Issues
Two Paths for Oregon’s Economy: Innovation and Creative Leadership or Sustained Mediocrity and Lack of Will Power
Oregon stands at an economic crossroads. Changes sweeping the global marketplace and a disturbing set of economic and fiscal trends at home offer us a choice between two futures.
One path presents an Oregon defined by thriving businesses that lead their industries in ideas, innovation and design, market reach, and staying power. This path heralds a future of good paying jobs that resist migration and sustain local economies and communities.
On the other path, Oregon becomes strictly a regional consumer market and a branch-office outpost for industries whose key ideas, research, decisions, innovations, and initiatives occur elsewhere. It becomes a commodity producer whose industries pay average or lower wages and are always vulnerable to cheaper sources of labor and supply elsewhere.
Healthy Communities Initiative envisions the growth and success of leading edge, traded sector industries – clusters of allied businesses that ring up sales outside Oregon and create good paying jobs that buoy local communities. While all Oregon companies improve the state’s economic well-being and quality of life, we stress traded-sector industries because they pay high wages; and by selling their products and services outside Oregon they bring in fresh dollars that fuel local businesses and tax revenues.
Traded sector industries tend to cluster. They draw competitive advantage from their proximity to competitors, skilled workforces, specialized suppliers and a shared base of sophisticated knowledge about their industry. In the 1970s Oregon’s largest industry cluster was forestry and wood products. Oregonians, urban and rural, enjoyed high wage jobs in this industry. Today, while still a world leader in timber and agriculture, Oregon has an array of innovative industry clusters. These include natural resource industries, advanced manufacturing, high tech, footwear and sports apparel, and clean technology.
While the destiny of these industries is in their own hands, it is critical that Oregon’s leaders pursue initiatives to create the environment that helps our traded sector industries succeed. The initiatives we recommend and support can improve the culture of innovation. They can enhance the work skills of our people, boost the quality of life that drives talented people to Oregon, and strengthen business infrastructure needed for productivity and competitiveness.
Despite the remarkable economic diversification described above, in recent years Oregon has fallen off course. After a surge in the 1990s, Oregon’s per capita income has been declining compared to the national average for the past twelve years. Per capita income is the total income earned in the state divided by the population. It is a key measure of economic well-being and determines how much money is available to spend on schools and other public services.
In recent years Oregon’s unemployment rate has tracked well above the national average. Moreover, the boom and bust economic cycles have been particularly hard on Oregon companies and workers.
Declining per capita income, combined with exploding costs for health services and prisons, has crowded out investments in education – especially higher education. Because education and income are inextricably linked, this trend could push down personal incomes even further.
Looking forward, Oregon’s challenges are greater. An aging population will continue to put upward pressure on spending for human services. The legacy costs of a poorly conceived public pension system have come due. And the continued rise in health care costs is unsustainable for both the private and public sectors.
Our unbalanced and unstable tax system continues to be a drag on high-wage job growth. With the passage of Measure 66, Oregon has the dubious distinction of having the highest capital gains tax and second highest income taxes in the nation. This policy discourages investors and high wage earners from locating here. Yet without a sales tax or an adequate reserve fund Oregon still lacks the ability to provide stable funding for public services.
Oregon is trapped in a “Circle of Scarcity.” Breaking this circle is the single most important task for Oregon’s business, elected, and community leaders to tackle together.
The challenges Oregon faces are immense. They can only be addressed if Oregon’s business, elected, labor and community leaders work together.
Unnecessary Regulations Strangle Job Growth and Business Expansion
Nearly every day in Lane County the unemployed stream into local businesses looking for work. They can’t pay their mortgages. They can’t pay their bills. They can’t feed their families. They don’t have health insurance. Their jobs are being choked off as the manufacturers, industries, farms, ranches, trucking companies and others who employed thousands here with good family-supporting wages, benefits and vacations, are just quitting.
We need good quality of life regulations. But excessive regulations are unnecessarily limiting the use of our best assets: our natural resources and population of willing workers.
The key areas in which we could expand our economic development are private businesses and industries consisting of manufacturing, construction, agriculture, transportation and other industries noted below. Oregon and Lane County are unique in that they possess the natural assets that could pull us out of our economic doldrums. We can grow and make products; we can add to their value; we can sell and ship them across the nation and around the world. Local entrepreneurs and established businesses will create real jobs – if we just get out of their way.
Take agriculture, which has been one of the larger and more stable sources of employment for workers in the region. Before the 2009 recession, Oregon’s agriculture industry was linked to a workforce of 214,511 full or part-time jobs & $25.8 billion in sales. Oregon’s agricultural exports grew 71.6% and comprised one of the top two export industries through the first quarter of 2008 on a year-over-year basis.
Often, private job creation is hobbled by excessive planning processes and resulting regulations. Region 2050 Problem Solving Program, Envision Eugene, LTD’s West Eugene EmX, Lane Livability Consortium and Smart Communities Project just to name a few. Lane Livability Consortium alone proposed 193 scheduled meetings over the next three years as it plans to duplicate and triplicate efforts of local elected governments in an effort to create a spaghetti-like tangle of regulations and processes. The strategy seemed to be to overwhelm citizens with thick reports and paperwork, then burden them with a multitude of monotonous meetings that accomplish little.
The past two decades have generated a record number of rules, regulations, fee increases, taxing districts, overlay zones and additional government controls. We need good regulations that help maintain our high quality of life. Traditional blue-collar workers, who once earned a living wage of about $50,000 per year from manufacturing industries or trades, are losing their jobs in record numbers, in part because their employers – the job providers – simply cannot comply with unnecessary, burdensome regulations and still stay in business. The table below shows the loss of jobs in manufacturing and trades over the last five years here in Lane County.
Since the early ‘80’s, which marked the beginning of spotted owl litigation, our government, state and local agencies and regulators have continued to aggressively restrict and tax the private businesses that create jobs. These private industries and businesses used to purchase millions of dollars of local consumables each year, putting even more people to work. Now they are downsizing, closing or moving out of Oregon. These employers are being forced away because it can be more profitable doing business elsewhere. We need these jobs back. We need to encourage our Job Providers while maintaining reasonable quality of life regulations.
Our Job Providers are not on strike. They simply gave up and sought out more hospitable business environments.
Cindy Land
Eugene, OR
| Population Estimates: |
|
||||||||||||
| http://www.co.lane.or.us/Departments/BCC/Documents/Budget10-11/AdoptedOverview2010.pdf |
|
||||||||||||
| http://www.google.com/publicdata/explore?ds=kf7tgg1uo9ude_&met_y=population&idim=county:41039&dl=en&hl=en&q=lane+county+population#ctype=l&strail=false&nselm=h&met_ | |||||||||||||
Government Reform for Greater Transparency and New Management Strategies
In August, this community experienced the first act of a longer drama about this county budget when the Lane County Commissioners received news of a $2 million budget shortfall. This shortfall had the commissioners making decisions between the poor, sick and homeless versus the safety of our community. At the last minute, the shortfall was revised down to $800,000.
One department, Public Safety, was cut by $500,000. Public safety is the most essential service of county government. Will criminals be running loose in the streets?
There are more cuts coming. Act Two of this drama will continue to unfold if state projections fall short, federal funding and other surprises force our commissioners and the administrator to redefine essential county services.
Our county administrator made a simple recommendation: reduce the “lapse” in many of the departments, including a core service of county government public safety. Lapse is the difference between the number of budgeted employees and the actual number of active employees on the job in Lane County. Vacant positions are currently kept on the books for budget purposes.
Some vacant but budgeted positions go unfilled for months, maybe even years, because it may be difficult to find the qualified candidate, compensation packages are insufficient or other personnel issues. These funds and positions are not subtracted even when they do not actually contribute to the stated purposes when the Budget Committee approves the department’s budget.
When the gap between budgeted employees and actual active employees is accumulated, those surplus funds are absorbed into the department and can be used for whatever the department director wants. It has similar advantages to an invisible reserve account for individual departments. This practice creates bloated budgets that camouflage the actual cost for essential services for county citizens.
This is the time to change this common practice. Departments should not hold open unfilled vacancies which can become slush funds and used for other purposes. The money should be returned to the general fund not as a carry-over resource for that department, but reduced from the department’s budget as unneeded and reallocated by the administrator. It is disingenuous to taxpayers in these challenging times to use what-you-see-is-not-what-you-get budgeting. It hides the real cost of essential services from taxpayers and elected officials.
Lane County government needs to earn back taxpayers’ trust. In Act Three, commissioners, budget committee members and administration should keep boots-on-the-ground, butts-in-the-jail and rocks-on-the-road with transparent budgeting. The good news: Act One of this drama, we have started the process early of a simplified, truthful county budgeting process that is long overdue.
Having Jail Space Only Solution to Effective Incarceration and Rehabilitation
Most people don’t differentiate between “prison” and “jail”. As far as most of us are concerned, as long as the “bad guys” are locked up in a small room with bars and a stainless steel toilet, it really doesn’t really matter what we call the facility, but jail and prison are very different animals that house different populations and meet very different community needs. A healthy community needs both local jail capacity and access to prison space for its most serious offenders.
Prisons are state-run facilities that hold felons who have been sentenced to serve more than a year in custody, while jails are local facilities that house those who are awaiting trial, including those awaiting trial on the most serious felony charges, and those who have been sentenced to serve short periods of incarceration for violating probation or committing misdemeanor crimes like DUII, simple assault and theft. Although it’s important for misdemeanor wrongdoers to be punished, local jails play a more critical role in the criminal justice system: they give force to judicial orders. I’m talking about orders to attend trial, order to participate in anger management counseling and orders to follow through with drug treatment.
Judges, like parents of young children, must have the ability to enforce the rules they make. Unfortunately, when it comes to a group of criminal offenders who typically have no tangible assets, the only enforcement power that matters is the ability to incarcerate. The system fails in dozens of tragic and expensive ways once criminals understand that the loss of jail capacity has rendered the judges “toothless”. That’s where Lane County stands today with respect to property criminals, and the consequences are doing great harm to victims, taxpayers and offenders.
Some might think that the inability to incarcerate is a windfall for the criminals. That’s certainly true for some of them, but for many, perhaps even most of them, the lack of local supervision and jail space is depriving them of a real shot at meaningful rehabilitation. Similarly, some in the community believe that failing to fund a jail is saving money that could be better spent elsewhere, but we’re not saving at all. We’re ensuring more victimization, more insurance costs and higher prison populations, all of which ultimately cost us much more. We’re also paying in lost quality of life and lost business opportunities, because we feel less comfortable in our community and few businesses would choose to relocate to an area with property crime rates among the worst in the country. In sum, we’re being “penny wise and pound foolish”. We’ve struck a balance that represents the worst of all possible worlds: we’re forcing a system design which does less, at greater costs, with disastrous results. That’s a shame, particularly when we have the local talent and expertise to deliver an optimized system capable of delivering more of everything for less. We can do better.
Business, Not Government, Creates Jobs
How many times have you listened to a politician, whether on TV or in person, and heard him or her say that government will be creating thousands of jobs over the next x number of years? This is where government officials completely miss the point. Did you know that in my 10 years as Mayor of Springfield I never once said we are going to create jobs over the next x number of years?
“Why?” you may ask? Because that is not the role of government. The role of government should begin with the premise that “We want your business to come into our state/county/city. Now, what can we do to make you want to do business here?”
Finally, once we’ve attracted you, government’s role is to get the business its permits in an expedited manner.
My goal was to personally meet with the sitting consultant, or possibly an executive of the firm and invite him or her to do business in Springfield/Lane County. Then I would provide a roadmap for the decision makers showing them how we can quickly and efficiently get them their permits.
My thought was that if we provide this kind of service then jobs and investment will be created. In ten years while I was Mayor, over $1 billion of private sector investment came to Springfield, bringing with it thousands of new jobs.
Business, not government, creates jobs. Government, at its best, makes it easy for business to do so.
Article Written By Sid Leiken, Lane County Commissioner and former Mayor of Springfield
Goal: Quality Jobs and Higher Incomes for All Oregonians
The overriding goal of Healthy Communities Initiative is to increase and maintain high-wage jobs that support families and maintain strong communities. Key measures of success are per capita income, reduction in poverty, and statewide job stability.
Quality jobs and higher incomes result in lower poverty rates and lower tax rates for quality public services that in turn, support a healthy economy. This relationship is known as the “Circle of Prosperity.”
Unfortunately, Oregon has not been meetings its goal. Since 1997, Oregon’s per capita income has fallen off pace with the US average. Poverty rates are near the highest in the nation, and unemployment has been hovering above the national average in both good and bad economic times.
Vision: Industries Leading the Globe in Innovation and Sustainability
All businesses add to Oregon’s economic well being. Local businesses, those that sell their products and services exclusively or primarily to local customers, and who face little direct competition from out of state–add to the local quality of life, provide entrepreneurial opportunities for citizens, and can be the springboard to help launch traded sector clusters. Most jobs in a community are actually not in the traded sector, but in local service industries such as restaurants, grocery stores, hospitals and schools.
Oregon’s economy is driven by companies that ring up sales outside of Oregon, bringing in fresh dollars that support families, local businesses, and government services – essentially companies who export their products and services to other U.S. states and other countries around the globe. Because traded sector industries bring in the fresh dollars that allow these service industries to grow, we must pay special attention to them. These companies are particularly important because they create new wealth rather than just recirculation of the wealth that is already here.
The success of traded-sector industries is not random. These industries tend to “cluster” based on shared advantages such as natural resources, a specialized workforce, proximity to suppliers, and a policy environment conducive to the industry’s activities. While the future of these industries is in their own hands, it is critical that Oregon’s leaders understand our key traded-sector industries, and pursue initiatives that continue to provide them with a competitive advantage over other places.
Traded sector industries are both small and large. According to one study, about 88% of companies that export have fewer than 200 employees. By identifying our traded-sector industry clusters and paying special attention to their needs, Oregonians and policy-makers have a way of thinking about how to grow our economy and create more high-paying jobs.
Voters Want State Government Reform
Polling in 10 states shows that Americans want politicians to cut spending and reduce public employee benefits before they raise taxes.
Americans believe that bold action to restrict spending is necessary to stabilize the finances of state government.
Last month, in a wide-ranging national survey of 1,000 randomly selected, registered voters, and in 10 polls in individual states each with 400 respondents, my polling company found that voters strongly favor measures to pare the compensation of current and future public employees. They strongly oppose higher taxes.
Specifically, over three-quarters (78%) say their state faced a budget crisis this year, and 68% say that the crisis was resolved with spending cuts. Overwhelmingly they blame politicians for creating and exacerbating the problems: 48% say “elected state officials made careless and self-serving decisions,” while only 6% say “state governments did not tax enough.”
The top priorities for resolving current fiscal issues are to cut government spending (47%) and to ask for greater sacrifice from current public employees, by having them contribute more towards their benefits (31%). By almost two-to-one, they think that current public employees should have to contribute more toward their pension benefits because of budget problems.
On West Coast, Oregonians most pessimistic about economy
Published: Monday, August 15, 2011, 1:53 PM Updated: Monday, August 15, 2011, 5:26 PM
By Jeff Mapes, The Oregonian
Gallup finds that Oregonians are more pessimistic about the economy than their West Coast neighbors in California and Washington.
The pollster has developed an “economic confidence index” based on answers to questions about the state of the economy and whether things are getting better.
Read More From The Oregonian >>>
Oregon third-worst for percentage of children with unemployed parents
Published: Wednesday, August 17, 2011, 9:17 PM Updated: Thursday, August 18, 2011, 9:48 AM
By Richard Read, The Oregonian
Thirteen percent of Oregon children have at least one unemployed parent, ranking the state third worst nationally in a dynamic that can have lifelong effects on kids.
A study on children released Wednesday by The Annie E. Casey Foundation included the unemployment statistic. Oregon and four other states tied, ranking only slightly better than Rhode Island at 14 percent and Nevada at 16 percent in 2010.
Oregon’s No. 3 ranking seems high, given that the state ranked seventh nationally last year for unemployment, at 10.8 percent. Children’s advocates blame what they see as a lack of government help for parents trying to hold onto jobs while caring for kids. They plan to push the Legislature to expand programs that support working parents.
Read More From The Oregonian>>>
Rep. Matt Wingard Comments on “Extraordinary” 2011 Legislative Session
by In the news Tuesday, August 2. 2011
Legislative Spotlight by Taxpayer Association of Oregon
“Extraordinary.” That’s how Rep. Matt Wingard describes the most recent legislative session that featured a split House and the first ever co-Speaker’s office.
“Republicans were able to prevent tax increases, keep fee increases to a bare minimum, and ensure that we live within our means,” said Wingard. “I’m always pleased when I and my like-minded colleagues can stop tax increases.” Wingard, a vocal proponent of charter schools and public education reform, also expressed satisfaction that the 2011 Legislature approved what he believes are “the most significant education reforms in state history.” Among other things, these reforms support and encourage charter schools and the statewide virtual school, which will expand educational choices for parents and students. And, thanks to educational service district reform, school districts will be free to shop for better, more cost-effective services.
“Oregon needs high-quality public schools. I’m pleased that we took a giant step forward in the right direction this session.”
Despite the session’s success, Wingard expressed disappointment that the Legislature failed to pass key job creation legislation put forward by his Republican colleagues, saying he hopes that changes come February. While Oregon’s 18% real unemployment troubles the lawmaker, more troubling is the fact that Oregon’s per capita income is 9% below the national average.
“In today’s economy, even when Oregonians work, they’re often poor,” said Wingard.
According to the lawmaker, Oregon’s depressed per capita income can’t simply be blamed on a bad regional economy. Washington, whose per capita income was roughly the national average in the 1990s and largely mirrored Oregon’s, now enjoys a per capita income higher than national average. Oregon’s meanwhile has plummeted.
“High taxes, excessive regulation, and onerous land use laws are preventing us from creating an environment conducive to economic growth. We have to confront these issues head on.”
Wingard also said that the current fight in Congress over spending cuts and the debt ceiling makes it even more imperative that Oregon enacts necessary economic reforms.
“The nation’s fiscal problems aren’t going away. The only way for Congress and the President to get our fiscal house in order is to cut spending. In the future, this will mean less federal money for states. All the more reason we need to get Oregon working again.”
Source: Rep. Matt Wingard Comments on “Extraordinary” 2011 Legislative Session