Month: August 2015

Oregon Leads the Nation in Passenger Rail Subsidies

By John A. Charles, Jr.

In the waning days of the 2015 legislative session, a much publicized group of eight legislators conducted extensive negotiations with the Governor’s office over a “transportation package” that would have raised fuel taxes, created a new transit tax, repealed most of the “low-carbon fuels standard” enacted earlier in the session, and paid for various highway improvement projects. That package failed, leaving many observers with the impression that Oregon is “underinvesting” in transportation.

But not every mode suffered. For the few riders of ODOT’s Portland-Eugene passenger rail line, the bank vault was open. The legislature approved $18 million in subsidies for the 2015-17 biennium, including $10.4 million in scarce General Fund dollars.

While this may not sound like a lot in the big picture, it’s quite generous given the minimal use of this line. For the most recent year, the line generated a mere $180,000 in passenger fares, but racked up operating expenses of $7,875,409. This worked out to an operating subsidy of $65.70/ride.

However, the reality is actually much worse. Upon vigorous questioning by Ways and Means Subcommittee Co-Chair Betsy Johnson, ODOT admitted that the “all-in” subsidy was closer to $120/ride.

Was this embarrassing to rail advocates? Hardly. When the multi-billion ODOT budget was up for its single public hearing, there were 21 witnesses who testified—and 20 of them spoke for the sole purpose of defending the rail subsidy. This author was the only witness to suggest euthanizing passenger rail.

The problem is that two decades ago, Amtrak began off-loading most short-line runs to states. ODOT and its legislative overseers foolishly agreed to accept this responsibility, and taxpayers have spent more than $300 million since 1994 propping up the line. Bureaucrats and single-issue advocates know that once you let the “camel’s nose under the tent,” the rest of the camel will soon follow—and then it will be too late to cut the program.

So even though the ODOT rail administrator was the subject of withering criticism by various members of the Ways and Means subcommittee during budget hearing, in the end he was still standing—and walking away with the full appropriation.

Coincidentally, as the ODOT budget was being considered, the Washington, D.C.-based Brookings Institution released a new paper showing the extent of passenger rail operating subsidies across the nation. In every case, transit districts lost money last year, but the losses were relatively modest on a per-boarding basis. The biggest loser, the Hampton Roads Transit system of Virginia, had subsidies of $6.63 per ride.

For whatever reason, Brookings ignored the Portland-Eugene line, as well as the TriMet commuter rail line running from Beaverton to Wilsonville, which has operating subsidies of roughly $12/ride. Cascade Policy Institute took the Brookings data and created a new chart showing that Oregon was at the top of the leaderboard in the category of “most wasteful transit lines,” and shared this with various legislators. Predictably, it had no effect.

Oregon surface transportation infrastructure continues to deteriorate; but for the privileged few who take the rail line from Eugene to Portland, life is good.


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. This article originally appeared in the August 2015 edition of the newsletter, “Oregon Transformation: Ideas for Growth and Change.”

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New Orleans’ Miracle School District

Ten years ago, Hurricane Katrina devastated the southeastern United States, displacing more than 372,000 school-aged children. Today, New Orleans’ school population has returned to more than two-thirds its pre-storm level, but a lot has changed for the better in the public school district.

Before Katrina, a Louisiana state legislator called New Orleans “one of the worst-run public school systems in America.” Almost two-thirds of students attended a “failing school.” After Katrina, the state legislature transferred more than 100 low-performing Orleans Parish schools to the Recovery School District. Now, the district has 57 charter schools operating under nonprofit charter management organizations.

According to The Washington Examiner, barely more than half of New Orleans public school students graduated before Katrina. Today, almost all New Orleans students attend charter schools. In the 2013-14 school year, three out of four students graduated on time, and fewer than seven percent attend a “failing school.”

This amazing turnaround is due to the hard work of teachers, administrators, local and state leaders, and parents who rebuilt New Orleans’ public school system from the ground-up, with the vision and determination to create “an all-choice school district with high-quality schools.” The unprecedented success of New Orleans’ Recovery School District serves as a model for education reform efforts across the country. Parental choice, flexibility for educators, and innovation in management really can achieve the impossible.

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Event Video – Mark Skousen's View of What Leads to Economic Growth May Surprise You

Cascade Policy Institute presents Professor Mark Skousen, named “one of the top 20 most influential living economists,” as he reveals “What Hidden Forces Lead to Economic Growth and a Higher Standard of Living?” and “Why are some countries rich and others poor?”

This lunch event in Portland on August 14, 2015 was introduced by Steve Buckstein, senior policy analyst and founder of Cascade Policy Institute.

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Most Teachers Oppose Mandatory Union Fees

A national education journal, EducationNext, has just released results of its annual poll asking a number of education-related questions. One question has particular relevance now because this happens to be National Employee Freedom Week, a nationwide campaign offering an unparalleled focus on the freedoms union employees have to opt out of union membership.

The EducationNext poll asked people in general, parents, and teachers, among other demographic groups, how they feel about mandatory union fees. Here is the exact question asked in the poll:

Some say that all teachers should have to contribute to the union because they all get the pay and benefits the union negotiates with the school board. Others say teachers should have the freedom to choose whether or not to pay the union. Do you support or oppose requiring all teachers to pay these fees even if they do not join the union?

Only 34 percent of the general public supports such mandatory union fees, while 43 percent oppose them.

Only 31 percent of parents support such fees, while 47 percent oppose them.

Most surprising of all, only 38 percent of public school teachers support mandatory union fees, while 50 percent oppose them. As a Reason.com “Hit & Run” blog post notes, “It’s not just non-unionized teachers who think this; unionized teachers made up almost half the sample, and only 52 percent of them said agency fees should be mandatory.”

One public school teacher who opposes mandatory fees could be instrumental in seeing them banned not only for all teachers, but for all public employees across America. California teacher Rebecca Friedrichs has filed a lawsuit against the California Teachers Association, arguing that mandatory fees violate her Constitutional First Amendment rights of free speech and free association. The U.S. Supreme Court recently agreed to hear her case, with a decision likely by next June.

While the Court ruled in 1988 that no one must join a union or pay the political portion of union dues, many workers are still required to pay so-called “fair share” non-political union fees for services such as collective bargaining. Now the Court will take up the argument that at least in the public employment setting, all union activities can legitimately be considered political.

Rebecca Friedrichs says, “It’s time to set aside this union name calling and all this fear mongering and let’s put America and her children first, and let’s put the rights of individuals above the rights of these powerful unions.”

It is clearly time to put individual rights above those of the powerful unions, and now we know that even most teachers agree.

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Employee Freedom Respects Workers’ Choice

Why might workers like the opportunity to opt out of union membership? Some believe they can make better use of their own money rather than giving it to a union. Others “vote with their feet” against what they perceive to be poor union service or negotiating results. Still others leave because they oppose their unions’ political positions. They simply don’t want to support any organization that doesn’t share their political beliefs.

Many scientific surveys have been conducted to see how the public and members of union households feel about these issues. A survey conducted for this year’s National Employee Freedom Week asked members of union households this question:

“Are you aware that you can opt-out of union membership and of paying a portion of your union dues without losing your job or any other penalty?”

Surprisingly, over 27 percent of Oregon union household members surveyed answered No. This implies that over 65,000 of Oregon’s some 243,000 union members don’t realize that membership and some dues are optional.

The right to work without third-party interference is more than an economic issue; it is a profoundly moral one as well. In America, no one should be compelled to join a union or to pay union dues in order to hold a job. For more information about how employee choice can benefit Oregon workers, visit oregonemployeechoice.com.

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Put Individual Rights Above Those of Powerful Unions

By the time the U.S. Supreme Court rules in the Friedrichs v. California Teachers Association case next June, Rebecca Friedrichs may be the most well-known public school teacher in America—and the most controversial. She is asking the Court to uphold the Constitutional First Amendment free speech and free association rights of all California public school teachers, and by extension all public sector workers across America, against the demands of unions that now require even non-members to pay “agency fees” or “fair share dues.”

The Friedrichs case is just the latest to come before the Supreme Court pitting individual workers against the powerful unions that seek to take their money without their consent. In Abood v. Detroit Board of Education (1977), public sector unions were allowed to impose fees on all workers for collective bargaining purposes. Then, in Communication Workers of America v. Beck (1988), the Court found that unions could not compel fees for political purposes that workers opposed. Finally, just last year in Harris v. Quinn, the Court went further and ruled that at least some workers could opt out of both the political and bargaining portions of public sector union dues. This set the stage for freeing all public sector workers from any forced union dues, which is what the Friedrichs decision hopefully will accomplish.

In Oregon, there also may be a citizen’s initiative on the ballot next November granting freedom from all union dues for public employees. Public employees are the focus of this initiative, and the Friedrichs case, because it has become clear that all public sector union activities are political, including the inherently political act of collective bargaining with public bodies. Union arguments that they should collect fees from all workers because they represent them all increasingly ring hollow because unions lobby to represent everyone. They could just as well lobby to only represent those who voluntarily agree to pay them.

Several scientific surveys have been conducted to see how the public and members of union households feel about these issues. The 2013 survey found that more than 30 percent of Oregon union households would opt out of union membership if they could do so without penalty. Last year, more than 80 percent of all Oregonians surveyed agreed that employees should be able choose whether or not to join a union or pay union dues. This year’s survey again asked members of union households the following question:

“Are you aware that you can opt-out of union membership and of paying a portion of your union dues without losing your job or any other penalty?”

Surprisingly, over 27 percent of Oregon union household members surveyed answered No. This implies that over 65,000 of Oregon’s some 243,000 union members don’t realize that membership and some dues are optional. This is even more surprising given that their so-called “Beck rights” granted by the Supreme Court in 1988 are named after Harry Beck who is now retired in Oregon and still advocating for worker freedom.

These surveys were conducted for National Employee Freedom Week, which this year runs from August 16th through the 22nd.

Rebecca Friedrichs is taking her case to the Supreme Court because, in her own words, “It’s time to set aside this union name calling and all this fear mongering and let’s put America and her children first, and let’s put the rights of individuals above the rights of these powerful unions.”

“Put[ting] the rights of individuals above the rights of these powerful unions” is something every Oregonian should support.

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Taxpayers Ultimately Get the Bill for Oregon’s Medicaid Expansion

By Thomas Tullis

Thirty states have already undertaken the Medicaid expansion encouraged by the Affordable Care Act. In Oregon, more than one in 4 people are now enrolled in Medicaid. Enrollment is nearly twice as high as originally thought, and now lawmakers are looking at a half-billion-dollar state deficit after grossly miscalculating the projection.

In an attempt to reconcile the $300 million Cover Oregon fiasco, the Kitzhaber administration had centered in on fast-track Medicaid enrollment. Oregonians were incentivized and encouraged to sign up for Medicaid, with ObamaCare extending the eligibility requirements to adults earning up to 138% of the federal poverty level.

With the expansion’s 76% increase in monthly enrollment, Oregon’s growth is second only to Kentucky. While many states have not expanded and have seen little to no growth in enrollment, Oregon boasts some of the highest percentages of average annual growth in Medicaid spending over the last few years.

As the federal government will soon require Oregon and other states to be responsible for part of Medicaid costs, lawmakers are already talking about increasing the nearly two-billion-dollar bipartisan hospital tax that Governor Kate Brown signed in March.

Health insurance policy is in desperate need of market-based reforms. A competitive free market can ensure quality and affordability. Government handouts and regulations simply drive up costs that in this case will be borne by taxpayers.

Thomas Tullis is a research associate at Cascade Policy Institute, Oregon’s free market think tank. He is a student at the University of Oregon, where he is studying Journalism and Political Science.

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Ending the Public Employee Union Stranglehold on State Politics

The Executive Club and Cascade Policy Institute are pleased to welcome David Nott, president of Reason Foundation, at the Executive Club’s September dinner event.

Date: Wednesday, September 2, 2015

Time: Buffet dinner begins at 6:30pm. The regular program starts at 7:00 pm.

Location: Portland Airport Shilo Inn, 11707 NE Airport Way, Portland, OR 97220

This event is free to attend. If you would like to purchase the dinner buffet, you are welcome to do so for $20 at the door.

About David Nott:

David Nott is president of Reason Foundation, a non-profit think tank advancing free minds and free markets. The foundation also publishes the award-winning and critically acclaimed national magazine, Reason. Reason Foundation hosts the annual Reason Media Awards featuring the Bastiat Prize. David created Reason.tv and the Drew Carey Project to produce and distribute internet video journalism, whose home page has reached over 200 million hits since its launch as well as the Reason.com news, which receives over 3 million hits a month. He is executive producer of the Reason Foundation 2013 film, “America’s Longest War: a Film About Drug Prohibition.”

David is an engineer by training. He received his Bachelor of Arts and Sciences with Distinction, in economics and engineering, from Stanford University. He has three children and resides in El Segundo.

Reservations for this joint Executive Club/Cascade event are appreciated but not required. We hope to see you on September 2!

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When Will the State Land Board Restore the “Trust” in Oregon’s State Trust Lands?

 

By Anna Mae Kersey

When Oregon joined the Union in 1859, it was granted approximately 3.4 million acres by Congress in State Trust Lands, public lands managed by the state to support public education. In so doing, Congress assigned a fiduciary responsibility to the state to produce a profit from these lands for the Common School Fund in perpetuity. Over time, Oregon sold the majority of these lands in an effort to yield more economic benefits for the fund, with some 772,776 acres remaining under state management.

 

Unfortunately, those lands have been poorly managed, especially when compared with other Western states and the federal government.


 

Average Annual Return on Investment

State Trust Lands vs. Federal Management

2009-2013

Jurisdiction Revenues Expenditures Returns per dollar spent
 
New Mexico $554,218,262 $13,516,608 $41.00
Arizona $231,823,603 $16,629,652 $13.94
Montana $107,610,838 $12,443,132 $8.65
Bureau of Land Mgmt. $4,690,082,024 $1,508,484,072 $3.11
Idaho $66,033,347 $23,572,154 $2.80
Oregon (2013-14) $8,096,821 $7,593,305 $1.09
U.S. Forest Service $571,781,109 $5,708,126,237 $0.10

 

 

 


 

When Oregon can barely break even on lands that other states manage for great profit, it is a serious indictment of leadership by the State Land Board.

Furthermore, only 7,400 acres of the 772,776 acres currently classified as State Trust Lands actually meet the criteria of having either short- or long-term revenue earning potential. This means that approximately 96 percent of State Trust Lands show no signs of generating revenue in five to ten years.

The primary reason for the discrepancy between Oregon’s profit margins and those of its peer states is the endangered species restrictions placed on the Elliott State Forest. These restrictions have transformed these lands from profit producing assets into deficit inducing liabilities.

Oregon, in essence, is in default to the Common School Fund. In addition to its obligation to continue to bring in revenue, it is also legally bound to maintain “intergenerational equity” and “cannot benefit current students at the disadvantage of future students, or vice versa.” Neither current nor future students stand to benefit from a deficit.

In contrast, the Common School Fund itself earns significant net revenue for schools each year. Assets of the Fund are invested by the State Treasurer and the Oregon Investment Council and consistently exceed performance expectations, earning an annual average of 13.25 percent return on investment over the past three years, as opposed to the 0.1 percent return on investment by the State Trust Lands.

There can be no public trust in an agreement where one side, time and time again, fails to deliver. On August 13, the State Land Board will meet in Salem to discuss the Elliott State Forest. It is imperative that board members look to the past to prepare for the future. There is already a precedent of transferring lands to private ownership. The board needs to sell those lands that are costing the fund and future generations, so that the trust in State Trust Lands can be restored.

Anna Mae Kersey is a research associate at Cascade Policy Institute, Oregon’s free market think tank. She recently graduated from Mercer University in Macon, Georgia with an Honors B.A. in Philosophy and is pursuing a Master’s of Liberal Arts at St. John’s College in Santa Fe, New Mexico.

 

 

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The Extinction of Public Transit

By Emma Newman

Uber and Lyft have recently gained over 50 percent of the taxi market in Portland. This is especially notable as Portland was initially hostile to ridesharing companies, to the point of filing a lawsuit against Uber late last year. This industry takeover is just one example of how private market innovation has upended government-regulated transit.

At a recent Metro hearing on the SW Corridor project, one of the main arguments for pursuing a costly light rail tunnel requiring the destruction of several homes was that ten years of disruption is worth 100 years of use. But considering the speed at which the transportation industry is changing, is long-term use of public transit infrastructure likely?

Public transit is rarely anyone’s first choice due to inconvenience, time cost, and lack of reliability—problems that personal vehicles rarely face. Overcoming these factors has made ridesharing companies more popular than traditional taxicabs.

The fact that private market solutions will increasingly outcompete public transit is evident not only with companies like Uber and Lyft, but with future technologies as well. Google’s driverless car being used on a wide scale may seem to be far into the future; but if costly transit projects are being justified by decades of potential future use, transit planners need to consider what the future of transit may actually look like.

Emma Newman is a research associate at Cascade Policy Institute, Oregon’s free market think tank. She is a student at George Fox University, where she is studying Economics and Computer Science.

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