. 

But whether or not the outcome is sealed up, the presidential candidates are expected to come here. John Kasich is scheduled to campaign in Oregon this week. Trump, Clinton and Sanders should come, too.

The only other remaining candidate, Ted Cruz, won’t show up. Cruz and Kasich cut a deal by which Cruz will concentrate on Indiana and Kasich will campaign in New Mexico and Oregon. Their collective goal – and increasingly desperate hope – is to win enough delegates to block Trump’s seemingly inevitable march to the GOP presidential nomination this June. Kasich says the divide and conquer strategy was necessary because he and Cruz have limited time and campaign cash.

Kasich has been embraced by a good chunk of Oregon’s GOP establishment, with former Oregon lawmaker Bruce Starr steering his campaign activity here. Kasich’s pragmatic approach to policy and his refusal to engage in negative campaigning fit pretty well with Oregon’s temperament, but the Ohio governor may be viewed by GOP conservatives as not conservative enough. For example, Oregon’s pro-life leader said the Kasich-Cruz deal wouldn’t change her group’s endorsement of Cruz. It also doesn’t help that the Kasich team neglected to submit anything for the Oregon Voters’ Pamphlet.

On the Democratic side, Bernie Sanders may make his Oregon campaign a referendum on issues he wants to see in the party’s national platform. Sanders sent out a slick mailer devoted entirely to five-point plan to combat climate change. He also has shown an ability to attract a huge crowd at his previous rallies in Portland.

Clinton has experienced hands guiding her Oregon campaign activity. Expect the Clinton pitch in Oregon to be for party unity in the fall to prevent Trump or any other GOP candidate from capturing the White House. Clinton might underscore the need for party unity by pointing to the nomination of U.S. Supreme Court justices who will preserve abortion rights and key aspects of Obamacare and possibly overturn Citizens United, the decision that opened the floodgates to large and sometimes secret corporate campaign contributions.

A Trump appearance, which his local backers are encouraging, would be an event. Despite promises of acting more presidential on the campaign trail, Trump seems to be back to his old ways – calling out critics and taking aim at Clinton. At a rally this week, Trump mocked Kasich for always campaigning while he’s eating.

Because Oregon’s Democratic and Republican primaries are closed, non-affiliated Oregon voters won’t get a chance to cast a ballot for a major party candidate. That invariably incites a debate about a different kind of primary that allows everyone to vote, regardless of party registration.

The Oregon primary may not really matter in determining who wins the 2016 GOP and Democratic presidential nominations, but it will make many Oregonians feel as if their votes matter a little bit. Oregon’s handful of delegates may be enough to push Trump near or over the 1237 delegates he needs to capture the GOP nomination on the first ballot and avoid a contested convention. Oregon’s Democratic vote could lend its voice to the need for progressive platform planks. .

We aren’t likely to see candidates eating at our favorite local diners, but are likely to see them at events, not just faces in the backseat of limousines rushing to or from the airport after a fly-in fundraiser. That makes the Oregon primary matter. Almost.

The Long Shadow of IP28

An initiative to raise the tax in Oregon on corporations with large sales is destined to spark a sharp argument over business paying its fair share and taxes that lead to higher consumer prices.

An initiative to raise the tax in Oregon on corporations with large sales is destined to spark a sharp argument over business paying its fair share and taxes that lead to higher consumer prices.

Oregon faces a lot of serious issues, but they all may pale in the shadow of IP28, the proposed initiative that would increase the minimum tax paid by corporations with sales exceeding $25 million per year in Oregon. 

Proponents and opponents will argue about the merits and demerits of IP28, but it is hard to argue with Duncan Wyse, the president of the Oregon Business Council, who says, “IP28 will suck up the money and energy that could go toward other issues.”

Wyse and others worry the debate over IP28 will widen Oregon’s political divides as well as overshadow other important debates ranging from improving rural economies to solving the housing affordability crisis in Portland.

The 2016 Oregon legislative session considered, but failed to pass an alternative to IP28. Backers have until July to collect the needed signatures to place the initiative on the November general election ballot. Few doubt it will make it to the ballot. 

The Oregon Legislative Revenue Office estimates IP28, if approved by voters, could generate as much as $5 billion in new revenue during a biennium. A Better Oregon, the group pushing the initiative, says the additional revenue should go to public education, health care and senior citizen services. 

IP28 would turn Oregon’s corporate minimum tax into a gross receipts tax for larger corporations. Supporters say the measure will force out-of-state corporations that profit from sales in Oregon to pay their fair share of taxes. Opponents claim it would result in higher consumer prices.

Because the initiative exempts other kinds of businesses (S corporations, partnerships, B corporations and limited liability companies), business advisers say corporations may organize differently in Oregon to avoid the higher tax. Critics also note that the initiative can’t bind a future Oregon legislature on how to spend the money it would raise. While lawmakers may feel politically obliged to spend on the purposes proposed by initiative backers, they wouldn’t be constitutionally bound to do so.

Backers say the measure will make up for Oregon’s low overall taxation on business.

There is no doubt or disagreement the initiative will spark a vigorous, if not rancorous debate. The 2010 special election campaigns over Measures 66 and 67 – which raised the corporate minimum tax and increased the tax rate for higher-income Oregonians to raise $733 million – degenerated into name-calling and fractured political relationships, especially between business and organized labor. IP28 would impose a bigger tax change, which former state economist Tom Potiowsky has called a “sales tax on steroids.”

While there is plenty of time for arguments over IP28, its shadow already may have a chilling effect on other campaigns. What shaped up a bombshell election season in Oregon has turned out to be more of a dud. The gubernatorial race is flying under the media radar. The rumored challenge-from-the-left to Oregon Senator Ron Wyden never materialized. The race for the Democratic nomination for secretary of state, which features three candidates with credentials, has drawn little attention.

The 2016 legislature managed to pass a minimum wage bill that will avoid having that issue on the November ballot. But the session itself was marred by partisan wrangling and arguments over the purpose of an even-year, 35-day legislative session. The rancor also has led to a recall effort against Senate President Peter Courtney.

If IP28 casts a long shadow on Oregon politics, the raucous presidential primary is the big elephant in the room. It is the dominant topic of political conversation on news outlets and across kitchen tables. The “Final Five” candidates in the running for the Republican and Democratic presidential nominations are expected to campaign in Oregon prior to the May 17 primary, drowning out pretty much everyone else.

The November general election could be a different matter as the GOP and Democratic frontrunners Donald Trump and Hillary Clinton both have unusually high negative ratings according to national polls. Assuming they capture their respective party nominations, they would mount vigorous campaigns aimed at stimulating voter turnout, with Trump appealing to alienated white blue-collar workers and Clinton trying to recruit younger voters activated by Bernie Sanders’ rhetoric about a rigged economy and establishment politics.

Those appeals for radical change could complicate the efforts of IP28 opponents, who already acknowledge the initiative starts with a majority in support.

A Tale of Two Tax Systems

Washington’s sales tax, which carries the revenue load in the Evergreen State, faces a shrinking tax base because of the growth of online sales and the ease of driving to Oregon that doesn’t have a general sales tax.

Washington’s sales tax, which carries the revenue load in the Evergreen State, faces a shrinking tax base because of the growth of online sales and the ease of driving to Oregon that doesn’t have a general sales tax.

Oregonians regard their state tax system as the worst possible – except for all the alternatives, especially a sales tax. That hasn’t blunted calls for “tax reform” in Oregon, including a new initiative to subject large corporations to a gross receipts tax.

KUOW, the NPR affiliate in Seattle, aired a story about the woes of Washington’s state tax system, which depends heavily on a sales tax. The punch line of the piece was that if Washington had Oregon’s system that taxes income, it would raise almost double what the state generates now per fiscal period.

That “unofficial calculation” by the Washington Department of Revenue is based on data that shows the Evergreen State’s sales tax base is shriveling as a percent of an expanding economy, while Oregon’s relatively progressive income tax rakes in increasing revenue when the economy expands. 

Studies in both states have shown that a sales tax may be a little less volatile than an income tax in up and down economic cycles. But Washington’s analysis of its sales tax base shows it may be inadequate to the task of keeping pace with economic growth when more and more economic growth occurs online. It doesn’t help that Washingtonians cross the border into Oregon and make purchases they can cart home without paying sales tax. 

KUOW’s online version of its story includes “Washington’s Chart of Doom,” an analysis by Treasurer James McIntire that shows sales tax revenues peaked in 1987 as 6.93 percent of the state’s economy and have steadily declined since then to 4.8 percent in 2015. McIntire projects revenue to keep falling to 4.65 percent by 2021.

That’s a tough trend line, aggravated by economic and population growth that places new demands on public revenues.

Oregon and Washington have talked for years about the three-legged stool of taxation – income, sales and property. You don’t have to look far for a state with all three – Idaho. The KUOW report says if Washington adopted Idaho’s tax system, it would collect $10 billion more per fiscal period.

Oregon goes through spasms of tax reform fever, which often involve brief romances with a sales tax. The KUOW story quotes Oregon Legislative Revenue Director Paul Warner as estimating it would take a 12 percent sales tax to equal what the state’s income tax yields. Washington’s state sales tax rate is 6.5 percent.

Contrasts between the two states note that Oregon has no sales tax, which isn’t exactly true. Oregon and some Oregon localities have imposed a few selective sales taxes, most notably on hotel and motel stays, and in some tourist-centric towns on food and entertainment. When you add in Oregon’s gas tax and state-controlled pricing on distilled spirits, one of the main selling points of a sales tax – capturing revenue from tourists – isn’t especially convincing, not that Oregonians seem persuadable on the subject anyway.

There is little motivation from retail businesses to support a sales tax, especially in border communities like Portland that reap benefits from Washington commuters who already drive here to work, eat lunch at restaurants, shop on their way home and pay income tax on their Oregon-based earnings. This explains the success of the Costco store on the Oregon side of the Glenn Jackson Bridge. 

The Oregon tax system demon is economic volatility, which produces plentiful revenues in good times and sparse revenues in bad times. Economic theory would say that problem is curable by stashing away “excess revenue” during economic booms to fill in gaps when the economy lags. This is where economic and political theory diverge. With growing demands for spending, “excess revenue” is hard to define. That drove a GOP-led legislature many years ago to install, with voter approval, the personal income tax kicker, which rebates revenue that exceeds a state revenue forecast by 2 percent or more. Oregonians received a modest personal income tax kicker rebate based on their 2015 tax returns, which averaged around $125 and sucked $402 million out of the state’s General Fund.

It’s inevitable some Washingtonians and Oregonians will continue to cast covetous eyes at each other’s tax system as political leaders struggle with how to generate revenue, particularly for public education. It’s unlikely the two states will trade out their current core taxes, but very likely they will keep complaining about their shortcomings.

Washington to Vote on Carbon Tax

Washington could become the first state in the nation with a carbon tax if voters pass Initiative 732 in November. But state budget analysts warn it could amount to a loss of more than $900 million in tax revenue over a four-year period. 

Washington could become the first state in the nation with a carbon tax if voters pass Initiative 732 in November. But state budget analysts warn it could amount to a loss of more than $900 million in tax revenue over a four-year period. 

Washington state could find itself at the cutting edge of taxing carbon emissions with Initiative 732 heading for the ballot this fall. But opponents and budget analysts fear the bold plan goes a step too far.  

The measure would create a new tax of $25 per metric ton of carbon burned in fossil fuels, including gasoline, natural gas and coal. It also would also shrink Washington’s sales tax rate by one percentage point and virtually eliminate the business and occupation tax for manufacturers.

If the initiative passes, Washington will become the first in the nation to tax carbon emissions as other states look on.

“I-732 encourages cleaner energy solutions by shifting the tax burden onto carbon pollution and away from regressive and burdensome taxes that hurt families and businesses,” says Carbon Washington, the group behind the initiative.

Sounds great. So, what’s the problem? Well, as always in the process of creating new taxes and changing the rates of old ones, you have to look at the broader picture. And the big question surrounding I-732 comes down to its fiscal impact, which thus far has been defined by polar opposite projections from either side of the initiative battle.

Carbon Washington argues the tax would ultimately be revenue-neutral, bringing in an estimated $1.7 billion a year while returning roughly that much to taxpayers by lowering the sales tax. State budget analysts with the Office of Financial Management, on the other hand, estimate the tax change would amount to about $915 million in lost revenue for Washington over a four-year period, a painful gut punch for a state where annual budget shortfalls have become the norm.

Yoram Bauman, the founder of Carbon Washington, fired back at the OFM in February, saying the agency miscalculated the fiscal impact of I-732. Bauman added that OFM analysts are not carbon tax experts.

However, the Department of Revenue and legislative budget analysts also project I-732 would create a net revenue loss for the state.  

Several major state organizations have come out against the initiative, including the state Democratic Party, the Washington State Labor Council and the International Association of Machinists and Aerospace Workers. Ultimately, they argue that it’s the worst time to experiment with a change that could jeopardize so much tax revenue.

“At a time our state is struggling to fund basic services – including public schools, mental health facilities and many other essential services – I-732 would send Washington in the wrong direction and create more damaging austerity choices,” Labor Council President Jeff Johnson said.

Numerous environmental activist groups support I-732, but it's also drawing criticism from some environmentalists. Several factions of Democrats in the legislature and county-level Democratic organizations across the state also are lining up behind the initiative, which supporters tout as an economic stimulus that will do something concrete to address climate change without hurting the middle class.

Lowering the B&O tax for manufacturers would help keep living wage jobs in Washington, proponents argue. The group anticipates reducing the sales tax would save hundreds of dollars a year for the average household in Washington. The initiative would provide up to $1,500 a year in tax rebates for about 400,000 low-income households across the state, Carbon Washington says.

The legislature had a chance this winter to alter the carbon tax proposal and address revenue concerns. But in a short session ruled by more immediate budget woes and questions about adequate education funding, that simply didn’t happen. It also didn’t happen during the special session that ended March 29.

Now, it’s up to the voters to decide what to do. Given Washington voters’ recently muddled history on tax reform measures, it’s anyone’s bet as to how this one will turn out on Election Day. 

Justin Runquist is CFM’s communications counsel. He is a former reporter for The Oregonian, The Columbian and The Spokesman-Review. Away from the office, he’s a baseball fanatic with foolhardy hopes that the Mariners will go to the World Series someday. You can reach Justin at  justinr@cfmpdx.com and you can follow him on Twitter at @_JustinRunquist.

Oregon's Mailed In Gubernatorial Race

Oregon pioneered mail-in balloting and now may be spearheading a new innovation – the mailed in gubernatorial campaign.

Oregon pioneered mail-in balloting and now may be spearheading a new innovation – the mailed in gubernatorial campaign.

The 2016 presidential race is a tornado of tweets, debates and name-calling. Meanwhile, the 2016 Oregon gubernatorial race is more like a still wind with few Facebook posts and a couple of press releases. Oregon has led the nation in mail-in voting. Now we may be leading it with mailed in campaigning.

Democratic Governor Kate Brown seems to have her foot on the pause button. Republican challenger Bud Pierce is running a campaign that resembles an earnest, sleepy Sunday morning political talk show. Allen Alley, who has run for governor before and entered the race late this go-round, appears to be resting on his name familiarity and party ties to win the GOP nomination.

For Oregon voters looking for a roll-up-your-sleeves discussion of policy, there is mostly silence. For voters rooting for a raucous, bare-knuckles campaign, there is just an empty prize-fighting ring. The political combatants are evidently occupied elsewhere.

Chances are the fireworks will come. There is partisan animosity about a Democratically-backed minimum wage boost, a requirement for paid sick leave and a utility-negotiated deal to end coal power in Oregon. Partisans on both sides of the political aisle may be annoyed by the lack of a vigorous exchange on policy or politics by the candidates.

It’s almost as if Oregon politicians are withdrawing in the face of a tumultuous and coarse political primary battle, as Donald Trump and Ted Cruz wage war in the gutter, and while Hillary Clinton and Bernie Sanders spar over her Wall Street speeches and the realism of his policy proposals.

This year shaped up as a show-stopper election in Oregon with just about everyone except Senator Jeff Merkley appearing on the ballot. But the promise of a blockbuster ballot has shriveled into a deflated balloon as serious races failed to materialize and the races that exist have resembled junior high school dances with the girls hugging one wall and the boys the other. 

The gubernatorial race so far has been a non-starter. Brown, who took over for Governor John Kitzhaber amid an influence-peddling scandal, got high marks for a strong start. She demonstrated leadership and wielded her friendly personality to good stead. But since then, Brown has grown more cautious, even as the Democratic-led legislature punched through liberal legislative measures in the short 2016 session.

While Brown’s reticence could be explained as politically expedient, it is harder to understand the political logic of Pierce and Alley. Challengers have to lay siege to an incumbent, creating voter willingness to consider an alternative. The best blow Pierce has landed is that things aren’t quite up to snuff in Salem. Alley has basically said we can do better than what we’ve got. It usually takes more than that to unseat an incumbent, even one running for the job for the first time.

Oregon has become a reliable blue state, making a statewide election victory for a Republican a dubious prospect any time. Prospects in 2016 could be even dimmer if Donald Trump is the party’s national standard-bearer, forcing down ballot candidates to spend time disavowing his statements and stands. Neither Pierce nor Alley seem on the same wave length as Trump or his closest rival, Ted Cruz. Maybe they figure the less said, the better.

The closest to political excitement so far in Oregon was a Bernie Sanders rally last week, which was timed to boost his support in the Washington state Democratic presidential caucus. Sanders also filled the Portland TV airwaves with his commercials.

The Oregon primary is now only a few weeks away, so you expect the political pace here to pick up with a gubernatorial debate or a major policy speech or something. Maybe the candidates were waiting for spring break to end to launch their real campaigns. Or maybe they are on an extended spring beak themselves.

Portlanders have seen a respectful contest to replace Charlie Hales as mayor. The candidates have talked about policy differences, which are tiny, and the two frontrunners insisted that other candidates be included in mayoral forums. All very polite, very Portland, very much material for the next season of Portlandia. 

Gary Conkling is president and co-founder of CFM Strategic Communications, and he leads the firm's PR practice, specializing in crisis communications. He is a former journalist, who later worked on Capitol Hill and represented a major Oregon company. But most importantly, he’s a die-hard Ducks fan. You can reach Gary at  garyc@cfmpdx.com and you can follow him on Twitter at@GaryConkling.

Session Anger Sparks Courtney Recall Drive

[Photo Credit: The Oregonian] Despite brokering the bipartisan deal that allowed the rancorous 2016 Oregon legislative session to end smoothly and early, Senate President Peter Courtney faces a recall drive led by a Woodburn Republican who says the longest serving Senate president in state history is “out of touch.”

[Photo Credit: The Oregonian] Despite brokering the bipartisan deal that allowed the rancorous 2016 Oregon legislative session to end smoothly and early, Senate President Peter Courtney faces a recall drive led by a Woodburn Republican who says the longest serving Senate president in state history is “out of touch.”

Senator Peter Courtney, the longest serving Oregon Senate president, is facing a recall attempt for the third time in a long political career that stretches back to 1980. The drive, which started collecting signatures over the weekend, may represent spillover hard feelings from the 2016 legislative session.

Courtney's critics are perturbed about successful Democratic legislation in the short 2016 session to phase out coal power and raise the minimum wage. They also are upset that Courtney didn’t push through the resolution to ask voters to approve setting aside 2 percent of Oregon Lottery proceeds to help veterans.

The coal-to-clean bill, which was hammered out as a compromise between electric utilities and environmentalists to avoid a more aggressive ballot measure this fall, created political tension during the short session. House and Senate Republicans demanded that bills be read aloud in their entirety, which slowed down session progress and jeopardized passage of several major bills, including the coal-to-clean legislation.

Some of the venom of the short session landed on Courtney, who played a lead role in convincing Oregonians to amend the state Constitution and permit annual sessions. Skeptics said it was unlikely lawmakers would stick to minor housekeeping legislation and budget tweaks in the 35-day, even-year session. The 2016 session was packed with high-profile bills, including multiple minimum wage bills, several marijuana industry measures and significant energy and environmental legislation.

Matt Geiger, a Woodburn business leader who ran unsuccessfully for a House seat in 2014, is spearheading the Courtney recall. Geiger was planning to make another run for the House, this time as an Independent, but dropped his plans to pursue the recall.

Geiger said the higher minimum wage will harm the agricultural and small business sectors. The utility-environmental compromise on coal, Geiger said, would drive up electricity rates without real environmental benefits in Oregon. He also questioned a bill introduced by Courtney that would allow mass transit districts to impose a payroll tax. That bill never made it out of committee during the 2016 session, largely because Courtney let it sit in deference to the bill’s critics. 

“It’s time we remove from office someone who is clearly out of touch with the needs of his community and who only seems to care about which special interest is writing him a check,” Geiger said in a press release.

However, Dick Hughes, editorial page editor for the Statesman Journal, wondered aloud in a weekend column why Courtney is being targeted. The recall pecks at the coal-to-clean bill that passed, but it fails to mention the California-styled cap-and-trade energy bill that Courtney blocked, to the frustration of many Democrats.

“Peter Courtney is an odd target,” Hughes wrote. “I’m befuddled. The liberalist liberal among legislative leadership is House Speaker Tina Kotek, not Courtney.” It was Courtney who brokered the deal between Republicans and Democrats that allowed the rancorous session to end smoothly and early.

Courtney became Senate president in the 2003 session when there were 15 Democrats and 15 Republicans. He was the only Senate Democrat who Republicans trusted enough to hand him the gavel. He has held the post since then.

Courtney won re-election in 2014 and hasn’t given any firm indications of whether he will run again in 2018 when he will turn 75. The two previous recall efforts against him failed to gather enough signatures. In Oregon, the last 10 recall petitions have failed to receive enough valid signatures. The last successful recall election occurred eight years ago with the ouster of a Wheeler County district attorney. 

The Legislative Trail from Salem to Olympia

Passing bills in the Oregon and Washington legislatures is similar, but markedly different in key ways, such as a power Rules Committee and permitting floor amendments in Washington. But Oregon knows how to adjourn on time; Washington not so much.

Passing bills in the Oregon and Washington legislatures is similar, but markedly different in key ways, such as a power Rules Committee and permitting floor amendments in Washington. But Oregon knows how to adjourn on time; Washington not so much.

Early adjournment of Oregon's short 2016 legislative session provided an opportunity to hop on a train and see the waning days of the Washington Legislature in Olympia. I was looking for similarities and differences, and I found plenty of both. 

Generally, Oregon's and Washington’s legislatures are similar. They are both “citizen” legislatures. They meet annually, with longer sessions in odd-numbered years and shorter ones in even-numbered years. They also tend to wait until the last minute to pass major bills, after extended periods of political jockeying and horse-trading.

Now, here are are some key differences I noticed. 

Washington's Rules Committee wields real power: All Washington policy bills must go to through the Rules Committee before reaching the floor. This gives the Rules Committee significant authority, ultimately deciding, on almost all of the bills, whether they die or go to the floor for a vote. Oregon also has a politically driven Rules Committee, but leadership only sends select bills there for review – or to wait until a political compromise is worked out behind closed doors. 

Washington’s Senate operates more like Congress: Washington has a lieutenant governor, who presides over the Senate but only can vote in case of a tie, much like the vice president. Washington’s lieutenant governor is elected separately from the governor and serves with no term limit. Oregon doesn’t have a lieutenant governor. The independently elected secretary of state is next in line, as we saw last year when Gov. John Kitzhaber resigned and Secretary of State Kate Brown replaced him. Oregon’s Senate selects its own presiding officer from its membership, who votes on all bills just like his or her colleagues.

Floor amendments are permitted in Washington, but not in Oregon: Washington lawmakers can and often do offer floor amendments. On the day I visited, a public school bill that had been jerked to the House floor without going through the Rules Committee faced a floor debate over 27 separate amendments. After a lengthy debate, eight amendments passed, including one that replaced the entire original bill. Oregon lawmakers can petition to have a bill pulled out of committee, but it rarely happens. Once a bill reaches the Oregon House or Senate floor, it is not subject to amendment. Lawmakers can defeat a bill, vote to send it back to committee or vote for or against a minority report, if one is approved in committee. Most of the time floor votes on “amendments” are stalling tactics in Oregon. Overall, the committees have more sway in the Oregon legislative system. 

Oregon gets out on time, Washington does not: In six of the last seven years, Washington has developed a habit of missing constitutionally established deadlines on the budget, forcing one or more special sessions each time. Again this session, the Washington Legislature fell short of reaching a budget agreement by Thursday at midnight and went into a special session almost immediately. Governor Jay Inslee vetoed 27 bills as punishment for not reaching a budget deal in time. The intention behind his actions is to stop the cycle of consistently late budgets.

In Oregon, experienced legislative leaders have been able to adjourn early, including in the shorter even-year sessions during which Oregon has 35 days compared to Washington’s 60 days to hammer out bills and adjust the budget. Washington, unlike Oregon, has tried to skate around a state Supreme Court ruling that the Legislature inadequately funds public schools, which puts knots in the budget process.

Seeing the differences between legislating in Salem and Olympia firsthand was insightful. It was a reminder that the intricacies of how a bill becomes a law can vary from state to state and from bill to bill, but it’s never quite as simple as the Schoolhouse Rock interpretation of how a bill becomes a law.