State Economy

New Workplace Battlefront Opens on Flexible Scheduling

 The next workplace battlefield is emerging over flexible scheduling of workers in sectors such as fast food restaurants. The situation further rankles Oregon business leaders who are still upset over paid sick leave, a higher minimum wage and Measure 97.

The next workplace battlefield is emerging over flexible scheduling of workers in sectors such as fast food restaurants. The situation further rankles Oregon business leaders who are still upset over paid sick leave, a higher minimum wage and Measure 97.

Democratic lawmakers are teeing up legislation for the 2017 session to mandate scheduling rules for some workers, which could make testy relations with Oregon’s business community even testier.

Senator Michael Dembrow, a Portland Democrat, says it’s timely to tackle the legislation next session. He noted the 2015 Oregon legislature imposed a moratorium on municipalities passing “flexible schedule” ordinances. That moratorium expires next year.

Dembrow’s legislation probably would mirror ordinances adopted in Seattle and San Francisco that require employers with large numbers of part-time workers to provide advance schedules or pay extra compensation.

Supporters say sudden work schedule changes make it hard and costly for low-wage workers to arrange for child care or balance work for second and third jobs. Business advocates say employers need the ability to adjust worker schedules to deal with emergencies and when employees call in sick.

Business groups are already rankled about workplace legislation following the 2015 session when Democrats pushed through bills to mandate paid sick leave and raise the state’s minimum wage.

They haven’t cooled down as business representatives walked away after Dembrow's first interim work group meeting on the flexible scheduling bill.

There is broad business opposition to Measure 97, the initiative appearing on the November 8 general election ballot that would impose a gross receipts tax on corporations with more than $25 million in annual sales in Oregon. Business leaders predict business closures or departures if the measure passes and warn they will be reluctant participants in any negotiations on an alternative if it fails. That wariness could extend to other issues, including the flexible scheduling bill.

After demurring, Governor Kate Brown endorsed Measure 97, even though she says she hates it. Brown based her support on the need for substantial additional revenue to plug a $1.25 billion or larger projected budget hole in the 2017-2019 biennium. Brown and her GOP challenger Bud Pierce will hold their first gubernatorial debate Saturday in Bend and can expect to be asked about the flexible scheduling bill.

When push comes to shove, some business leaders may prefer statewide flexible scheduling legislation as opposed to the specter of cities such as Portland and Eugene adopting their own local ordinances. But bruised political feelings among business leaders also could diminish or even extinguish their willingness to compromise.

Pierce Dumps Trump as Gubernatorial Debates Loom

 GOP gubernatorial candidate Bud Pierce jettisoned his endorsement of Donald Trump on the run-up to this Saturday’s first debate with Governor Kate Brown in Bend. Four more debates will follow into mid-October.

GOP gubernatorial candidate Bud Pierce jettisoned his endorsement of Donald Trump on the run-up to this Saturday’s first debate with Governor Kate Brown in Bend. Four more debates will follow into mid-October.

Few people aside from Donald Trump believe the unconventional GOP presidential candidate can capture Oregon in the November 8 general election. Now Oregon’s GOP gubernatorial candidate Bud Pierce has joined the chorus.

Pierce withdrew his endorsement of Trump this week, claiming the New York real estate magnate isn’t unifying the Republican party and is driving away Hispanic voters. Pierce says Hispanic voters have a natural attraction to political conservatives and he is actively seeking their support to upset Governor Kate Brown.

In an interview last month, Brown urged Pierce to disavow Trump and “do the right thing.” Whatever the right thing might be, Pierce stopped short of pledging to vote for Democrat Hillary Clinton. He said he won't cast a ballot for anyone in the presidential race this year.

Jacob Daniels, Trump’s Oregon campaign chairman and perhaps the only person in the state who thinks his man will win here, dismissed Pierce’s dropped endorsement as insignificant.

The most recent public polling shows Brown with a comfortable double-digit lead over Pierce, but some Oregon Democrats have been uneasy over her largely invisible campaign while she hit the campaign fundraising trail. Pierce hit the airwaves with hard-hitting TV ads last month. Brown went up in the last few days with a softer ad that describes her political start as a children’s advocate and her achievement s governor boosting state K-12 school funding.

Brown and Pierce are scheduled to square off in their first face-to-face debate on Saturday in Bend, which may only rate second billing to home football games in Eugene and Corvallis. The gubernatorial candidates debate again September 30 in front of the Portland City Club, October 6 in Eugene, October 13 in Medford and October 20 in Portland.

Pierce has called for fresh thinking in Salem while Brown has touted her leadership as the successor to John Kitzhaber, who resigned at the beginning of his unprecedented fourth term. No seminal issues have created a sharp division in the race, though the Oregon-Oracle $100 million settlement of the Cover Oregon fiasco may have averted a flash point in the race. The settlement that involved six separate legal actions came just before Brown was scheduled to be deposed.

The debates are likely to underscore Pierce’s opposition to and Brown’s endorsement of Measure 97, the initiative that would impose a gross receipts tax on corporations with more than $25 million in annual sales in Oregon. Proponents and opponents of the tax measure are waging a vigorous campaign that pivots on how much of the tax will filter down to small businesses and ultimately Oregon consumers. Early polling indicates the measure has strong support.

The gubernatorial candidates should be pressed on how they would respond if the tax measure passes or fails. Measure 97 is projected to generate $3 billion in new state tax revenue annually, which would more than plug the state’s anticipated $1.5 billion biennial budget hole. However, the state will face severe spending challenges on education and health care spending if the measure fails.

As the debates unfold, a key target for each candidate will be attracting non-affiliated voters. Brown can generally count on the Democratic majority in urban areas from Portland to Eugene. To win, Pierce may need to catch some of the same populist wind that propelled voters in Oregon to support Trump and Bernie Sanders.

Oregon’s Pending Political Divorce

 Measure 97, which would raise taxes on corporations with more than $25 million in annual sales in Oregon, faces an uncertain future in the general election. However, it does seem certain that it's causing a political divorce in Oregon that will fuel polarization and make compromise harder to find.

Measure 97, which would raise taxes on corporations with more than $25 million in annual sales in Oregon, faces an uncertain future in the general election. However, it does seem certain that it's causing a political divorce in Oregon that will fuel polarization and make compromise harder to find.

Oregon voters can expect political rhetoric to escalate over Measure 97, the initiative to impose a gross receipts tax on corporations with large sales in the state, as the November 8 general election approaches.

However, the more intriguing question may be what will or should happen after the election, regardless of whether Measure 97 passes or fails? Chances are whatever happens will feel like a divorce. Andrew Bulkily, writing for Oregon Business, summed up the situation as going from “gridlock to civil war."

No one disputes that the stakes are huge. Oregon officials estimate Measure 97 will generate $3 billion per year in new state tax revenue. Proponents say most of that tax will be shouldered by large out-of-state corporations that currently don’t pay their fair share of the tax burden in Oregon. Opponents insist that the tax measure will result in higher consumer prices.

Emily Powell, the third generation owner of Powell’s Books, says higher taxes resulting from the passage of Measure 97 could drive the iconic Portland-based independent bookstore out of business. Powell says profit margins in the book business are too small and competition is too stiff to allow the store to raise its prices.

Measure 97 revenues have been touted by supporters, including Governor Kate Brown, as a badly needed and long overdue revenue make-up for K-12 school funding, health care and senior services. Opponents argue that the initiative can’t guarantee how legislators will spend the added tax money and that a big chunk of it will go to cover huge Public Employees Retirement System shortfalls.

There are people on both sides of the initiative who wish a compromise could have been reached to avoid a ballot measure mash-up that could be the most expensive political campaign in state history. Proponents and opponents have each raised double-digit millions of dollars to trade televised jabs this fall. Measure 97 backers weren’t in the mood to compromise, feeling that 2016 could be a moment to push through a major tax change on the ballot.

Which brings us to what happens after the election. If Measure 97 passes, the state’s available discretionary revenue will sharply expand. That would probably erase the projected $1.3 billion state biennial budget hole, but it wouldn’t necessarily determine how the balance of money would be spent. You could expect fierce arguments among interest groups over how much should go to K-12 schools versus investments in health care and senior services – and in higher education. You also could expect some high-profile business response, such as a business like Powell’s Books shuttering.

If Measure 97 fails, the state budget hole will loom even larger, potentially threatening cuts to K-12 and higher education funding and threatening Medicaid expansion. Perhaps worse, many in the business community may refuse to enter into discussions about how to meet that budget shortfall, PERS underfunding or tax reform because of the fractious fight they had to wage to defeat Measure 97. Oregon lawmakers may see hearing rooms full of angry faces unwilling to sit together in work groups to explore solutions.

It’s likely that the political zombie of a state sales tax would re-emerge. The sales tax has been the default idea for how to reduce the volatility of Oregon’s existing income-tax-heavy revenue system. However, sales taxes face their own haunting challenges, such as Internet sales. In Oregon, the appetite for a sales tax by voters has the same taste notes as brussels sprout ice cream.

If Measure 97 passes and Brown wins election, it will give her an effective mandate to guide how the new tax revenue should be allocated. However, it could dampen enthusiasm for climbing the steep hill to craft, pass and avoid a referral on a major transportation funding measure.

If Brown wins, but Measure 97 fails, Brown will have the challenge of trying to patch together a balanced budget, with limited credibility to court business support for alternative tax-generating options.

Brown’s position also would be weakened because she must run for election again in 2018 for a full four-year term. As secretary of state, Brown succeeded John Kitzhaber as governor after he resigned in 2015 and is running this year to fill out the final two years of the former governor’s four-year term.

This is a fairly grim picture. Sort of like a family portrait after a divorce.

Over time, views will soften, the more contentious personalities will be pushed aside and a dialogue can resume. But as the 2016 presidential election has revealed, strong political undercurrents can be unleashed, deepening polarization and crippling efforts to find common ground – or even a table where everyone can sit around to talk.

A Crack in Public Pension Wall Emerges in California

 Many Oregon political leaders believe reforms are needed to public employee pensions to trim costs and plug a swelling unfunded liability, but few think reforms can pass a court test. Now a crack may be emerging in that impenetrable legal wall.

Many Oregon political leaders believe reforms are needed to public employee pensions to trim costs and plug a swelling unfunded liability, but few think reforms can pass a court test. Now a crack may be emerging in that impenetrable legal wall.

A state appellate court ruling in California will be studied carefully for its implications on whether public employee pension benefits are immutable or can be modified.

While unlikely to generate any immediate political response, the court ruling, if upheld on further appeal, could entice state lawmakers in California and elsewhere to explore public employee pension changes in the face of ballooning unfunded liabilities. Oregon’s Public Employees Retirement System unfunded liability has swelled to $21 billion.

The need to allocate more money for state and local public employee pensions has been one of the hardest fought issues in state legislatures around the country. Pension bills that have passed, including in Oregon, have mostly been struck down by courts as unconstitutional.

The Sacramento Bee reported the unanimous ruling by a California state appellate court says there is no absolute bar to modifying public employee pensions. The vested right to a pension “is only to a reasonable pension, not an immutable entitlement to the most optimal formula of calculating the pension,” the court ruling said. “The Legislature may, prior to the employee’s retirement, alter the formula, thereby reducing the anticipated pensions…so long as the …modifications do not deprive the employee of a reasonable pension.”

The effective prohibition of any change to an existing public employee pension provision, called the California Rule, stems from a series of court decisions beating back efforts to trim benefits and reduce costs. You could say there is an Oregon Rule, too.

Oregon’s latest attempt at what legislators called public pension reform was largely thrown out by the state Supreme Court. That’s what makes the new ruling in California intriguing. Does it reflect a crack in the California Rule? If so, how wide is the crack? And, most important, will the crack stand up when appealed to the California Supreme Court?

The genesis of the crack began in the judicial bankruptcy proceedings for the City of Stockton. Federal Judge Christopher Klein said "pension benefits could be reduced  in a bankruptcy action because bankruptcy is nothing by the impairment of contracts,” according to the Sacramento Bee’s reporting.

California’s Public Employees Retirement System (CalPERS) argued reducing state employee pensions couldn’t be ordered by a federal judge. Klein rejected CalPERS’ claim. However, Stockton never tested Klein’s opinion and emerged from bankruptcy without touching public employee pensions.

The appellate court opinion involved Marin County’s implementation of one of the public employee pension reforms included in the 2012 pension reform legislation enacted by the California Assembly and signed into law by Governor Jerry Brown. The provision that Marin County adopted prohibits using unused sick leave to “spike” pension benefit calculations.

There is a long road ahead before anyone will know whether the crack in the California Rule is real and just what it might permit in terms of modified pension benefits. That’s little consolation to lawmakers who will face budget holes and rising pension costs when they return to their state capitals early next year. But it does give them something to watch that could open a new conversation down the line.

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.

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.

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 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 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.

Oregon’s Running Start on Affordable College

 Free college education has become a campaign slogan in the 2016 presidential election, but Oregon has gotten a running start with the first class of high school seniors facing a deadline next week to apply for the Oregon Promise.

Free college education has become a campaign slogan in the 2016 presidential election, but Oregon has gotten a running start with the first class of high school seniors facing a deadline next week to apply for the Oregon Promise.

Oregon has gotten a head start on the challenge of free college education, with a deadline next week for high school seniors to apply for the new Oregon Promise program, which guarantees a “free” two-year education at a state community college.

According to state financial aid officials, more than 12,000 Oregon high school students have signed up, with the total expected to go higher by next Tuesday. That’s when students must have filled out their online application, submitted high school transcripts to show they have a 2.5 grade point average or better and completed a financial aid application. 

In the first year of the program, an estimated 7,000 Oregon Promise applicants are expected to enroll, which would push up the percentage of high school graduates who move on to college in the state. 

Senator Mark Hass, D-Beaverton, won legislative approval for the program because of its market appeal to students from lower income households and its relatively small cost. As The Oregonian’s Betsy Hammond has pointed out, many Oregon Promise applicants already would have qualified for financial aid that covered virtually all of the cost of tuition at a community college.

Even so, Hass says the program entices students to apply who might otherwise have not even bothered. Going to community college allows most students to stay at home and continue jobs they had in high school.

Eligible Oregon Promise students will be required to take a full course load and maintain a good grade level. They can take courses needed to move on to a four-year degree-granting institution or to earn an industry certificate. Hass modeled his program after one in Tennessee, which he says has increased enrollment at both community colleges and four-year colleges and universities.

 The Oregon College Savings Plan allows for student accounts that can accept contributions from parents, grandparents or other relatives and realize tax-free earnings when they use the money for college tuition.

The Oregon College Savings Plan allows for student accounts that can accept contributions from parents, grandparents or other relatives and realize tax-free earnings when they use the money for college tuition.

Another Oregon program is helping college students hold down debt. The Oregon College Savings Plan, which began in 2001, now has more than $1.2 billion in assets spread over 86,000 student accounts. More than $170 million was contributed to Oregon College Savings Plan accounts last year.

Students are able to draw on their account to pay for tuition and other qualifying educational expenses when attending college or an accredited technical school. Oregon offers a tax deduction for contributions up to $4,600 for married taxpayers filing jointly or $2,300 for single filers, but tax-free earnings are the real advantage when the funds are withdrawn for qualifying college expenses.

Not every household has the cash to contribute to the plan. However, student accounts can accept contributions from more than parents. Oregon College Savings Plan officials point out that whatever money can be tucked away for a student is money they won’t have to borrow in the future when they attend college.

Assets in the plan are subject to investment cycles, so there is an element of risk. Many savings plan account holders saw their nest eggs shrink when the housing bubble burst in 2006-2007 and the subsequent financial industry meltdown. Oregon officials replaced the plan’s financial partner and overhauled the program to provide greater protection for student account holdings.

It’s worth noting that 36,000 Oregon college students received $57.3 million in need-based Oregon Opportunity Grants in the 2014-2015 academic year. Another $69 million in student aid will be distributed to qualifying Oregon students this year. Grants of $2,100 are available for full-time, full-year students at eligible Oregon postsecondary institutions.

Oregon has lagged other states in providing need-based student aid, but in recent legislative sessions has stepped up expenditures. The 2015 legislature authorized $140.9 million for Oregon Opportunity Grants, which was almost a 24 percent increase over the previous biennium.

“Emergencies” Top Short Session Docket

 Senate President Peter Courtney helped to convince Oregonians to approve annual sessions and now presides over a 35-day session packed with legislative “emergencies."

Senate President Peter Courtney helped to convince Oregonians to approve annual sessions and now presides over a 35-day session packed with legislative “emergencies."

The strains of a short even-year legislative session sprouted on day one as Republicans in the Oregon House and Senate demanded each of the 260 bills introduced be read aloud word by word.

The message sent by GOP lawmakers is that a 35-day session is too short to consider legislation raising the minimum wage, altering corporate taxation, addressing affordable housing and adopting a pair of far-reaching energy bills.

Those measures are on the legislative docket as a last-ditch effort to keep the issues they raise off the November ballot.

Oregon’s election-year annual session has evolved into a different, though perhaps inevitable role from its original conception. Senate President Peter Courtney, who led the push for annual sessions, sold the plan as a way to update the state’s biennial budget, pass minor legislative fixes and deal with emergencies that couldn’t wait.

Emergencies that can’t wait now apparently include blockbuster ballot measures that would raise the minimum wage as high as $15 per hour, slap a gross receipts tax on large corporate taxpayers and force Oregon utilities to ditch coal-generated electricity.

Senate Republican Leader Ted Ferrioli tweaked Courtney’s memory of the purpose of the short even-year legislative session by saying, “As I recall, Oregonians were sold on the idea of annual meetings with the promise that the ‘short session' would focus on balancing the budget, making small legislative ‘fixes' and responding to emergencies that need immediate attention.  I'm sorry to report that the 'short session' has become little more than a setting for the majority party to pursue an over-reaching agenda of tax increases, regulation and ideological issues dear to the progressives who rule Portland and to a great extent, the rest of Oregon.”

The last part of Ferrioli’s statement reflects his underlying opposition to all of the heavy-duty legislative proposals that are on the table thanks largely to Democratic-leaning activists. The exception is the coal-to-clean bill that was negotiated by utilities and environmental groups.

Governor Brown has offered an alternative minimum wage proposal and Senator Mark Hass, chair of Senate Finance, is proposing a scaled down corporate tax measure.

While those high-profile issues command attention, other significant legislation has been introduced to address marijuana industry regulation, gun sales, processing of rape kits and a few bills that didn’t make it out of the longer 2015 legislative session.

The racer-fast pace of a short session – if a bill can’t get a hearing, markup and a vote in the first two weeks, it is basically dead – provides plenty of fodder for skeptics. House Republican Leader Mike McLane said one-hour notice for a hearing on a major bill doesn’t allow enough time from someone from Eastern Oregon to show up to testify.

In the end, emergencies are in the eye of the beholder. For many Portland-area legislators, for example, the growing housing affordability problem in the city has elevated to a crisis that requires a legislative response. Their proposed response, which requires construction of affordable housing and puts limits on evictions of renters, may not seem so urgent in other parts of Oregon.

Tax Reform, Affordable Housing Top Readers’ 2016 Policy Priority List

 Affordable housing is top of mind for many Oregonians heading into 2016. In September, Mayor Charlie Hales declared Portland had fallen into a housing crisis. The announcement helped set the stage for difficult state-level discussions about how to solve the problem. 

Affordable housing is top of mind for many Oregonians heading into 2016. In September, Mayor Charlie Hales declared Portland had fallen into a housing crisis. The announcement helped set the stage for difficult state-level discussions about how to solve the problem. 

We asked about top 2016 policy priorities, and you answered. The two most mentioned policy priorities were tax reform and affordable housing. A transportation funding plan and changes to the Public Employee Retirement System (PERS) also drew mentions.

As expected, when we asked about leadership, most comments zeroed in on Governor Kate Brown and her role in making needed changes, even as she faces election this November to complete the last two year’s of John Kitzhaber’s term.

Here are some highlights from what you told us.

Tax Reform

Jan Lee, a former state representative from Clackamas County and lobbyist, said it’s again time to explore a sales tax in Oregon. “We need a sales tax with some compensating features to reduce income or property tax a bit so that we have a system that fares better in all economic climes,” Lee says. 

While Oregon’s employment figures have shown strong growth over the past year, incomes have largely remained stagnant. But Lee believes changing the state’s tax system while raising the minimum wage could be enough to spur creation of higher paying jobs across the income spectrum.  

“The legislature can raise the minimum wage; if not one of this fall's ballot measures can achieve that result,” she says. “Maybe instead of some of the other tax credits now made available, there could be more tax breaks that businesses can earn by providing higher paying blue collar and white collar jobs to drive our economy and meet families' needs.”

“As always, close coordination with the Governor's office and open communication between the two party caucuses sets up a better opportunity for leadership to bring people together,” Lee explains. “Consensus is not expected, but achieving a little higher majority on important issues makes the system more workable.”

Tom Wilson, vice president of Campbell & Company, said it’s time to put the clean fuels bill approved during the 2015 Oregon legislative session and a proposed 10-cent per gallon gas tax back on the table. That’s just the start of a series of changes Wilson envisions for Oregon’s tax system, which he says will require top-down leadership.

“Governor Brown needs to lead the charge on this by reminding all the Multnomah County Democrats and Tina (Kotek) that there is actually another part of Oregon that needs to be served,” Wilson says. “Start to fix PERs by requiring members to contribute to their retirement like the rest so do. Do not allow the unions to jam through another tax on corporations.”

Affordable Housing

Four months ago, Mayor Charlie Hales declared a housing crisis in Portland, and news stories continue to surface about Oregonians struggling to keep up with skyrocketing rents and day-to-day housing costs. So, it’s no surprise that affordable housing is top of mind.  

Chris Vetter of  the Vetter Group and Don Mazziotti,  the former head of the Portland Development Commission and now a Portland-based management consultant, listed housing as their primary concern for Oregon in 2016.

“We need more affordable apartments and opportunities for urban professionals,” Vetter says.

Mazziotti says Oregon lawmakers should focus on easing the financial burden on homeowners and renters across the state.  

Jim Standring, president of Tigard-based Westland Industries, took another angle, suggesting lawmakers approach the affordable housing crisis with an eye toward improving Oregon’s land-use laws. 

“Oregon's land use system is totally broken and needs significant change,” Standring says. “Concerns about affordability and homeownership will continue to suffer without these changes.”

We hope you will keep talking to us about the priorities you want addresses in Oregon. We’re listening. 

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 follow him on Twitter at @_JustinRunquist

What Matters Most to You in 2016?

 As we head into a new year, CFM wants to know what policy priorities are most important to Oregonians for 2016. Lawmakers will convene a new legislative session in February, but they will only have 35 days to get their work done .

As we head into a new year, CFM wants to know what policy priorities are most important to Oregonians for 2016. Lawmakers will convene a new legislative session in February, but they will only have 35 days to get their work done.

From tackling Portland’s housing crisis to negotiating a plan for an unprecedented minimum wage hike, Oregon lawmakers have their work cut out for them in 2016.  

Education, health care, transportation, human services, consumer protection, environmental preservation, criminal justice, taxation: Those are just some of the priority areas calling for swift action and firm leadership in Salem as we look ahead to the next year. 

The Oregon legislature convenes February 1 for a brisk 35-day session. Soon after, statewide elected positions will be contested in the May primary and November general elections.

In the meantime, CFM wants to know what issues matter most to you. Is it finding more revenue for education and social services? Improving transportation infrastructure? Or maybe it’s something else entirely.

As we ponder the political battles ahead, CFM invites you to share what you believe demands the most attention from Oregon's elected leaders. Here’s what we’re looking for:

•  What are the top two policy priorities facing Oregon? 

•  For each of your two priorities, provide a short explanation of what you think should be done and how it should get done. Is legislation needed? Better enforcement? Bully pulpit leadership? Bipartisan support? Be as specific as you can.

•  In addition to your top two policy priorities, tell us what you expect in terms of leadership from Oregon's governor and from House and Senate leaders. What would you regard as real leadership? How can leadership be manifested so it produces positive results? What would you see as a lack of leadership?

Send us your submissions through Friday, January 8, and we’ll share them shortly after on our Oregon Insider blog.

This isn't a contest or a survey. Our intention is to reflect the range of thoughts and concerns that everyone shares with us. We will point out areas where a number of people's priorities overlap, but we also will include priorities that may generate only a single recommendation.

Please send your submissions to Justin Runquist, CFM’s communications counsel, at justinr@cfmpdx.com.

We look forward to hearing your thoughts.

Oregon Lags in Full-Time Job Growth

 Oregon is still not an easy place to find full time employment.

Oregon is still not an easy place to find full time employment.

Oregon finds itself in uncomfortable company as one of the hardest states in the nation to find a full-time job, according to an analysis by a group called 24/7 Wall Street.

While Oregon's unemployment rate has dropped to 5.5 percent, its underemployment rate stands at 12.8 percent, largely because of a high number of people who are involuntarily part-time workers.

"Individuals employed part-time for economic reasons accounted for 5.4 percentage points of Oregon’s underemployment rate of 12.8 percent, the fourth highest incidence of involuntary part-time employment nationwide," writes Thomas Frohlich on the 24/7 Wall Street website.

"These workers cited seasonal declines in demand, inability to find full-time work or unfavorable business conditions as reasons for seeking part-time employment," Frohich says. "Such high levels of financial stress, even among the state’s employed population, likely led to greater reliance on government subsidies. Nearly one in five Oregon residents relied on food stamps, the highest proportion nationwide. Many SNAP recipients were likely also part of the underemployed population."

If any consolation, Oregon wasn't the hardest state in which to find a full-time job. That honor fell to Nevada, with an underemployment rate of 15.2 percent. Involuntary part-time workers made up 6.4 percent of the underemployment percentage. Other states with worse underemployment percentages than Oregon were California (14 percent), Arizona (13.8 percent) and West Virginia (13 percent).

Rounding out the bottom 10 were Mississippi (12.8 percent), South Carolina (12.8 percent), Michigan (12.6 percent), Georgia (12.5 percent) and Rhode Island (12.4 percent). South Carolina and Mississippi ranked slightly better than Oregon because their unemployment rates were higher at 6.6 percent and their involuntary part-time worker percentages were lower. South Carolina also experienced a 3.4 percent labor force growth rate from 2007-2014, compared to only a 1.1 percent growth rate in Oregon.

California and Nevada ranked worse than Oregon even though both states have more robust labor force growth at  5.1 percent and 4.8 percent, respectively. Arizona's labor force growth rate only totaled 1.9 percent, while West Virginia's labor force actually declined by 2.6 percent.

24/7 Wall Street calculated the underemployment rate in individual states by adding together those who are unemployed, marginally attached workers, discouraged workers and involuntary part-time workers.

Oregon Senate Republicans tweeted about the report, noting "It's time to put family-wage job creation 1st in the #orleg."

24/7 Wall Street is based in New York and publishes online financial news and opinion. The article was based on statistics generated by the U.S. Bureau of Labor Standards.

Sewage Brewage

 Oregon is known for its creative microbrews. Now it may be known for sewage brewage.

Oregon is known for its creative microbrews. Now it may be known for sewage brewage.

Oregon is known for its creative microbrews. Now it may be known for sewage brewage.

Clean Water Services (CWS), Washington County's wastewater and stormwater utility, wants to stage a competition this summer for brew-masters using water coming directly from its water treatment plant pipes.

Coors touts Rocky Mountain spring water as the source for its beer, but brew-masters in the CWS competition will work with water some say has questionable purity. However, CWS spokesman Mark Jockers says, the water undergoes extensive high-purification treatment and "is the cleanest water on the planet." 

A cold beer on a sunny summer day is reason enough to set up a brewing kettle, but Jockers says the friendly competition is intended to demonstrate there is life for sewer water after treatment. If people will drink it, then they will be comfortable with many other uses, which in turn can conserve precious water resources. 

Clean Water Services is not your typical wastewater utility. It is sponsoring a program called Tree for All with the goal of planting 1 million native trees and shrubs in a single planting season. A CWS insider said the program may miss its goal and wind up planting closer to 2 million trees and shrubs. This is not the kind of "failure" most people identify with government.

The utility mines its wastewater streams to extract minerals and nutrients that, through a patented process, it turns into what it calls a stream-friendly fertilizer. CWS is restoring a large wetland adjacent to its Forest Grove wastewater treatment plant to expand its capacity with what it calls green infrastructure. 

So making beer at the tap end of a sewage treatment plant pipe doesn't seem all that out of character.

According to press reports, at least 12 home brew-masters have signed up for the CWS competition. Home brewer Jeremy Landers told Keely Chalmers of KGW-TV that he is looking forward to the opportunity to use water purer than what he can get out of the faucet in his house.

More pristine water, Landers says, gives brewers more latitude of what to add to create a unique beer flavor. The taste, he explains, comes totally from the brewer's creativity, not the DNA of the water in the beer.

Faint-hearted folks may turn up their nose for so-called sewage brewage. But a lot of people will be eager to stick their noses into a pint.

Asking the Right Questions

Asking the Right Questions.jpg

What is the state getting for the money it is spending?NOTE: A version of this blog, written by CFM Senior Partner Dave Fiskum, first ran in this space two years ago. As legislators return to the Capitol early next month for the 2015 session, it is appropriate to run it again.

If state government is going to operate more effectively and efficiently, then there are three questions policymakers should ask as they review individual pieces of legislation.

1.  Is there an appropriate role for government to play?

This is a question seldom asked, at least on the record. Many policymakers simply assume that, if there is a problem, then there should be a state response to it.  The evidence is found in the 3,500 to 5,000 bills introduced every legislative session.

If the question was asked routinely, the answer would not automatically be "yes" or "no," but would depend on the specific situation. Often, the simple act of asking the question and considering the answer would be a step in the direction of aligning state government programs to available resources.

Policymakers should reserve the right to say there is no appropriate role for state government in, for example, a battle between two business groups.

A "yes" answer, by contrast, could apply to a question about organizing health care for indigent Oregonians or offer financial and/or parenting support for single parents and their children.

2.  What is the state getting for the money it is spending?

Call this "performance-based contracting." It sounds obvious that state contracts should be based on this premise. But performance-based contracting is the exception rather than the rule. In fact, in social services law in Oregon, the first instance of the use of the phrase occurred in the 2011 legislative session when lawmakers passed and the governor signed Senate Bill 964, now ORS 418.190-195. It deals with programs designed to provide services to Oregon's foster children.

If you are a state government services provider, you should compete for a contract on the basis of what you pledge to deliver.  Then, you should keep a contract if you deliver on the pledge — or lose the contract if you don't.

3.  How will state action affect the private sector – especially individual and corporate taxpayers on whom the state depends for the money to fund its operations?

Jeb Bush, the former Florida governor, now a nearly declared candidate for President in 2016, wrote this in a Wall Street Journal piece:

"We have to make it easier for people to do the things that allow them to rise. We have to let them compete. We need to let people fight for business. We need to let people take risks. We need to let people fail. We need to let people suffer the consequences of bad decisions. And, we need to let people enjoy the fruits of good decisions, even good luck.

"That is what economic freedom looks like. Freedom to succeed as well as to fail, freedom to do something or to do nothing. People understand this. Freedom of speech, for example, means that we have to put up with a lot of verbal and visual garbage in order to make sure that individuals have the right to say what needs to be said, even when it is inconvenient or unpopular. We forgive the sacrifices of free speech because we value its blessings.

"But when it comes to economic freedom, we are less forgiving of the cycles or growth and loss, and of failure and success that are part of the realities of the marketplace and life itself.

"Increasingly, we have let our elected officials abridge our own economic freedom through the annual passage of thousands of laws and their associated regulations. We see human tragedy and we demand a regulation to prevent it. We see a criminal fraud and we demand more laws. We see an industry dying and we demand it be saved. Each time, we demand, "Do something...anything."

Asking and answering the issues Bush poses would go a long way toward creating appropriate limitations on the role of government, both in Oregon and nationally.

Expecting Oregon policymakers to ask and answer all three of these questions would produce a more effective and efficient state government.

State Taxes, Volatility and the Kicker

 As tax revenues in Oregon once again reach the level to trigger corporate and personal kickers, we’re likely to see lawmakers talking about tax reform.

As tax revenues in Oregon once again reach the level to trigger corporate and personal kickers, we’re likely to see lawmakers talking about tax reform.

Oregon's tax revenue system is slightly more volatile than the all-state average, but less than some critics think based on a new study by Pew Research. One volatile element not included in the Pew assessment is the personal income tax kicker, a unique and quirky procedure that rebates to taxpayers money that exceeds projected revenues by two percent or more.

According to Pew, Oregon's state tax regime volatility rating is 6.4 percent, compared to an all-state average of 5 percent. The most volatile state tax regimes are ones heavily dependent on severance or extraction taxes. Alaska has the most volatile state tax system at 34 percent.

Oregon depends heavily on personal and corporate income tax revenues, which rise and fall in concert with broader economic trends. When times are good, Oregon's income tax system generates a growing pot of money.

If times are too good, Oregon's personal income tax kicker is triggered, requiring a chunk of incremental revenue to go back to taxpayers.

Triggering the personal and corporate income tax kickers could happen again this year, forcing state lawmakers to contend with a hole in their budgets. In the latest quarterly economic forecast, state economists said the corporate kicker is almost certain to be triggered and we are very close to triggering the personal kicker.

The corporate kicker is in the $50 million range and poses less of a problem because that revenue is now dedicated to schools instead of business bottom lines. The personal income tax kicker, if triggered, would likely be in the $300 to $500 million range, enough to pinch the state budget, but not anything like the $1 billion bite in the 2005-2007 biennium, which at the time represented 10 percent of Oregon's General Fund. 

Reducing volatility has been a long-time goal of governors and legislators. It is the source of most drives for "tax reform." Arguments generally come down to finding a "balanced" state tax system, which usually means one that derives revenue from both income and sales. The argument for less volatility is that it makes it easier for state budget writers to do their jobs. 

Sales tax advocates point to Washington, which has a sales tax but not personal income tax, as an example of a more stable tax system. The Pew research shows Washington's tax system volatility is 4.6 percent. 

South Dakota, which relies on a sales tax, has the least volatile tax regime at 3.6 percent, Pew says. The next lowest state in the ranking at 2.9 percent is Kentucky, which has both personal income and sales taxes.