Selected editorials from Oregon newspapers.
The Oregonian, Jan. 27, on the effects of a new business tax
"Hard-working Oregonians are paying their taxes, but out-of-state corporations aren't paying theirs," claims the union-backed organization seeking to place a massive gross receipts tax on the November ballot. By voting for the tax hike, the thinking goes, Oregonians can simply pluck about $2.5 billion per year from the coffers of distant corporate titans, hire more teachers and pay nothing themselves. After all, they're already paying their taxes, right?
You can see why voters might want to believe such a thing, but bumper-sticker platitudes tend to have, at best, a nodding acquaintance with reality. That's certainly the case here. A gross receipts tax - a tax on business activity - would behave as a sales tax, erode private-sector job creation and affect low-income Oregonians more significantly than upper-income Oregonians. But don't take our word for it. That's how Paul Warner, Oregon's legislative revenue officer, described the effects of such a tax to the Senate Interim Committee on Finance and Revenue on Jan. 13.
Warner's staff modeled a broad-based gross receipts tax of 0.4 percent that would raise about $1 billion per year. The effects of the tax would take about five years to be felt fully, the model assumed, and over that period a number of things would happen. The state's population would be about 8,000 lower than it would be otherwise, as Oregon's slightly weakened employment engine would produce fewer jobs and attract fewer people. Household income would be about $800 million less than it would be otherwise, in part because there would be fewer households. Meanwhile, prices on goods and services would rise. The receipts tax, Warner explained, would have the effect of a consumption (aka sales) tax. Such regressive taxes place a greater burden on the poor than on the wealthy.
Because the tax would generate revenue, it would produce a lot more public-sector jobs than would have existed without the tax - about 6,000 in all. But this would be offset by a decrease in the expected number of private-sector jobs in excess of 15,000. The tax would, in other words, cost 9,000 more jobs than it would create.
So much then, for the fairy tale notion that a gross receipts tax is something that businesses pay, but not individuals. Oregonians would pay for a gross receipts tax in the form of higher prices and lost job opportunities.
That does not mean that it's necessarily bad to create new taxes or boost existing taxes. What matters is what you get in return and whether it justifies the sacrifice. Sen. Chris Edwards, D-Eugene, made this point by asking Warner whether the end result of all of that additional government spending (better-educated Oregonians, for instance) could produce a stronger economy over the long term. The answer: Of course it could. Such outcomes, though, require government entities to ensure that the money is spent wisely, which would require a commitment to accountability, to cost containment and so on. That's why tax policy should emerge from the Legislature, which has the responsibility, if not always the inclination, to weigh costs and benefits soberly before acting.
Consider, then, the massive gross receipts tax sought by the you-won't-pay-it (wink-wink) crowd, who seek to circumvent the Legislature by using the initiative process. Why? Because the public employee unions behind the proposal have no obligation to see that new revenue is spent efficiently. Their only interest is to see that it's spent on their members, as much of it necessarily would be.
The unions' tax differs in some ways from the tax Warner's office modeled. Instead of being applied broadly, for instance, it would be applied to C corporations that do at least $25 million of business in Oregon. The tax would be applied to Oregon receipts in excess of $25 million, and it would be high - 2.5 percent as opposed to the 0.4 percent Warner's office modeled. Owing to the high rate, the tax would generate two and a half times the revenue Warner's broad-based tax would.
Modeling the effects of the proposed tax is trickier than modeling the effects of a broad-based tax, Warner explained to lawmakers earlier this month. But the effects would be generally similar: Higher prices, a disproportionate impact on the poor and the erosion of private-sector employment. The tax's supporters would like voters to believe that only big corporations would be affected by the tax, but this isn't true. Smaller businesses would pay more for the goods and services they bought from big corporations that paid the tax. And to the degree that they could, businesses of all sizes would simply pass along the additional cost to consumers.
In this way, "hard-working Oregonians" would pay their own taxes and gross receipts taxes, too, all without any assurance that the revenue would be spent responsibly.
The (Eugene) Register-Guard, Jan. 31, on the legislative session
Voters amended the Oregon Constitution six years ago to require annual legislative sessions, and the new calendar has evolved quickly. The 35-day sessions in even-numbered years were expected to be codas to the 160-day odd-year sessions — lawmakers would fine-tune the budget, deal with a few unanticipated problems and go home. But the short session that convenes Monday will deal with some meaty issues, and some thorny ones.
Part of the increasingly substantive role is a product of the initiative process. By this time of year, it becomes possible to discern the most consequential ballot measures likely to be considered in the November general election. The February session offers lawmakers their last opportunity to act as shortstop, approving substitutes for initiative proposals or referring to the ballot alternative measures of their own.
Democrats also feel a need to take advantage of their control of the governor's office and their strong majorities in both the House and Senate. Their position is likely to be no stronger in 2017, and could be weaker — which adds an element of urgency to items on the party's agenda.
Those factors combine to bring forward the issue of an increase in Oregon's minimum wage. A big increase would have consequences for workers, businesses, governments and nonprofit organizations — consequences that would vary by economic sector and geographic region. A hurry-up legislative session will not have time for the hearings, committee reviews and debate the issue deserves.
But unless the Legislature approves some sort of minimum wage increase, an initiative for a larger and more disruptive increase is likely to be on the ballot in November. Gov. Kate Brown has called for a two-tier increase that would be phased in more slowly than initiative sponsors propose — and the Legislature will have 35 days to decide which approach is better.
Similarly, an initiative is headed for the ballot that would impose a 2.5 percent gross receipts tax on sales by corporations in excess of $25 million a year. The tax would raise an estimated $5.6 billion per biennium — a potential game-changer for Oregon schools and other public services. But the effects would inevitably include higher prices for retail goods, utilities, fuel and services. The Legislature may try to devise a corporate tax increase that would be less ambitious and have fewer regressive effects.
Another tax proposal that is certain to arise would double the state's hotel-motel tax to 2 percent. The $17 million in annual revenue from the current tax is used to promote Oregon tourism. Revenue from the increased tax would be used to provide $25 million in support for the International Association of Athletics Federations' 2021 world championships in Eugene.
The host city had not been chosen before the 2015 Legislature adjourned, and waiting for the 2017 Legislature to consider the tax increase would mean that the championships would claim a larger share of revenues collected during a shorter period. It won't be an easy decision for lawmakers, even though about half the tax would be paid by out-of-state visitors. Lawmakers will be reluctant to support a tax increase whose benefits, at least for a time, would flow disproportionately to Eugene, and the proposal will need the support of three-fifths of the members of both the House and Senate.
Another complex issue before the Legislature will be Oregon's shortage of affordable housing. The shortage has been worsening since the recession of 2008, with construction lagging behind demand by about 40 percent. Housing prices in Portland, in particular, have been rising faster than in all but a few of the nation's markets, but affordability is also a problem in Eugene and other parts of the state. The Legislature will discuss proposals to allow local governments to require that new housing developments include a certain percentage of units for lower-income buyers or renters. Crafting such rules in ways that don't discourage housing construction will be a difficult task in the short session.
An even more complicated and far-reaching issue is climate change. In the 2015 session, a California-style proposal for a cap-and-trade program for the state's primary sources of carbon emissions was set aside in favor of new standards to reduce the carbon intensity of transportation fuels.
The cap-and-trade proposal, which rewards large emissions reductions at the expense of those who fail to scale back emissions, will be reintroduced in the session that opens Monday, but whether lawmakers will find time to consider it is an open question. One possibility would be to scrap the clean fuels standard, which has become mired in partisan politics, in favor of the cap-and-trade program, which would achieve the same goals.
The minimum wage, corporate taxes, lodging taxes, housing, climate change — that's a lot of heavy lifting.
Other contentious issues, such as a proposal to allow police to remove firearms from the homes of people who are under temporary restraining orders, could be added to the list. And Republicans are demanding that the Legislature act to improve education funding, protect open school enrollment, provide investment incentives for small businesses and begin to prepare for increased pension and Medicaid expenses.
It will be a busy 35 days. The notion that even-year legislative sessions would be concerned with tying up loose ends has been left behind.
The (Bend) Bulletin, Jan. 29, on Oregon's high school graduation rate
Don't break into your happy dance just yet. While Oregon's high school graduation rate did go up last year, it's still certain to be near the bottom of the national pack.
Moreover, if the current rate of increase is sustained, we won't reach the laudable 100 percent graduation rate until around 2029, well past the 2025 goal set by former Gov. John Kitzhaber.
Oregon, it seems, still hasn't found the keys to helping all students get through the most basic education they'll receive.
The Oregon graduation rate was up by slightly less than 2 percent. Even at that, fewer than 80 percent of youngsters in this state can expect to complete high school within four years of starting it, well below the national average. Thus, in 2014, the last year for which complete numbers are available, 72 percent of Oregon high schoolers graduated on time; nationally the number was 82 percent.
Meanwhile, in Central Oregon, the two smallest school districts, Culver and Sisters, continued to boast the strongest graduation rates, and traditional high schools in most communities also posted above average rates.
It's no doubt impossible to blame a single thing, or even a handful of single things, for Oregon's inability to get kids through school on time. We know that up to a point, money plays a role, and that keeping students connected with teachers and with one another helps. And, though the evidence isn't crystal clear, we suspect that more time in school for all students — more days, more hours — can help.
Too, we know that kids who routinely miss school are less likely to graduate, and Oregon's children miss lots of school. In fact, youngsters who are not in class at least 90 percent of the time are considered chronically absent. Oregon has an epidemic of chronic absenteeism.
All that suggests that if Gov. Kate Brown's as-yet-unnamed education innovator does one thing it should be to concentrate on absenteeism. Help Oregon schools keep kids coming day after day, and all the state's goals should be easier to reach.
The (Corvallis) Gazette-Times, Jan. 26, on regulating marijuana edibles
Regulators with the state of Oregon are proposing a very cautious set of rules to govern what's certain to be a brisk market in marijuana edibles — cookies, candies, drinks and a surprising variety of other items that can swallowed instead of inhaled.
It's the right call. Experiences in Colorado and Washington state, two states that legalized the use of recreational marijuana before Oregon, suggest that edibles deserve extra amounts of caution. Oregon is wise to be acting accordingly.
Colorado officials were surprised by the popularity of edibles in that state; one analysis suggests that edibles accounted for roughly a third of recreational marijuana sales there last year. That went hand-in-hand with a surge in the number of calls to poison hotlines and visits to emergency rooms prompted in part by people who had unknowingly ingested considerably more THC, the active ingredient in marijuana, than they had thought.
One of the key issues here involves inexperienced users, who may not understand that one pot-infused marijuana chocolate bar, for example, could contain 10 or so servings — and so it would be a bad idea for one person to swallow the entire bar in one sitting. (It makes matters worse that ingested pot doesn't take effect as quickly as inhaled pot — and so an impatient inexperienced user might decide to take a second or third helping, with unintended results.)
(Similarly, marijuana smokers who haven't lit up in years need to remember that today's marijuana is considerably more potent than it used to be; keep in mind that Colorado slogan, "Start low. Go slow.")
The Oregon rules about edibles go to lengths to ensure that the products clearly designate how much represents one serving: So, for example, that chocolate bar sold on the recreational market would be made up of 5 milligram servings — and the bar would be clearly marked to designate the size of a single serving. The entire bar could have no more than 50 milligrams of THC — 10 servings in all.
Products where it's more difficult to identify or designate a single serving size would be limited to a total of 10 milligrams.
The other important issue at stake here is being as sure as possible that edibles don't fall into the hands of children, who are used to devouring a single candy bar or cookie in one sitting — and who might not be able to read warnings on the packaging (or who may not care). The Oregon rules require that edibles be sold in child-resistant packaging. That packaging cannot feature cartoons or superheroes. State officials also plan to require that marijuana products bear a universal warning sign — a picture of a marijuana leaf next to an exclamation mark.
These restrictions all seem reasonable, especially when you consider that the number of cases reported to the Rocky Mountain Poison Center regarding young children ingesting marijuana increased from five in 2013 to 22 last year, according to a story in The Oregonian newspaper.
Arguments from marijuana proponents that the rules are overly restrictive and could needlessly constrain the state's growing number of marijuana entrepreneurs just don't hold much water.
The popularity of edible marijuana products caught Colorado off-guard. In Oregon, we have no such excuse. Shame of us if we can't learn from the Colorado experience.
The Daily Astorian, Feb. 1, on the future of coal in Oregon
Most Oregonians get it: The age of coal is over. Nations, states and companies that don't immediately begin a serious transition to non-coal electricity will face a steep upward curve in costs, which will be passed along to consumers and future generations.
Though details will doubtless be refined during the legislative process, utilities, conservationists and consumer groups make a good case for Oregon House Bill 4036. Weaning Pacific Power and Portland General Electric off coal in 14 years, this bill is designed to satisfy state voters would otherwise be tempted to pass a ballot initiative this year that might be more clumsy in achieving the same goal and cost $600 million more.
As the cost of wind, solar and other clean energy comes down, regulations aim to keep fossil fuel-related greenhouse gases out of the atmosphere and ocean. By starting to lock in predictable costs for alternative energy, the big private utilities and society as a whole give themselves a path that avoids future price shocks.
Oregon already is planning on the end of its one coal-fired power plant by 2020, PGE's facility in Boardman. HB 4036 would mean Oregon would cease buying coal-generated electricity produced out of state in places like Wyoming. With vast reserves of coal and other fossil fuels, the interior Western states will doubtless search for other customers for dirty power. But in the long run, it's likely other states and the federal government will join with Oregon in developing new ways to provide electricity.
HB 4036 will double Oregon's alternative energy usage by 2040. This ambitious push toward a sustainable future will provide an additional impetus for clean-power inventors and investors — improving the technology and bringing costs down. Pacific Power's analysis of the legislation finds it will increase costs by less than 1 percent a year through 2030. Oregon-related carbon emissions through 2040 will be 35 million tons less than they would be without this bill.
It's rare to build such a broad coalition of support as HB 4036 has achieved. It won't please climate-change deniers, whose mantra is still "Burn baby, burn." A strong majority of Oregonians prefer the sane approach exemplified by the legislation.