Issues
A Pragmatist Decides How to Vote
By Thomas Michael Stewart
“Pragmatist” has become a negative word in politics. These days, when people say that a politician is a pragmatist, they usually mean someone who has no strong principles and will say or do anything that seems expedient at the time.
The corruption of this word is unfortunate. As originally defined by American philosopher William James (1842-1910), pragmatism meant nothing more than that the worth of every new idea must be measured against the way that idea performs in practice.
I’m about to graduate from college, and I want to know that there’s a job waiting for me when I do. So, come November, I’m not going to vote Democrat or Republican. I’m going to vote for the presidential candidate whom I regard as the closest to being a true pragmatist.
Our most successful presidents have been pragmatists. In recent memory, we can point to Ronald Reagan and Bill Clinton. Both were pragmatists. Reagan was a committed tax-cutter who was willing to raise taxes when circumstances warranted it. Bill Clinton was a liberal who wanted to expand government, but was willing to turn 180 degrees and proclaim that “The era of big government is over” when the mood of the country changed.
What about Barack Obama and Mitt Romney? Mr. Obama came into office facing the worst economic crisis since the Great Depression – a crisis that, admittedly, was not his fault. To stop the free fall, Mr. Obama pumped $800 billion into the economy. Not all of that money was spent wisely, but I believe that catastrophe was averted. Nevertheless, economic growth remains sluggish.
The pragmatic thing to do, once the results of massive government intervention had proved disappointing, would have been to look for alternatives. Instead, Mr. Obama chose to believe that government could reinvent the American economy and return it to prosperity. So he gave us Obamacare, Solyndra and the Chevy Volt – along with near record-high gasoline prices.
Has Mr. Obama learned from experience? His campaign rhetoric to date suggests that he has not. He’s presided over the weakest economic recovery since World War II, but it’s clear that if he gets another term he intends to continue the same kind of policies that he has pursued so far.
But would Mitt Romney be any better? If Mr. Obama has a mystical faith that federal spending and government regulation will bring prosperity, Mr. Romney seems to be no less devout in his conviction that tax cuts and laissez-faire capitalism will do the same.
So which of the two candidates is closest to being a pragmatist? It’s a tough call, but I’d give Mr. Romney the edge. First, because Mr. Romney’s faith in tax cuts is tempered with reason. He wants to lower tax rates while at the same time eliminating many tax breaks. If he’s sincere in this, the result will be not only lower rates, but a tax code that is closer to being neutral. In other words, he is trying to create a tax code that doesn’t try to manipulate the economy through tax incentives. Why? So that taxpayers will base their investment decisions on their best judgment instead of how much they expect to save at tax time. More neutrality in the tax code has got to be good for the economy.
Second, Mr. Romney was a successful business executive. He knows how the market works and what motivates other executives to make significant capital investments and thereby create jobs. As an intellectual, Mr. Obama lacks this real-world expertise. So he is forced to rely on government solutions because he really doesn’t know what else to do.
Third, Mr. Romney is offering himself to the American people as a practical problem-solver. For example, he’s produced an economic recovery plan that has been endorsed by 400 leading economists, including four Nobel Prize winners. So there’s good reason to believe that a Romney administration would pursue sound, market-tested solutions to the nation’s economic problems.
I doubt that William James would wholly approve of either of our two major candidates for President. But to me, at least, Mitt Romney seems the more pragmatic of the two. That’s why he will get my vote.
Thomas Michael Stewart, a resident of Eugene and former student at Marist and Sheldon High Schools, is currently a senior at Princeton University. He has contributed to Lane Solutions in the past.
Five Lessons I’ve learned About Government Spending
By Sean VanGordon
In the fall of 2012 Oregonians should ask tough questions of candidates about their policy views. Campaigns in the United States are marketing-driven, heavily scripted and rely on simplistic catchphrases. Good marketing wins elections. But it doesn’t solve problems – because when you govern, it’s the details that matter.
Government spending is a perfect example of this oversimplification of issues. Voters are presented with the false choice of either paying more taxes to support government or cutting government programs. Even at the city level, budgets are more complicated than that. I want to share with you five key lessons I’ve learned about government spending. In doing so I’ll show that you can prioritize spending and protect essential public services.
For the sake of argument, this is a discussion about the management of government finances, not the role of government. In our current economic situation a reduction in spending is a reality, and this is my opinion of how to reduce spending while mitigating cuts to essential services.
Lesson #1: Economic Growth Is King
All budgets are tied together by a single truth, which is that the economy is king. That’s because economic conditions control the flow of revenue to the government. As a household earns more, it pays more in taxes. A worker with a decent manufacturing job pays more taxes than one on unemployment. Jobs will close deficits at all levels of government. Weak economic growth will make deficits worse.
Lesson #2: Reorganization Saves Money While It Protects Services
Elected officials need to constantly question the size and organization of government. By shrinking the size of government you can reduce overlap and save administrative costs. By cutting administration you protect services that the public uses. Here are some local examples:
- The Eugene-Springfield Fire Department merger: This is an ongoing effort to merge two fire departments. In Springfield it has saved approximately $600,000 through reduction of overlaps between the two departments. These savings protected firefighters from layoffs and, more important, safeguarded response times for citizens caught in an emergency.
- The Springfield Public Works and Development Service Departments: For the last twenty years these have been separate departments. Last year Springfield merged them. During the merger the city, determined to improve customer service, carefully reviewed all functions of the two departments. The result? Savings totaling about $300,000.
- The State of Oregon reduced managers: In 2012 the Oregon Legislature required that the State increase the ratio of employees to managers. While the State has had some challenges with implementation, the Legislature’s message was clear: Improve efficiency.
Lesson #3: Don’t Forget to Save
We need to focus on providing consistent services to the voters. The budget situation is tight in every jurisdiction, and we don’t know when it’s going to get better. Saving when you can and protecting your reserves protects the financial health of government. In the 2011-2012 budget cycle the City of Springfield received $500,000 more in property tax revenue than it had budgeted. The Springfield City Council decided to save it for the 2012-2013 budget cycle in order to avoid additional cuts.
In the Oregon Legislature there are numerous proposals to grow a rainy day fund. My personal favorite is the plan to save 3% of all revenue in the General Fund.
Lesson #4: Reduce Overtime
Overtime is expensive, but sometimes unavoidable. It wouldn’t make sense to send police back from a crime scene to punch out or call firefighters home from a fire because their shift was up. However, government needs to reduce non-essential overtime whenever possible. In 2011 the Springfield City Council held a meeting specifically to talk about the $900,000 in overtime we budgeted for the Fire Department. As a result, in 2012 the city reduced its budgeted overtime expenditure by 33% because management and labor worked together to find creative solutions.
Lesson #5: Innovate.
Innovation in government saves taxpayers money and protects services. It allows government to solve structural cost problems with creativity. Here are examples of innovative solutions that are either in use or under consideration:
- The statewide e-permitting system that allows developers to apply for permits on-line;
- The shared lending agreement between local libraries that makes it easier to share books while saving both staff time and spending on materials;
- Springfield is evaluating becoming self-insured for health insurance and workers comp;
- Both the Springfield City Council and Planning Commission now use iPads for public meetings, which saves thousands of dollars on printing costs.
There are plenty of additional examples on the state, county and local levels. As citizens, we need to promote this type of thinking.
Conclusion
The economic environment is tough right now. The country faces hard choices about the size and scope of government. In a campaign year candidates typically present two choices: 1) I will spend more money in government and may raise your taxes. 2) I will cut government spending and may cut your taxes.
Ask for specifics. Ask candidates which services they are going to protect and what the tradeoffs are. At the end of the day we need to elect leaders who can discuss their opinions in detail with you, and make solid decisions about problems we face as a community.
Sean VanGordon is a Springfield City Councilor
Increased Taxes on America’s Small Businesses?
Washington, D.C. – U.S. Senator Rob Portman (R-Ohio) recently released a statement responding to President Barack Obama’s call for increased taxes on America’s small businesses.
Senator Portman introduced his statement with these observations:
While President Obama calls for higher taxes on jobs (sic) creators, two new government reports undercut his class warfare argument and the basis for calls for higher taxes…. As the nation careens toward a fiscal cliff, real leadership not more rhetoric and finger pointing, is necessary to reform our tax code and address Washington’s out of control spending.
Analysis of the Congressional Budget Office’s (CBO) final report on what caused the January 2001 projection of a $5.6 trillion 10-year surplus to turn into an actual $6.1 trillion deficit over that 10-year period (ed. note: a $11.75 trillion dollar swing) shows that:
- Tax policies enacted a decade ago are responsible for just 16% of the swing from surplus to deficit, or $1.9 trillion;
- Given that only about one-fourth of the tax cuts went to upper-income earners (indicative of the reality that there are very few of these), just 4% of the decline from surpluses to deficits resulted from upper-income tax cuts, or $490 billion
- Since CBO ignores any of the positive impact of tax cuts on the economy (this is known as “static analysis,” as opposed to “dynamic analysis,” which estimates growth attributable to tax cuts), savings and economic growth, the percentage was actually even smaller than the 4% estimate (above).
Additional analysis of the factors behind this massive $11.75 trillion swing reveals that new spending, (much of which was due to debt incurred because of the new spending and interest) were responsible for almost half (48%) of the increase in spending.
To sum it up, the $11.75 trillion swing from surplus to deficit was comprised of a $6.1 trillion decrease in revenue (52% of the total swing) caused by tax policies, new spending and interest and a $5.6 trillion increase in spending (48% of the total swing).
Of the total spending and revenue lost over the 10 year period, an astounding 34% ($4 trillion) was due to Obama/Pelosi legislation over the last three years!
Senator Portman concluded:
In a second report, the CBO said that in both 2008 and 2009, the highest-earning 20% of taxpayers paid 94% of the total income tax burden – up from 86 %in 2007, and 81% before the 2001 tax cuts. In other words, higher-income Americans have been paying a bigger and bigger part of the total tax burden under the so-called “Bush tax cuts.”
Editors’ note: Due to rounding, the percentages above may not agree with the dollar amounts. For clarity’s sake the editors decided to round dollar amounts to two decimal points and percentages to just one.
The author is a concerned Lane County resident and business owner.
“YOU DIDN’T BUILD THAT!”
Individual Initiative & the American Economy
“YOU DIDN’T BUILD THAT!”
Let’s be fair to President Obama.
The commercial, “These Hands,” a commercial currently being aired by the Romney campaign (http://www.youtube.com/watch?v=4Lr49t4-2b8),quotes Mr. Obama proclaiming during his July 13th speech in Roanoke, Virginia: “If you’ve got a business, you didn’t build that. Somebody else made that happen.”
The quote is accurate, but perhaps taken a bit out of context. The full context is as follows: “If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have, that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen.” (emphasis added)
Perhaps the president simply expressed himself poorly. Possibly Mr. Obama’s statement, “you didn’t build that,” was meant to convey that – alone – entrepreneurs did not build the nation’s infrastructure nor create all the conditions necessary for their success. This is a nice thought. However, there is also the possibility that Mr. Obama truly believes what the Romney commercial implies: that those who succeed under our free enterprise system owe their success not to their own brains, guts and grit, but to government largesse.
Consider what Mr. Obama said immediately after the sentence italicized above: “The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.”
But this claim is wildly inaccurate. Government research did not create the Internet, nor was profit an objective of its creation. What the government (which is to say, the American people as taxpayers) did do was provide funding, initially through the Defense Department, and later through legislation sponsored by then-Senator, Al Gore.
No one person or entity invented the Internet, but the research involved was done mainly by universities and private enterprises, notably the Xerox Corporation. The original purpose of the Internet was to link computer research centers. Government research did not create the Internet “so that all the companies could make money off the Internet.” Making money off the Internet was a by-product of the government’s involvement, not the objective; just as the objective of the space program was to put a man on the moon, not to create freeze-dried foods, hand-held cordless vacuums, temper foam mattresses and other consumer products that were spun off from space technology.
It is true that a great deal of the pure research in this country takes place in government laboratories and in university and private research labs with the help of government grants. Mr. Obama had that right. But the government does not identify the commercial possibilities of this research, nor does it make and market successful consumer products; the business community does this. We don’t look to NASA to provide us with temper foam mattresses anymore than we look to the Defense Department to provide us with Facebook.
President Obama’s remarks in Roanoke remind me of an old story about a Scottish minister who arrived to take charge of a new parish. After touring the manse, the minister ventured out into the back yard and was stopped dead in his tracks by the sight of the most beautiful flower garden that he had ever beheld. Rubbing his hands together in sheer joy, he turned to the gardener and exclaimed, “Oh, Davy! Look at what the Lord hath done!”
The gardener snorted and replied, “Aye, Preacher. But ye should have seen this garden last winter, when the Lord had it all to himself!”
The American business community is the gardener in this fable, and President Obama is the well meaning, head-in-the-clouds minister who seems unable to recognize the role of individual initiative, persistence and hard work in the creation of any successful project.
Whether you consider the Romney campaign’s commercial to be fair or not, it has thrown the national spotlight on one of Mr. Obama’s greatest weaknesses – he is an intellectual who has never had to run a business or meet a payroll, and he lacks the practical understanding of how our free enterprise system really works – how individual drive and initiative built the American economy and worked to keep it strong.
Thomas Michael Stewart, a resident of Eugene and former student at Marist and Sheldon High Schools, is currently a senior at Princeton University.
Creating Jobs in Oregon
By Christopher Gergen
“We cannot solve our problems with the same thinking we used when we created them.” – Albert Einstein
Solving the grave economic challenges facing Lane County and the State of Oregon cannot be accomplished by mouthing the same tired rhetoric based upon faulty assumptions about the economy. We need fresh, original solutions based in reality.
Over the course of the last two installments (Part 1, Part 2) in this four part series we discovered why the usual suspects of job creation—government, “stimulus spending,” entrepreneurs and small business—do not by themselves create permanent jobs:
- Government does not create jobs by legislating, taxing, and regulating businesses to the point they leave the state or decide not to move their companies to Oregon in the first place.
- “Stimulus spending” on infrastructure projects only creates temporary jobs while the project is in progress. Once it ends, the jobs end with it. Also, “stimulus spending” forces governments to raise taxes on everyone, which in turn drags down consumer spending, further depressing job creation.
- Entrepreneurs and small businesses can’t create permanent jobs absent demand for their products.
- When companies and small business owners invest capital into the marketplace they hire under the assumption that demand will be sufficient to sustain the new jobs. Should demand fail to support the venture, the jobs created are lost—and thus were temporary.
In this installment we’re going to discuss where sustainable jobs really come from. Then in our final installment we’ll examine the proper roles of government, small business, and consumers in creating a healthy economic environment.
Understanding demand is key to understanding how consumers behave and how market forces work. Today we’re going to focus on two types of demand: market demand and consumer demand.
The macro solutions for Oregon’s and Lane County’s economic ills are found in creating market demand for goods and services, which, in turn, is created by consumer demand. To accomplish this, the Oregon Legislature needs to create a healthy economic environment by slashing a burdensome regulation regime.
A 2009 study by Cal State Sacramento economists on the effects of the State Legislature’s over-regulation of the Californian economy (1) found “…that the total cost of regulation to the State of California is $492.994 billion, which is almost five times the State’s general fund budget, and almost a third of the State’s gross product. The cost of regulation results in an employment loss of 3.8 million jobs, which is a tenth of the State’s population.” Oregon faces a similar challenge.
Regulation kills businesses and collaterally kills consumer demand in Oregon because the consumer cannot demand an Oregon product from a producer that does not exist in Oregon. He or she may still demand the product, but it now must come from a more business friendly state.
The Oregon Legislature has the power to erode or even destroy Oregon’s market demand. That destroys existing jobs and discourages creation of new ones. It’s as simple as that. If the market demand for Oregon goods and services is artificially low or non-existent for goods and services in demand elsewhere, it’s most likely because the business environment in Oregon is not advantageous to the producer of that good or service operating profitably. That fact alone means that while demand could potentially be high for a particular good or service, it makes no difference to our economy because Oregon doesn’t produce or offer it—which means these jobs don’t get created.
Market demand, which creates and sustains jobs, is driven by individual (i.e. consumer) demand. A group of consumers all buying the same thing creates market demand. At its optimum, this demand can even shield a company against a severe recession. Apple is a great example.
In January, 2012 Apple posted enormous earnings and revenue for the fourth quarter of 2011. To put into perspective how well Apple performed, the consumer demand for its products and services created more profits ($46.33B) for Apple than Google had in total revenue ($10.8B) (2) (3). It’s worth noting that Apple not only isn’t laying people off; it’s hiring—but not in Oregon.
At the other end of the spectrum is General Motors. In early March, GM announced it was suspending production of its Chevy Volt for five weeks (4). Chris Lee, GM spokesman, cited the reason for the suspension of production was “matching (its) production levels with demand and building to market.” This “matching…production levels with (consumer) demand and building to market (demand)” caused 1,300 people to temporarily lose their jobs. The Chevy Volt has continuously missed its sales (demand) targets because consumers just don’t like the product —resulting in job losses.
Public and private sectors both have a role to play in creating an environment that increases consumer demand. In our last installment we will look at specific things the public and private sectors in Lane County and Oregon can do to increase demand for Oregon goods and services. Specifically, we’ll look at how permanently lowering and reallocating public spending can bring Oregon’s economy out of stagnation. Well also look at the role wages play in this process.
Be sure to join me for this discussion in the next issue of “Lane Solutions.”
Note: For further study on the subject of economics, please click here for a good primer: http://www.investopedia.com/university/economics/default.asp#axzz1rwn7hGc4
Chris Gergen is a Springfield based financial advisor and is the author of The Quality Paradigm: Why You and Your Business Need it to Succeed. He blogs at Be Epic.Daily. He can be reached via email at [email protected].
(1) http://hotair.com/archives/2009/09/25/study-regulation-costs-california-economy-almost-500-billion/
(3) http://investor.google.com/earnings/2011/Q4_google_earnings.html
(4) http://www.mlive.com/auto/index.ssf/2012/03/gm_to_stop_chevy_volt_producti.html
Where Jobs Come From
By Chris Gergen
With all of the discussion about the economy, jobs, taxes, and the business climate in Oregon, I think it wise that we address the one question that keeps coming up in the national media and local debates in Salem—who creates jobs? Generally, debaters of this issue take one of two sides: the government creates jobs or the private sector (specifically, the rich and those trying to get rich) and small business owners—create jobs. Those who advocate one side over the other argue passionately in favor of their position. What’s more, both sides of the argument have legislators and political influencers who, just as passionately, believe their position is correct. Would you believe both of them are ignoring a significant factor in “job creation?” And it’s a factor that is crucial to understanding why Eugene, Lane County, and Oregon lag in job creation.
Let me tell you what they’re missing…
Regardless of who holds power at the state or national level, most (if not all) government economic expansion programs focus on providing tax breaks or subsidies to companies to entice them to move from one state to another. This was a significant factor in the robust job creation from 2000 to 2009 in Texas. 21.6% of these jobs were the result of employers moving in from other states. An additional 23.7% can be attributed to international migration (1). Thus more than one fifth of the jobs created in Texas were the result of jobs lost in other states because Texas offered an environment that was highly attractive to out of state companies.
Here are two other relevant facts:
- Between 2004 and 2007, 61 California companies moved to Austin alone (2). Why? Reasons often cited are low taxes & labor costs, less union control, ease of obtaining permits, and less stifling regulations.
- A survey of U.S. executives revealed that Texas is number one among states in offering a friendly business environment (California, New York and Illinois bring up the rear) (3). Many attribute this to the elements mentioned immediately above. In an era wherein capital and labor are highly mobile, job migration is a factor that states ignore at their peril.
All of us would be happy to have jobs shuffled to Oregon and, especially, to Lane County. And given the length of time the Oregon unemployment rate has been above the national average (25 of the last 30 years leading up to 2008 [4]), I would agree that any job growth would be good job growth. However, I would caution that any jobs created by shuffling jobs to Oregon from somewhere else could be shuffled out of Oregon just as quickly with the passage of anti-business and anti-wealth legislation such as Measures 66 and 67.
Let’s focus on some of the damage, either already caused or anticipated, as a result of Measures 66 & 67:
- According to the Cascade Policy Institute, Measures 66 and 67 will result in the loss of at least 70,000 jobs (5).
- According to Kiplinger, because of the high tax rates imposed by Measures 66 and 67 (for its effect on passive income) Oregon is the fourth most unfriendly state for retirees. For those retirees with taxable income of $250,000 or more, Oregon shares with Hawaii the dubious honor of imposing the highest income tax rate in America. Taken together, these policies have earned Oregon a place on its “do not live here in your second act” list (6).
- The year following the passage of Measures 66 and 67, Oregon dropped six places on the Tax Foundation’s list of states based upon business climate (7).
- Besides damaging both business and consumer climates, Measures 66 & 67 have missed their revenue projections by a staggering 50% (8). The “cure” for Oregon’s budgetary woes has left the State with continuing, huge budgetary challenges.
Clearly, the Oregon Legislature has failed to create an environment that would entice businesses to move to the state, let alone create sufficient jobs without such migration.
Will Oregon and Eugene absorb these lessons? Will they learn that high taxes, stifling regulations and difficulty in obtaining permits here are a formula for job creation – in Texas?
Next month we’ll discuss the role of the rich and small business owners in creating jobs. Be sure to come back – you’ll be very surprised.
Sources:
- http://www.factcheck.org/2011/08/texas-size-recovery/
- http://www.myfoxaustin.com/dpp/video/Is-Texas-Stealing-California-Jobs?20120119-ktbcw
- http://www.bizjournals.com/dallas/blog/morning_call/2011/09/texas-has-top-business- environment.html
- http://www.bls.gov/. http://www.statesmanjournal.com/assets/pdf/J0131639327.PDF
- http://cascadepolicy.org/projects/more/measures-66-and-67-will-cost-70000-oregonians-their-jobs/
- http://www.kiplinger.com/slideshow/TaxUnfriendlyStatesRetirees/5.html#top (10 Tax-Unfriendly States For Retirees 2011)
- http://www.taxfoundation.org/news/show/25680.html
- http://www.oregonlive.com/news/index.ssf/2010/08/measure_66_tax_revenue_coming/2382/comments-2.html
Chris Gergen is a Springfield based financial advisor and is the author of The Quality Paradigm: Why You and Your Business Need it to Succeed. He blogs at Be Epic.Daily. He can be reached via email at [email protected].
CONSERVATION VICTORIES
To provide protection for Oregon’s old growth and natural treasures the O&C TRUST, CONSERVATION, AND JOBS ACT
Provides legislative protection for old growth on 2.6 million acres of public forests in western Oregon for the first time in history.
Adds nearly 150 miles of Oregon rivers to the Wild and Scenic Rivers Act, including:
- 93 miles of the iconic Rogue River and its tributaries;
- 21 miles of the Molalla River;
- 19 miles of the threatened Chetco River; and
- 15 miles of Wasson and Franklin Creeks, tributaries of the Umpqua River
Protects 90,000 acres of Oregon forests as wilderness, including:
- 58,000 acres to be added to the existing Wild Rogue Wideness
- 32,000 acres of some of the last remaining old growth in Oregon’s Coast Range and permanent protection for Devil’s Staircase
Transfers more than 1,000,000 acres of mature and old growth forests from the Bureau of Land Management to the Forest Service to be managed as National Forest Lands.
Requires thousands of miles of legacy roads and logging roads in disrepair to be brought up to federal and state standards.
Repeals the contentious O&C Act of 1937 that led to the Western Oregon Plan Revisions.
Includes management restrictions on O&C Trust lands to protect clean water, terrestrial, and aquatics values, including:
- Prohibition on aerial application of herbicides and pesticides and a requirement for a public process for the development of an integrated Pest Management Plan;
- Long and short timber rotation ages to provide diversification and to encourage the recruitment of complex, early serial habitat; and
- A sustained yield requirement to prevent overcutting
Expedites land exchanges between the federal government, the O&C Trust lands, and private landowners to create larger contiguous blocks of forested land in western Oregon and to improve the conservation values of such lands.
Ensures the scientific community and general public are represented on the O&C Board of Trustees
Maintains federal ownership of all O&C lands and public access privileges.
O&C Trust, Conservation and Jobs Act
Oregon’s rural communities cannot afford another 20 years of gridlock in our federal forest. Without a new path forward, mills will continue to disappear, forest jobs will be outsourced, counties will be pushed of the budgetary cliff, and forest health will continue to decline.
A bipartisan plan now before Congress, “O&C Trust, Conservation, and Jobs Act” would create thousands of new jobs in Oregon’s forested communities, ensure the health of federal forests for future generations, and provide long-term funding certainty for Oregon’s rural schools, roads and law enforcement agencies.
Federal support payment to rural and forested communities commonly known as “county payments” or “timber payments” that have helped support rural Oregon counties for over a decade expired on September 30, 2011. Lack of revenues from timber harvest from our federal forests or a continuation of timber payments in lieu of timber revenue will have serious consequences for Oregon families and businesses. A recent Oregon State University study found that without timber payments, Oregon’s rural counties will shed between 3,000 and 4,000 jobs. Oregon business sales will drop an estimated $385 million to $400 million. Also, Oregon’s rural counties will lose $250 million to $300 million in revenues.
For counties already near the financial cliff and facing depression-like unemployment, this could be the final blow. In fact, a few counties in southern Oregon may soon call for a public safety emergency and will be forced to eliminate most state-mandated services- including police, jails, courts and services that help the neediest citizens in our communities.
This should alarm all Oregonians, even those who do not live in rural communites. Failing counties will have both budgetary and quality of life consequences for the entire state. Vital county services would be severely restricted or altogether disappear. Counties will continue to release offenders and close jail beds. Pot-holed roads and structurally deficient bridges will be neglected and school funding throughout the state will be reduced.
Given the serious fiscal crisis our counties and schools face, a new approach is necessary to create jobs, help stabilize funding for our schools and communities and better manage our forest. Passage of “O&C Trust, Conservation and Jobs Act” is essential.
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.