Oregon’s Fading Economy: Putting Lipstick on a Pig


The latest revenue forecast figures are out from the Oregon Office of Economic Analysis and isn’t good news. Revenue collections are down another $377 Million from the last quarterly forecast. That’s in addition to the $577 Million from the last quarterly forecast. That’s a total of $1.2 Billion since adoption of the state budget a short fourteen months ago.

The sad part of this is that the forecast is still wrong, still overly optimistic, and still using a flawed formula for estimating revenue. The state economists still rely on a program that assumes growth in revenue from any point in time despite the reality that Oregon’s economy, Oregon’s employment and Oregon’s tax revenues have been steadily declining for at least nine quarters.

As the Oregonian noted on Friday:

“It is hard to square the Democrats’ don’t worry, be happy political message with the grim revenue forecast showing how Oregon’s stuttering economy and meager job growth have opened yet another hole in the state budget.”

But the real tragedy, however, is that the continued trickle of federal funds is delaying the obvious need for Oregon’s political class to face economic reality. Oregon, not Oregon government, is sinking. The downturn in tax revenues is merely a symptom of the problem – not the problem itself.

It is quite possible to cover the revenue shortfall for state government by additional federal funds, or tax increases (the preferred solution by Oregon’s Democrats). But covering the revenue shortfall does nothing to address the underlying problem – Oregon’s business is stagnant at best and declining in all probability. Oregonians have lost over 160,000 jobs. More than 40,000 additional Oregonians have newly entered the job market with little or no prospect of finding employment. Unemployment roles have grown to over 208,000 and that includes only those who are drawing benefits. It does not include those who have run out of benefits or given up looking for work. It also does not include those who are underemployed or, because of self-employment, were ineligible for benefits.

A recent study being touted by Oregon Democrats and a handful of their supporters in the Portland business crowd purports to demonstrate that Oregon has a great business climate. Their claim is that no business has closed or left Oregon because of the passage of Measures 66 and 67. They argue that Nevada (well Reno, Nevada) is worse off than Oregon and it doesn’t have any business income tax. And that even conservative Arizona raised taxes, so Oregon can’t be all that bad. It is that kind of reasoning that is similarly reflected in Oregon’s government class and is just dead wrong.

Nevada is a poor comparison to Oregon in that Nevada – all of Nevada – is primarily, almost singularly, dependent on gambling and tourism. As gambling and tourism go, so goes Nevada and in an era of deep recession and no recovery, discretionary spending on gambling and tourism have fallen dramatically. The fact that Nevada does not have a business income tax is irrelevant – it doesn’t have any significant amount of business beyond gambling and tourism.

Arizona is also a poor choice for comparison about the effects of raising taxes. Arizona struggled for months and eliminated billions in state government spending before turning to a tax increase. The Arizona state legislature specifically rebuked the Democrats attempt to raise income taxes on business and, instead, raised the sales tax – a tax that everyone pays, not just those who create jobs.

And finally, the argument that no one can point to a business that specifically left Oregon because of Measure 66 and 67 is as spurious as the claim of President Obama about the number of jobs that his stimulus program saved. It is impossible to prove a negative and the Democrats have become expert in posturing claims in that fashion.

More importantly it is not the singular event of Measure 66 and 67 that drives a business to decide to close or relocate – or more likely to not expand – it is the accumulation of events that force those decisions. It is the cost of permits, the cost of licensing, the delays in licensing, the changing codes, the imposition of new regulations, the lack of law enforcement for petty crimes, the continued increase in utility fees occasioned by increase in government fees and regulatory requirements, the demands of bureaucrats more concerned about their own power than the effects on business, and the studied ignorance of the policymakers regarding any aspect of the needs of business. Can you point to any one act as being the cause? No, but you can point to the common denominator in all of these areas – a government class that believes that government is the prime reason for being and that business exists to fund government.

A better measure is the fact that neighboring states are now actively recruiting Oregon businesses, to relocate or grow in their states. Like most things political, perception is more important than reality and the perception of Oregon remains that of state in the full control of its public employees unions and excessively consumed by environmental and political correctness – consumed without the slightest hint of moderation or the slightest concern about impact, particularly to business.

Governor Kulongoski, after having championed big, intrusive and expensive government for virtually all of his political life and most certainly the last seven and one-half years as governor, now has given lip service to the reality that government must fundamentally change. But Kulongoski is the most economically illiterate person to ever occupy the governor’s office in modern times. His only concrete proposal for fundamental change, thus far, is to eliminate the “kicker” – you know, raise taxes – the same solution that he has had for government forever.

You cannot fundamentally change state government by returning the same people who caused the problem.

You simply cannot continue to return to office people who singularly and collectively believe in the supremacy of government and who lack the fundamental understanding that every dollar that Oregon government extracts from business is a dollar lost for purposes of growth, expansion and job creation.

Should voters return a Democrat to the governor’s office and return Democrat majorities to the state legislature, Oregon will continue to wallow in an economic third world state as the rest of the nation begins its recovery – a recovery that will begin in November, shortly after Pres. Obama loses his Democrat majorities in the House and perhaps the Senate.

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  • Bob Clark

    Kitzhaber just released details of his economic plan. It’s a joke. His biggest idea is for the state to go in debt another $100 million to weatherize schools. How lame. This is not a new idea. The Energy Trust of Oregon is already charged with weatherizing and making school energy use more efficient, since the year 2003 no less. The Energy Trust of Oregon is funded through the “public purpose” fee showing on utility bills. Either the Energy Trust isn’t doing their job, or Kitzhaber plans to duplicate their efforts.

    Besides, this is no different than what the Oregon legislature did this past year, floating $300 million for “shovel” ready jobs. Boy, the economy sure was stimulated by this program. Not.

    Kitzhaber also talks about promoting green jobs. We’ve been going down this “green” path for a better part of a decade, and guess what? Chineese and other foreign firms milking huge government subsidies are among the primary beneficiaries.

    KATU ran a poll showing Dudley’s 26 point plan to be far superior to the retread Kitzhaber plan. Hopefully, this plays out for Dudley winning the governorship.

  • Rupert in Springfield

    You know, all the studies and comparisons in the world don’t really matter. The fact is Oregon employment is awful right now and has with some regularity lagged behind national employment.

    You would think that given that situation it would occur to people that comparisons at that point become somewhat irrelevant. You can justify it however you want, but the fact is justification doesn’t create jobs, business does.

    Rather than say “well we aren’t any worse than them” or “Our business climate isn’t ranked that bad by this group” isn’t it clear we need to do better? If we want to attract business, we need to be better than the other guy, not “just as good”. Whatever our ranking on business climate, whatever the comparison to this state or that, the fact is Oregon is, on a regular basis, not all that great at creating jobs.

    The numbers don’t lie, Oregon is not creating jobs at the pace it needs to. If you want to change that, you need to improve conditions for business to attract them and thus create jobs. When we face that central fact we can move on. If we want to play pretend, and spend our time justifying why it’s business’s fault for not moving here, not Oregons, then I would suggest forgoing any discussion of jobs and shift our focus to how we can pay for our government with pretend money.

  • Great In Nevada

    Well I can tell you Larry that things are not as dire in Northern Nevada as you picture it. In fact, Reno and much of the northern part of the state are not falling into the same economic hole as Las Vegas.
    Recently, a business from Bend,OR just located in the Reno/Sparks area and is bringing in about 150 jobs – and best of all, the State didn’t pay them a dime to move here.
    Reno and Sparks are also major distribution hubs for companies like Amazon, JC Penny and General Motors to name just a few well known companies.
    And one last thing. I closed up my business in Portland in November and my wife and I will be saving about $14-15,000 in Oregon Income Taxes we won’t be paying to Salem.

    • Steve Plunk

      I’m sad you took your business out of Oregon but glad you get to keep more of your earnings. Good luck in Nevada.

    • eagle eye

      Yes, it’s great there, this out Aug. 20: “In Reno-Sparks, the unemployment rate held steady at 13.6 percent.”

      I once had a chance to move to Nevada at a higher paying job. I said no thanks! A fair while ago, but would say the same today.

      Good luck there!

      • Great In Nevada

        Should have mentioned that we retired as well as moving out of Oregon.

        • eagle eye

          Enjoy being retired in Nevada.

          What you say about the Oregon income taxes makes my point posted nearby, makes the point beautifully. But it seems that Oregonians don’t get it, apparently even some self-styled Oregon businesspeople.

  • eagle eye

    Seems to me the biggest problem is not discussed and that is the Oregon tax structure i.e. reliance on steep income tax, and super-steep capital gains. Causes all kinds of disincentives, wild swings in revenue as well as not capturing Oregon’s huge underground economy (including the drug trade).

    Until that changes, Oregon’s economic problems will worsen. But I see no chance of it changing. So Oregon will just have to live with its bad decisions.

    • Steve Plunk

      How are we supposed to capture taxes from the drug trade? Legalization?

      No. The biggest problem has never been revenue but spending. A government that wants to be all things to all people but most of all wants to protect itself.

      • eagle eye

        See below. The sales tax gets them when they spend their “earnings”. And it’s not just drug dealers, it’s the whole underground economy, a lot of tradesmen, merchants, etc. I don’t know how big it is, but I’m certain it’s very significant.

        I believe you’re wrong about the tax structure. Oregon is not a particularly high spending state, actually.

        Your obsessive hatred of government is blinding you to the realities of what is holding back Oregon.

        • Steve Plunk

          Why is it criticism of government spending and abuse of citizens is considered “obsessive hatred of government”? We need government but government needs to be balanced by the people’s power to control it. I believe that balanced has shifted too far toward the government politicians, bureaucrats, and public employee unions. A very reasonable position and far from obsessive.

          Government policies are holding us back and the sooner apologists for the government realize that the sooner business grows and tax revenues flow.

    • Rupert in Springfield

      How in the world is a steep income tax the reason underground economy and drug trade money tax revenue is not collected?

      How does having a massive capital gains tax not capture underground economy money?

      If I go in halfsies on $20,000 of grow lights and then sell the operation after three grow cycles are you suggesting that I would be more likely to pay capitol gains taxes if it was more graduated?

      If a couple of divorced women in pottery class set up a stand bartering mugs and bowls, they would switch from barter to money and pay taxes if the rate was more graduated? Great, we would net another $5 from the barter crowd.

      Yep, some guy selling eight balls is going to start paying the gross sales tax real soon.

      This is nuts.

      The underground economy doesn’t pay taxes largely because its illegal as in the case of druge, or irrelevant, as in the case of crafters bartering. I dont think dope dealers refuse to pay taxes as a protest against Oregons confiscatory rates.

      Steve is right – Oregons problem is spending, not revenue. Oregon needs to cut services now, and fulfill the obscene unions contracts it got itself into.

      • eagle eye

        As usual, you’re confusing everything. Must be all those hot dog vendors you had for reading class.

        The steep income tax is a disincentive to business. So is the capital gains tax.

        The connection with the underground economy is this: if it’s underground, it’s very likely not paying income taxes.

        But if someone is making say $30K/year underground, and then goes out and spends it, and there’s a sales tax, then that $30K gets taxed.

        Got it?

        • Anonymous

          I think I get it about the sales tax. It’s not that the pot growers, under-the-table carpenters etc etc would be collecting sales tax. But when they spend money at legitimate businesses — hopefully, the majority — they would be paying part of their income as sales tax to the state, whereas now, they are not paying income tax — freeloading off the rest of us. Right?

  • Marvin McConoughey

    Has anyone done a study to estimate what our per-capita income might be, given improved laws and government? It seems unlikely that all states would have identical income, even if taxes, governance, and laws were of equal quality.

  • Marvin McConoughey

    Has anyone estimated what our state income might be, given improved laws and government? It seems unlikely that all states would have identical income, even if taxes, governance, and laws were of equal quality.

    • valley p

      The income of a state is dependent on many many factors, tax structure being a minor piece. New Jersey has the highest business tax rates in the nation, and also has the highest personal income. South Dakota has the lowest business tax rates and is way down in personal income. People way over generalize when they say this or that is because of our tax structure. Geography and luck are way more important.

      Washington state is richer than Oregon because it has a way better deep water port (geography,) which led to more industrial development, and a big military presence. Boeing developed a seaplane there because he had a sheltered bay to play on, and eventually grew that into a major company. Microsoft is there because that is where Allen and Gates grew up (luck). Starbucks is there because 3 guys opened a coffee shop at Pike Place and figured out how to turn that into a gold mine (good idea that could have happened anywhere people drink coffee). Amazon.com is there because Bezo’s liked Seattle more than Texas.

      OK…4 major international corporations are in Washington State why? Pure luck mostly. Why is Nike in Oregon? Same thing. Phil Night was a track star at UO, and Bowerman had an idea about a waffle iron. That could have happened at any track school. Oregon’s tax structure had nothing to do with this, and Washington’s tax structure had nothing to do with its 4 main businesses being there. Silicon Valley developed where it did because of the proximity of Stanford and UC Berkley, 2 of the best research universities on the planet. Taxes had nothing to do with it.

      So can we just take a deep breath? Oregon has some advantages and disadvantages. Our tax rate is not very high overall. It is middle of the pack or lower. Anyway 80% of Oregon businesses do their business right here in the state as service or retail. They are dependent on consumer spending and nothing more. Tax policy affects only maybe 1/2 of the other 10% at most. Mobile traded sector businesses that do not care if they are in Oregon or Kansas.

      Next week the next Phil Night or Jeff Bezos or Bill Gates could pop up with an idea hatched in Medford or La Grande or Portland. They could build a Fortune 500 company here in 10 years time. Would we attribute that to our great tax structure? I don’;t think so. It would be sheer luck.

      But if you want to increase your odds, you maintain a very nice place to live and a great education system K through University. Do that and educated people will want to be here, and from them will emerge the next genius.

      Meanwhile we will all be blogging.

      • Dale Dundergrass

        “Do that and educated people will want to be here, and from them will emerge the next genius.”

        Oregon has plenty of educated folks…so where are all the geniuses. Well, besides you.

        • valley p

          If I had the answer to that I would loan them some money for a stake. I wouldn’t tell you about it.

        • eagle eye

          The “geniuses” tend to move out when they graduate from high school.

      • Rupert in Springfield

        >and Washington’s tax structure had nothing to do with its 4 main businesses being there

        Given that Boeing moved its corporate headquarters out of Seattle to Chicago, precisely because of tax incentives, this is one of your more inane pop offs.

        >Anyway 80% of Oregon businesses do their business right here in the state as service or retail. They are dependent on consumer spending and nothing more. Tax policy affects only maybe 1/2 of the other 10% at most.

        Could you please tell us how measure 67, which was tax policy, affected only “1/2 of the other 10%”?

        Illuminate us with the opalescent brilliance of your ever shining wisdom, we wait with rapt attention.

        >But if you want to increase your odds, you maintain a very nice place to live and a great education system K through University.

        Oregon is a way nicer place to live than many places in the world. Certainly prettier than the major business areas of China and India.

        Perhaps you can explain why we hear about shipping jobs overseas when according to your theory everyone should be angry Oregon is stealing all the jobs.

        We spend more than any other country in the world other than Denmark as I recall and we have a way prettier state than Shanghai, New Delhi, Kolkata, Hong Kong, Tijuana or Mumbay. Yet business moves there rather than to here. According to your theory, Oregon should be the business capitol of the west coast.

        Please give us an excuse as to why your theory seems to not comport with reality.

        In other words can you give us some bluster and hand waving why we do not see Oregon as a business hub, when your theory would predict such.

        >Do that and educated people will want to be here, and from them will emerge the next genius.

        I doubt it. You can have all the educated people you want, if you dont have good business conditions you dont have business and you dont have jobs.

        Example one would be the former Soviet Union. More scientists per capita than anywhere else in the world, yet the worst business conditions. Thus, an economy that couldn’t support itself.

        Spending money on education without establishing conditions where one can put it to use is the most foolish waste of money in the world.

        Example two would be Oregon. We subsidize our public universities quite a bit. But, since we have crap job conditions, more and more students take that subsidized education and leave for greener pastures once they get their degree. Thus all you have done is tax the citizenry to no purpose, other than to provide an educated populous to states with more attractive business conditions.

        >Meanwhile we will all be blogging.

        Thus the eternal flame of the dim bulb will continue to provide the warm glow of the idiocy that is you on these pages.

        • eagle eye

          Subsidize the public universities quite a bit? I guess you could say so. Data have been posted here that Oregon is about #46 or so in subsidy per student at the 4-year colleges. Right down there with Mississippi, New Mexico, and the like. The subsidy barely keeps the smaller campuses afloat, and holds back UO and maybe OSU (which might be better off if they were more or less independent). How much lower would you care to go?

          Probably right about the students leaving after they graduate, though I don’t have any hard data on that. My guess: most of the leakage occurs BEFORE they start college, when the better ones tend to head for greener pastures, i.e. better schools.

      • Marvin McConoughey

        Thanks valley p. That is a thoughtful and reasonable answer.

  • skippy

    Valley your posts are an adventure. Dale thinks Oregon has plenty of educated people..huh….sit in a room with a bunch of business people and all they talk about is the lack of an educated work force.

    • Steve Plunk

      Why do most Oregon university graduates leave the state? No jobs. There are plenty of educated people in Oregon but there are not enough jobs to keep them here. The tired excuse of an uneducated workforce has been used for decades to justify more spending on community colleges. All that has done has filled retail ranks with AA degrees.

      When I sit in a room with business people I just here complaints about the government mandates and high taxes. Of course I’m in a business where we work for a living.

      • eagle eye

        Where do you get the idea that most Oregon grads leave the state? Got anything to back that up?

        Actually, the leaving of the state takes place before they go to college. Oregon is notorious for having most of its best high school grads leave the state. Because of the perceived or real level of its higher education institutions, both public and private. (Also, probably, because of the lure of California’s many stellar campuses.) But it’s a fact that, say, Oklahoma’s two main public campuses have significantly higher average SAT scores that Oregon’s (UO and OSU). The reason is that Oklahoma is keeping more of its best students in-state.

        You are right about Oregon having lavish spending on the CC’s, as has been documented here.

        But on what the business owners talk about, my experience in Eugene is much different from yours. They do complain about the regulatory climate in Eugene, not Oregon in general. And I’ve rarely heard them mention “high taxes” per se. They do sometimes complain about the income tax and the lack of a sales tax. (See my other posts.) They also mention the lack of high-level higher education institutions sometimes, and the lack of top-level graduates. Also the lack of venture capital, and a very stodgy mentality among banks and financiers. (This last from would-be Oregon high-tech entrepreneurs; often they start their businesses in California or Washington.)

        Your snide little jab about being in a business “where we work for a living” is of course par for the course for you.

        • valley p

          Statistically Oregon has been much more of an attractor of college grads than it has been a sender of them. Portland ranks very high on the “creative class” list, meaning a high number of jobs in fields that require a lot of education relative to the overall population.

          Rupert writes: “Given that Boeing moved its corporate headquarters out of Seattle to Chicago, precisely because of tax incentives,”

          Well…yes…the magic phrase is “tax incentives.” If you have a business tax structure in place, and then you offer to cut aspects of it as incentives, you can lure an established business to relocate. Large mobile businesses do this all the time. They play states off against one another. Intel is doing that while we waste our time blogging. The alternative energy companies you hate have also done this very successfully.

          That is the 10% of overall businesses that I mentioned. Mobile capital who can locate anywhere. They hunt for tax breaks, and all other things being equal they go for the best deal.

          The other 90% of businesses in this or any other state are not mobile. They can’t move to India or China or Kansas and do business in Oregon, because their product has to come from Oregon resources OR their customers are Oregonians. What about this is confusing to you? The businesses that have moved to China or India or Brazil are manufacturing companies that can use cheap labor to make a product marketed internationally. 90% or more of businesses are not in this game. A shoe repair business has no incentive to move anywhere based on taxes as long as there are shoes to repair in Oregon and customers who have money to spend.

          Your problem, and by you I mean anyone who thinks we should lower ALL business taxes to attract or keep A FEW businesses, is that you will bankrupt the state by doing so, or defund schools that are crucial to long term value, or shift the tax burden even further onto individuals. Its a better strategy to have a fair tax structure and then offer the breaks to the companies you really want to be here.

          Rupert writes: “Example two would be Oregon. We subsidize our public universities quite a bit.

          We do? Compared to what? I think we rank 48 out of 50 in funding our universities. Would you be happy if we dropped 2 more notches?

          • a retired professor

            “Statistically Oregon has been much more of an attractor of college grads than it has been a sender of them. Portland ranks very high on the “creative class” list, meaning a high number of jobs in fields that require a lot of education relative to the overall population”

            You got any real data to back up your claim about Portland?

            You’re probably right about Oregon being an importer of college grads. Partly because Oregon is probably low on in-state college grads and certainly low on high-end grads. (As eagle says, the best students leave the state.) So Intel imports a lot of people from MIT, Berkeley, Stanford etc.

            Some people say this is an argument for having mediocre higher education in-state. But what they don’t realize is that having the grads right there, along with the institutions that produce them, is a huge plus to business. Just ask people in Boston, Silicon Valley, Austin, etc etc.

      • Anonymous

        “Of course I’m in a business where we work for a living”

        Sounds like you’re in a business where you complain for a living!

        eagle: why do you bother?

        skippy: right about the business complaints about the work force. But you should hear what working stiffs say about the business people they work for! It will never end.

        • Steve Plunk

          For gosh sakes why do you guys not get the idea this is a place to exchange ideas, talk, and yes even complain. If we don’t complain how can we expect things to get better. The reality is you use that complaining bit as a way to try and discount input you don’t agree with.

          My comment about being in a business where we work for living is meant to differentiate between different types of business and different attitudes amongst them. The business conversations between trucking company managers and architects would be quite different. Mine is a blue collar business so my take on what’s ailing business is likely to be different than that architect, consultant, big business exec, or Oregon Business Alliance member. There’s a difference of opinion between people like myself who do everything from turn a wrench to prepare financial statements. It’s not snide or arrogant but it is an important difference. But by all means keep assuming the worst.

          I’ll have to do more research concerning the college grads leaving. I’m used to the lament of the liberals that the best and brightest are leaving all the time. I guess I’ll have to quit believing what they say until I know it myself.

          I do know we have been teased by promises of a “Silicon Forest” that never materialize. We have also been told how the CC would solve the local employment problems yet did not. The left asks for more money to fix things while business just wants to keep what is already theirs.

          • eagle eye

            As I said above:

            “it’s a fact that, say, Oklahoma’s two main public campuses have significantly higher average SAT scores that Oregon’s (UO and OSU). The reason is that Oklahoma is keeping more of its best students in-state.”

            It’s true of other states with comparable or less to work with than Oregon — Kansas, Iowa, Missouri come to mind.

            The Silicon Forest really existed, but that was a long time ago now, back the 90’s, it was already fading by the end of the decade. It was responsible for Oregon’s prosperity then. But there was never enough to keep it going. There was a lot of blather about OSU becoming a “top tier” engineering school, i.e. top 25 instead of top 100.

            But there was no money put it into it, instead, Oregon continued its policy of starving the universities. While lavishly funding the CC’s, a point we might agree on.

            Oregon has continued with the same dysfunctional income tax system, the kicker, the recurring spending binges/shortfalls, regulatory hurdles. And as I’ve mentioned, though I only know it from anecdotes, a very stodgy, timid climate for high-risk entrepreneurs, the kind who started the original Silicon Valley.

            By the way, Dudley just announced a plan, or at least a hope, because there is no money, to give full scholarships to OUS schools to all top Oregon high school grads. To accomplish exactly the kind of thing I and others here have been talking about.

          • Anonymous

            “My comment about being in a business where we work for living is meant to differentiate between different types of business and different attitudes amongst them.”

            So in YOUR business you WORK for a living and in other businesses and other walks of life (quaint expression) people … do what for a living?

            Very revealing attitude.

  • eagle eye

    You make more sense than a lot people here!

  • valley p

    “You got any real data to back up your claim about Portland?”

    Start with perusing the work of Richard Florida, a researcher on this topic. He notes Portland time and again as an attractor of educated talent.

    http://www.theatlantic.com/search/?sort=time&source=magazine&q=creative+class#

    Oregon ranks 24th in percent of people with college degrees. Middle of the pack. We are also middling in just about everything else. Tax rates, education spending, education results, household income…you name it. Middle is our middle name.

    http://www.statemaster.com/graph/edu_bac_deg_or_hig_by_per-bachelor-s-degree-higher-percentage

    Steve writes: “If we don’t complain how can we expect things to get better.”

    Interesting. Where I grew up, complaining was an art form, but no one ever expected complaining to result in anything other than tension relief. Later in life, largely due to higher education, I learned that what makes things better is analyzing what the nature of a problem is, as objectively as possible, brainstorming solutions, putting those to tests, and then selecting the best one to move forward with.

    Catalyst is a whiners paradise. You start with a predictable rant from Lars, Larry, or some other so called conservative, you get a bunch of yeah right posts laced with anecdotes that can’t possibly be verified, and you get a range of “solutions” from cut spending to cut government completely. Only neither is a solution to anything other then spending less.

    As for working for a living, believe it or not Steve, that is what everyone this side of Paris Hilton or retired folks do, including the teachers and govenment workers you hate so much.

    • Steve Plunk

      If you would read my post you might understand my comment about being in a business where we work for a living.

      I suppose this “hate” you speak of is no more than the hate the liberals like yourself have for fat cat BP execs or Dick Cheney. My problem with government workers and teachers is they have irresponsibly damaged the state and country while laughing to the bank. That’s worthy of contempt. There’s also a difference between having a problem with a group like government employees and disliking individual members.

      I don’t just complain here. I get involved. I work with various groups and serve on volunteer committees. I recently sat down with an education advocacy groups coordinator to discuss education funding and priorities. This is a forum, a place to exchange ideas and yes, even complain. You guys just keep wanting to make me something I am not. Keep trying.

      • valley p

        I don’t hate anyone Steve, including BP “fat cats” as you call them, or Dick Cheney. Among other things, I do projects for energy “fat cats” and I certainly do not hate them. The oones I have worked with are mostly professional and responsible. But I find it interesting you accuse teachers of having “damaged the country,” though you seem to give BP, which did measurably damage the country, and Dick Cheney, who arguably is responsible for a whole lot of dead and maimed people as well as a gaping budget deficit a pass. I mean, it would take a whole lot of really bad teachers to come anywhere close to what Cheney left behind.

        As a former government worker and current part time university teacher, I did and do my job and then some. Damaged the country? I designed trails and campgrounds, helped plan timber sales, planned ski area improvements, and day to day did the work that was there to be done. My colleagues fought forest fires, rehabilitated streams, pulled weeds, protected archeological sites, and looked out for endangered species among other useless tasks. Some of them put in a lot of extra unpaid time on these projects. I don’t know where you get the idea that government workers get up every morning and look for a piece of the country to lay waste to, but it sure has not been my experience.

        Laughing to the bank? I wish. I make more money in the private sector than I made as a government worker. Your “contempt” for me and what you think I have done is a product of your own imagination, nothing more.

        As for making you something you are not, I have no such goal. I don’t waste my time trying to change people. What I try to do is offer you and Rupert and the various anonymous posters here a challenge. A different perspective, backed up by facts where possible, by opinion otherwise. What you choose to do with it is entirely up to you.

        • Steve Plunk

          When federal government employees make twice the compensation as private sector employees I consider that excessive and laughing all the way to the bank. State employees make much more on average and enjoy a retirement package that will destroy government as we know it. Those are both doing damage to the country.

          The Departments of Interior and Agriculture have damaged the country by letting environmentalist take over. Timber harvests are now political footballs. Ag subsidies are abused while family farms struggle. People like Shirley Sherrod effectively extort money while her fellow government bureaucrats sit idly by. A few trail and campgrounds don’t make up for that. Especially considering it was tax money that paid for them to start with.

          You said very clearly I hate teachers and government workers. That’s making me someone I am not. I believe they have damaged the country with their unions help and the negligence of our elected officials. Contempt? Maybe. Hate? No.

          BTW, how many might have died if not for the efforts of Dick Cheney and George Bush? That gaping budget deficit you lay at his feet was nothing compared to the budgetary mess our current president has gotten us into to.

          • valley p

            “When federal government employees make twice the compensation as private sector employees I consider that excessive and laughing all the way to the bank.”

            If they did I would have stayed with the federal government. Like I said, I make more money in the private sector. I don’t know where you get your information, but it is bogus. The benefits are better, but the pay is not better apples to apples. Quite the opposite, and this has been shown time and again.

            “The Departments of Interior and Agriculture have damaged the country by letting environmentalist take over. ”

            Now that is funny. Its funny in the “let” part…because the last thing those agencies did was “let” anyone take over anything. And it is funny to claim that to the extent environmentalists reduced clearcutting, road building, mining, and over grazing, that this damaged the country. It takes the word “damage” and turns it on its head.

            “Timber harvests are now political footballs.”

            They have been for 50 years. But for 40 of those years the football was always on the side of the field controlled by the timber industry. Now it is on the side of the field controlled by environmentalists.

            “Contempt? Maybe. Hate? No.”

            That is a difference without a distinction as far as I am concerned.

            “BTW, how many might have died if not for the efforts of Dick Cheney and George Bush?”

            I can tell you how many probably would still be alive. That number is conservatively 150,000. Another 25-50,000, just Americans mind you, have physical and psychological damage that will last the rest of their lives. Only god knows how many Iraqis have lost limbs, eyes, half their brains and the rest. All for a most unnecessary war.

            “That gaping budget deficit you lay at his feet was nothing compared to the budgetary mess our current president has gotten us into to. ”

            You need to check your math. Bush left office with a 1.3 billion dollar deficit just in FY 2009. Obama added about 400 million to that deficit. The FY 2010 deficit is a legacy of the Bush recession. And your party has no logical program for reducing it one cent in the years ahead. Quite the contrary, they are calling for extension of tax cuts designed to expire this year.

    • a retired professor

      The link on Richard Florida didn’t work for me, but I’m familiar with him, and not too impressed. Portland a big “creative class” attractor? It doesn’t show up in income statistics — Portland is about middle of the pack — or too much else that I can see. PSU a great university? OHSU is a good not-at-the-top-level medical school. How many Nobelists in Oregon? A hotbed of new technology? Yes, some, but pretty thin after you take away Intel. Great museums? Symphonies. OK, the Shakespeare festival is first-rate, the Bach Festival in Eugene is pretty good.

      As you say, Oregon is middle of the pack, on average.

      • valley p

        “Portland a big “creative class” attractor? It doesn’t show up in income statistics”

        Nor should it. It shows up in the proportion of the workforce engaged in occupations that are more brain than brawn dependent. Portland is not in the top 10, but we are well into the upper half from data I have seen in the past. Richard Florida often uses Portland as a model for a city that successfully transitioned from a blue collar industrial economy to a knowledge based one.

        Seattle is in the top 10.

        PSU is a 3rd tier public university. For what little money it gets from the state, it is doing as well as one should expect. Portland is a great city on some levels. A mediocre city on economics. It is an attractor of young talent, but they often get frustrated at the competition for decent paying jobs, no question about that.

  • Cliff

    You have not seen many businesses leave due to passage of Measures 66 & 67 because it takes time to move. My office lease is up in December and then we are moving to Utah. The guy upstairs is planing to move his business to Idaho by the end of 2011. We are just two very small businesses who are moving due to taxes (combination of high property taxes and now higher income taxes). I expect to save $10k-$15K per year in combined property and income taxes. We are also buying a home that is 50% larger for much less money than what we will sell our Oregon home for, so we will bring the business back home and save another $15K in office leasing expenses.

    Too many people are posting that high income taxes are not a big deal. We fear the same posters are ready to vote in the next set of tax increases and intend to keep spending money the state does not have. Time to save more money to put towards retirement. We will hate to go. Oregon has been our home since 1984.

    • eagle eye

      I’ve been saying that the high Oregon income tax is a big problem. It seems you agree.

      So, since the main revenue source for the state government is the high income tax, what would suggest to replace it?

      And did you consider moving to Washington, which has no income tax?

  • John in Oregon

    Most discussion here is excellent however I think misses the central point. Clearly taxes impact the Oregon economic environment. The real overall issue in general is economic liberty. Do individuals have the liberty to peruse their own economic self-interest? Viewed from this prospective its not just about tax rates, although Oregon’s huge 11 percent tax bite is a problem.

    Consider Smith Services who has an opportunity to pick up a new $100,000 contract. Under measure 67 Smith has a labyrinth of issues to negotiate. This new contract will move the business into the next bracket, another $10,000 tax bite. At a profit of 1% of sales Smith needs $1,000,000 in new sales to pay the tax. Is that additional new business out there, or is Smith better off without the contract? The marginal tax rate has become a factor in business management decisions.

    That is, business decisions are based on the tax implications of the next or future sales dollar.

    Several comments mentioned Boeing in relation to tax rate and incentives. Nothing could be farther from the truth.

    Boeing announced it would put the second 787 assembly line in Charleston, S. C. Union leaders and politicians like Sen. Patty Murray, D-Wash., expressed shock, dismay and outrage at the company’s decision.

    Like Oregon, Washington has an economic environment that is hostile to economic liberty. Back in 2002 Boeing told the Washington State House Labor Committee that “the state of Washington is not competitive” specifically Washington’s costly workers’ compensation system. Rather than allowing competitive open market insurance Washington chose a crony capitalist system.

    Government isnt the only negative impact on economic liberty. In an act of last-minute brinkmanship the Boeing machinists union called a strike on the eve of the Boeing Dreamliner roll out. In a tight competitive environment with EADS (EU subsidized Airbus) the union had leverage which severely damaged Boeings competitive position.

    Boeing’s vice president of human resources said it simply, Boeing is “unwilling to indulge the kind of last-minute brinkmanship that has been typical in all recent contract negotiations with the [machinists].” Meanwhile the Union leaders and politicians like Sen. Patty Murray, D-Washington will again express surprise, shock, dismay and outrage at the company’s decision to place the closed for business sign at the door.

    In 2008 I was dealing with a minor issue for my employer and as a result had to monitor several planning commission meetings in case a question came up. This was a Portland metro area but not the City of Portland.

    At one meeting a shopping center development was on the docket. I still remember the developer being quizzed about the required video store and drug, but not big box, store. The developers answer that no one was willing to open such a business was, well it was just unacceptable. Metro had decided those business would be there, end of discussion.

    Many comments have been made about existing enterprises, Boeing, Tektronix, Intel, Nike. Tektronix is a good example. Founded in 1946 Tektronix grew and spun off Tek Labs, Chemtrix, Rogers Organs, Exact Electronics, Analog Devices, Floating Point Systems, Mentor Graphics, TriQuint Semiconductor, and Planar.

    Ask your self this simple question. In today’s government environment could a Boeing, Tektronix, Intel, Nike, or Microsoft start up today? Could Boeing get the buildable land? Could Tektronix get the manufacturing approvals?

    Free markets and private enterprise weeds out failing business replacing them with new thriving and competitive companies.

    Government weeds out business failure subsidizing what the market would close.

    Ultimately government planners plan for yesterday’s business at the expense of tomorrow’s vision. The loss of economic liberty crushes business and shackles every person, business owner and worker alike.

    • valley p

      “Like Oregon, Washington has an economic environment that is hostile to economic liberty. ”

      Interesting. Washington has no personal income tax, no corporate income tax, and I believe the lowest capital gains tax in the nation. This is hostile?

      Boeing moved manufacturing to a non union state to get away fro the union, not to escape taxation.

      “Metro had decided those business would be there, end of discussion.”

      Based on your fragment of information, I’ll guess that the developer was trying to locate a big box commercial development in an area zoned for industrial production. Am I right? Metro and the 26 cities of the region agreed a few years back to reserve industrial land for industries, not retail commerce, which has lots of other options for location. This is not a policy that is hostile to business. It was done at the request of the manufacturing industry, which because it has special needs has fewer location options. Unless you think there should not be any zoning, choices have to be made between appropriate uses.

      “Ask your self this simple question. In today’s government environment could a Boeing, Tektronix, Intel, Nike, or Microsoft start up today? Could Boeing get the buildable land? Could Tektronix get the manufacturing approvals? ”

      Yes, yes, and yes. There is nothing preventing some smart young engineer from figuring out a better mousetrap, there are all sorts of tax breaks and incentives for manufacturing, and there is lots of vacant or underutilized land available for a start up. Intel is about to do a major expansion in Hillsboro, Vestas is opening a new headquarters in Portland, Freightliner expanded its Portland production, new distilleries and breweries are opening daily. There has been no loss of “economic liberty.” Its a myth.

      • eagle eye

        A huge company like Intel, or Hynix in Eugene, can get the special tax breaks, or Vestas can play off the green energy craze. Some of them even stay in Oregon, Intel case in point.

        (You are right about Washington having a good business climate in many respects; maybe that is why their incomes now far outstrips ours.)

        It’s entrepreneurial startups — the future Teks, Nike, Floating Point, Mentor Graphics etc etc — that have a big headwind to fight in Oregon. The state income tax, just for starters.

        Breweries and distilleries, and cute actresses and musicians and other “creatives” trying to eke out a living as baristas, are fun, very fun. But it’s not a basis for an economy.

        • valley p

          Why is the income tax a headwind against start ups? By definition, a start up makes no money for its first number of years. Its essentially a gamble on an idea, most of which fail to return anything on investment. My earlier point was that start ups that succeed and grow into something are usually happy accidents. Gates and Allen did not choose Washington because of its tax policies, but simply because they grew up there and liked the place as home. Same with Nike. I think we are looking under the wrong rocks.

          An economic development policy that attracts established companies will have to offer tax breaks, incentives, and so forth. That is the playing field and Oregon has to be in the game. Arguments against tax breaks are self defeating. Having more successful home grown start ups is probably related to our education system and the education level of the populace at large. The more upper middle class families you have, the more you have nurturing of young talent, some of which creates breakthroughs. And the more you pull in companies like Intel and Vestas, the more you get upper middle class people.

      • Anonymous

        You say that “Washington has no personal income tax, no corporate income tax, and I believe the lowest capital gains tax in the nation. This is hostile?” No, so there must be other reasons for Boeing’s production move to other states. One is the union mentality within Boeing’s unionized work force. The same intensity of hostility may not be evident in all unions operating in Washington State. But, Boeing reacts to its reality, not that of other firms.

  • John in Oregon

    VP, only a progressive would rush to defend the distraction of economic liberty to be replaced by government dependence. Let alone do so with a statement like > *Washington has no personal income tax, no corporate income tax, and I believe the lowest capital gains tax in the nation.* My god, that evil Boeing pays no tax at all and they are still not happy!!! No taxes. Not a thin dime. Not a penny. Even. The recklessness of Boeing, how dare they abandon Deep Blue Washington as not competitive in economic liberty.

    I am tempted to advise you start your research prior to engaging your keyboard. But I won’t say that. Nor should I need to repeat that I said “its NOT just about tax rates”.

    Back to that scofflaw Boeing that pays no taxes. Ooooops guess you missed this little thing called a B&O tax. You know what that is don’t you. Why it’s a Washington tax on total business sales. Imagine that. Tax the public when they buy something and tax the business for selling it. Nice scam. Such a nice scam that Salem decided to import the scam.

    But AGAIN it’s not just about taxes. In 2002 Boeing told Washington lawmakers the state would have to become more competitive in taxes, unemployment insurance (UI), regulations, and workman’s comp among other factors, in order to keep the state attractive for business. That’s FOUR things, three of which are NOT TAXES.

    Now about that anonymous planner somewhere in the bowels of central planing. You had guessed that the developer was trying to locate a big box commercial development in an industrial zone. Actually the property is zoned for this use. The property had come available and no variance was needed.

    So we were dealing with the Metro planners wet dream as they sit at an obscure desk in the old Sears building. Before them are the visions of this store, that store, and the other store but not this one, not that one or not the other one. What gives these people the wisdom that you and I don’t posses? What makes them brilliant and my neighbor stupid? Aside from the term planner in the title, what exactly does all that?

    Thus my example. This was way back in the ancient days of 2008, but even then Blockbuster was closing stores not opening new ones. Yet the planner wanted a DVD store while the market was building Red Box DVD vending machines. The planner wanted a stand alone pharmacy when in the market place they are attached to a Freddies, Wallgreen, or Wallmart. At least the panic over food deserts hadn’t yet begun.

    At best the planner can only reflect yesterdays market as we see in the DVD / pharmacy example. Even when the planner attempts to predict the future we get boondoggles like the south waterfront biotechnology research fantasy. That crashed and burned as all central 5 year plans do.

    Yet the planner persists, demanding the developer accommodate failing business models by reducing rent, a hidden government subsidy.

    Free markets and private enterprise weeds out failing business replacing them with new thriving and competitive companies. Government weeds out business failure subsidizing what the market would close. All to please the bureaucratic pin head with planner in his title.

    We see where government priorities lay when government first funds the core functions of government, the planners and regulators which control peoples lives. The optional services, libraries, the police, fire, and schools must compete on the ballot for money.

    VP you tell us that > *Yes, yes, and yes. There is nothing preventing some smart young engineer from figuring out a better mousetrap, there are all sorts of tax breaks and incentives for manufacturing*

    This isn’t about inventors coming up with better ideas. Economic liberty is about the inventor having the opportunity to bring that idea to market as a successful product. Consider what Howard Vollum and Jack Murdock’s experience would have been like under today’s regulatory rules.

    Act I, the scene, Murdock’s basement.
    Knock, Knock. I am Snidely Whiplash of Portland Code Enforcement. We have a complaint that you are building military things in your basement. You can’t do that the war is over Mr. Vollum. What is this thing you are building anyway? Well I don’t think the world needs any of your Silly Scopes. What makes your Silly Scope different? Triggered sweep! I told you the city doesn’t like military things. Jay Edgar Hoover told us to watch out for commie spies. Here take this red tag you can’t build things in your basement.

    Act II, Scene SE Hawthorne.
    Knock, Knock. I am Snidely Whiplash of Portland Code Enforcement. Ohh it’s you two again. We have a complaint that you are building things in a commercial zone. Still doing this Silly Scope thing I see. Tell me does anyone else build these Silly Scope things? DuMont, yes my sister has one of those DuMont picture radios. If DuMont stopped building those Silly Scope things doesn’t that tell you something?

    (In 1946 DuMont dropped its test instrument business to concentrate on Television. DuMont went out of business in 1956.)

    Act III, Portland building permit office.
    Hi I am Snidely Whiplash welcome to the Portland Building Department. Ohh it’s you two again. You want what? You want to build on 50 acres? Are you insane, we don’t allow that? But if you really want to waste your time you need to hire the law firm of Stripum, Whipum and Slash, InCrowd Engineering, and Connected PR.

    Compare that to a recent item in the news.

    Background. Zinc Air batteries have been around for some time. They are primary cells (not rechargeable) have high energy density but low discharge current. The primary use is hearing aid batteries.

    The company ReVolt Technology has access to basic research that MAY result in a rechargeable Zinc Air battery. ReVolt has no manufacturing facilities, and no research facilities. They have not developed a prototype and hope to produce a hearing aid battery in the next few years.

    The announcement. ReVolt had received $6.8 million from Oregon and The City of Portland and an additional $5 million in federal funding. They are applying for an additional $30 million. All because batteries are the planners wet dream. Not because ReVolt has a viable product.

    ReVolt gets $11.8 million in “Government” money. $11.8 in OPM, other peoples money. This is the very definition of crony capitalism. ReVolt using the power of governed for leverage while ignoring the free market. If the product succeeds ReVolt walks away with the technology. If the product fails ReVolt just walks away. Either way the people walk away with an empty bag.

    Howard Vollum and Jack Murdock built Tektronix using private investment.

    • valley p

      “In 2002 Boeing told Washington lawmakers the state would have to become more competitive in taxes, unemployment insurance (UI), regulations, and workman’s comp among other factors, in order to keep the state attractive for business. That’s FOUR things, three of which are NOT TAXES.”

      Well great. So Boeing wanted bigger breaks, they negotiated for them, and they got them. And they left anyway. What is a state to do John? Just ask businesses how much they think it is fair to pay and how much regulation they should be subject to and then hand them that? Is that your suggestion? “We don’t like those OSHA inspections. Safety costs money.” “OK then, no inspections. What else boss?

      “Actually the property is zoned for this use. The property had come available and no variance was needed. ”

      Well if all that is true then the planner had no authority to deny the permit. But I have this sneaky suspicion you still are withholding something important. What is it? For example, “Metro” planners have no role in reviewing local development proposals, so why do you even bring Metro into this?

      “This isn’t about inventors coming up with better ideas. Economic liberty is about the inventor having the opportunity to bring that idea to market as a successful product. ”

      Your example is fun but does not comport with reality. Many Portland businesses, and probably elsewhere in Oregon, start as home based. Its pretty easy to run a start up out of a basement or garage in most cities in Oregon. When you outgrow the garage, yeah, you have to go rent a facility designed and zoned for the purpose. We try not to allow residential neighborhoods to be turned into heavy industrial zones for good reasons. But contrary to your story John, Portland has “industrial sanctuaries” where residential AND commercial uses are kept out of areas zoned for industry. Sort of the opposite of your example.

      Bernie Maddoff built his business using private investment as well. No government subsidies. A real success story. And Paris Hilton? Totally privately financed.

  • John in Oregon

    VP you must live in the state of Jefferson, a mythical place that exists only in your mind. > *Well great. So Boeing wanted bigger breaks, they negotiated for them, and they got them.*

    FALSE. Boeing wanted to be allowed to buy workman’s comp in a private competitive market. It was the state of Washington that insisted on a government monopoly and the crony capitalism agreement.

    You mentioned OHSA which is federal. Frankly the insurance industry has a better record of reducing accidents because of the incentive to prevent loss before it happens. OHSA has a record of producing lots of red tape, complex confusing regulation and little benefit.

    Again with the altered state of Jefferson. > *Well if all that is true then the planner had no authority to deny the permit.* and *”Metro” planners have no role in reviewing local development proposals, so why do you even bring Metro into this?*

    Do you really want me to believe that the planning commissioners of a small town wanted to be siting in a public meeting debating placement of the handicapped elevator being here or there? Voting to decide if the shape of the roof line should be this or that? No they don’t. But as they say the fecal mater rolls down from the top, and the top in this area is METRO.

    Why else do you think the people of Boring Oregon are in open revolt against METRO? They don’t want the METRO plan rammed down their throat.

    It’s true that the element of luck placed Howard Vollum and Jack Murdock in Portland. Also luck that DuMont focused on TV not test instruments. It’s great you can start a business in your basement, in Wagontire Oregon. But that’s not the rule in the Portland metro area. People do start basement business but that is in violation of the law.

    What I didn’t tell you is that after Hawthorn Electronics Vollum planned to move to a larger facility in the City of Portland. The city roadblocked that move which is why Taktronix moved west to Washington County. BTW Tektronix is an excellent example that calls your education infrastructure argument into question.

    • valley p

      “Do you really want me to believe that the planning commissioners of a small town wanted to be siting in a public meeting debating placement of the handicapped elevator being here or there? Voting to decide if the shape of the roof line should be this or that?”

      I don’t care what you believe, but the fact remains that Metro has no authority or influence on elevator placement, the shape of roof lines, or local zoning.

      “Why else do you think the people of Boring Oregon are in open revolt against METRO? ”

      Boring is in open revolt? I don’t think so. I think you mean Damascus, which happens to be where I live. And as usual “the people” really means SOME of the people, not all, and not even a majority based on the last election, when the anti Metro ballot measure failed.

      As for Metro ramming things down our throats, here is the story John. Metro extended the regional urban growth boundary around what is now the city of Damascus in 2002. Most locals did not want the UGB expanded in our area. People do not like forced change, and Metro is the agent of forced change in our community. On top of that, you have people who moved there for a semi rural lifestyle now having to adjust to an urban future. It is disruptive and unsettling.

      “It’s great you can start a business in your basement, in Wagontire Oregon. But that’s not the rule in the Portland metro area. People do start basement business but that is in violation of the law.”

      Its pretty easy to get a home occupation permit in Portland and most of the 26 cities of the Portland region. The issue comes down to the nature of the home occupation and what sort of noise, traffic, or pollution it generates. Maybe you think anyone should be able to do anything they want in the middle of a residential neighborhood, but most people disagree with you on that.

      “What I didn’t tell you is that after Hawthorn Electronics Vollum planned to move to a larger facility in the City of Portland. The city roadblocked that move which is why Taktronix moved west to Washington County. BTW Tektronix is an excellent example that calls your education infrastructure argument into question. ”

      Well, I don’t know the history of Tektronix. But I’d like to know what you mean by Portland “roadblocked” a propose move. In what way? They did not allow them to build a facility in a place zoned for that purpose? It seems to me that Tektronix, like lot of modern R&D based high tech companies, either need or prefer large areas of cheap land where they can build a new, very clean, somewhat isolated facility. Portland, being an older city, lacks large vacant industrial sites. This is why Silicon Forest happened in Hillsboro, not Portland, and why Silicon Valley happened in San Jose, not San Francisco.

      I don’t know what you mean by calling my educational infrastructure argument into question. What do you think my argument is, and what about Tektronix calls it into question?

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