PDC’s Seeds Unlikely to Grow

By Ben Shelton

You may remember Sam Adams’ February promise to give $500,000 to small businesses around Portland. Currently, a five-member board, appointed by the Portland Development Commission, is is seeking an investment manager for the Portland Small Business Seed Fund. Public venture capital programs, however, don’t pay; they ignore real business solutions and starve money from the critical functions of government.

If the mayor wants to promote business growth, he should focus on mending Portland’s business environment by reducing tax and licensing burdens on successful businesses, which may pay almost 4% to the city and county alone. Lowering these costs would create positive incentives for all entrepreneurs and investors, instead of rewarding a few handpicked companies.

This story reflects a statewide problem. The Oregon Business Development Department operates with the same methodology on a much larger scale. Its budget reached nearly $420 million in the 2007-2009 biennium. The Oregon Innovation Council, a function of the Department, awarded $28 million to seven initiatives during that period. The state invested tax dollars in wave energy, solar innovation, food processing, manufacturing, and drug research. So far, the payoffs are not easy to quantify, but the state continues to support the program.

Investing money is a risky game. Innovation is hard to spot. In public venture capital programs, government leaders want to invest in businesses that seem progressive. However, unlike Wall Street, leaders aren’t using their money, they’re using ours.


Ben Shelton is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Posted by at 06:00 | Posted in Measure 37 | 6 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Jim

    I think its funny how these CPI articles are always the same:

    1. Democrats are doing it wrong.
    2. If they really cared about jobs, they would cut taxes.
    3. This indicates a broad, nationwide problem with Democrats.

    And then there is no discussion of which types of businesses could be helped the most, which taxes/fees hurt business owners most and should be cut, etc. Brilliant.

    • Rupert in Springfield

      >And then there is no discussion of which types of businesses could be helped the most

      The reason why this is not discussed very much by Republicans or Conservatives is because its a Democrat game.

      It is a Democratic approach to tax heavily then reward on a pick and choose basis. The problems with this are discussed in the article. Obviously this approach accords government more power as it then becomes in the business of picking winners and losers, thus its natural appeal to Democrats.

      Republican tend to be more broad based – lower taxes overall and let the market decide which business succeed. Its a less glamorous, but more productive approach.

      >which taxes/fees hurt business owners most and should be cut, etc.

      Then you must not have read the article you are replying to. Here is a quote from the second paragraph in:

      “If the mayor wants to promote business growth, he should focus on mending Portland’s business environment by reducing tax and licensing burdens on successful businesses,”

      • Anonymous

        “Republican tend to be more broad based – lower taxes overall and let the market decide which business succeed.”

        You are delusional.

  • Bob Clark

    Seems like an investment manager would cost the city at least $100k per year, which would represent a substantial drain on the $500k investment fund. Moreover, if this manager can attract private capital like cityhall is asking, such quality person probably isn’t going to work for public sector salary. The Oregonian article quotes one venture capitalist as saying the kind of seed money cityhall is talking about won’t make a diff. This probably points to the real goal of the Mayor and cityhall which is to give some (token) show of concern for the local economy. A much more effective way would be to lower the cost of doing business locally. Things like keeping water and sewer rates stable and streamlining the permit process actually score on analysis conducted for rating locations for business expansion whereas a seed fund doesn’t show up usually on score sheets.

  • Rupert in Springfield

    >You are delusional.

    And obviously you don’t have much of an argument.

    Based on your comment, you probably aren’t much out of grade school either.

    Oh well…Cheers!

    • Anonymous

      “And obviously you don’t have much of an argument.”

      An argument for what? That grass is green and the sky is blue? That chronic cronyism undermines Republican’s supposed free market advocacy?

      “Based on your comment, you probably aren’t much out of grade school either.”

      ???

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