Month: January 2019

How Ride Hailing Services Can Complement Bus and Rail—and Save TriMet Money

By Eric Fruits, Ph.D.

After teaching an evening class at Portland State University, I walked up to the kiosk showing TriMet arrival times. My bus was coming in five minutes. Good news. One of my students was standing there, too. She shook her head, looked at her phone, and said, “My next bus is in 30 minutes. I’m just going to Uber home.” Her situation wasn’t unique. Across the country, more and more commuters see ride hailing as a reliable and affordable substitute for mass transit.

Transit agencies should see services such as Lyft and Uber as an opportunity rather than a threat. Toward that end, Cascade Policy Institute recommends TriMet pursue a pilot project that replaces one or more of its high-cost bus lines with ride hailing services supported by a subsidy funded with the cost savings from eliminating the high-cost line. The experiment likely will find that replacing high-cost bus service with ride hailing will improve ridership and save money.

TriMet faces a challenge of declining ridership in conjunction with rising costs. Ridership has declined for many public transit providers in the U.S.—TriMet reports bus boardings have dropped 13 percent from their 2009 peak. As the Portland Tribune reported, the agency thinks many factors have contributed to the decline in ridership, including gentrification in Portland, the growth of urban centers inside and outside the city, and the development of self-sufficient walkable neighborhoods that has reduced the need for bus trips.

Longer travel times likely are another factor that explains the decline in bus ridership. From 2007 through 2017, the average vehicle speed for TriMet buses has dropped by almost nine percent. Portland city commissioner Amanda Fritz recently tweeted that Portland’s new speed limit law has made her bus commute five minutes longer. Over a year, that’s about 30 extra hours sitting on a bus. With longer travel times, the costs to commuters of using public transit increase, leading to a decline in ridership.

As with any mass transit enterprise, TriMet operates a number of high-cost, low-ridership bus lines. For example, the agency reports the 97 (Tualatin-Sherwood Rd) bus line has about ten riders per hour at a cost of more than $18 per ride. The fare for a ride hailing service covering the same distance as the average bus trip would be less than $8. Service on this route could be completely replaced by ride hailing services and save TriMet thousands of dollars a week.

While ride hailing can replace mass transit, it can also complement bus and rail service. Recent research finds that ride hailing services have the largest positive effect on rail service in cities with large public transit systems already in place, such as Portland. In 2015, Lyft conducted a nationwide survey of riders and found that 25 percent of riders use Lyft to connect to public transit. Uber reports that nearly 25 percent of Uber trips in suburban Portland began or ended within one quarter-mile of a MAX or WES station.

More than a dozen cities in the United States currently have programs running similar to the pilot project we propose. Detroit’s program, “Woodward 2 Work,” runs late at night and is aimed at those who work late shifts when mass transit does not run. San Clemente replaced two high-cost bus lines with ride hailing. Marin County’s service is designed to boost ridership on commuter rail by making it more convenient for riders to get to and from rail stations. Several of the programs that began as pilots have been extended because of their success in serving commuters and saving money.

Many of these cities have developed procedures to accommodate users who do not have a smartphone and users with ADA-related needs. In approving ride hailing services in Portland, the city mandated a performance standard that called for wheelchair accessible vehicles to reach riders in thirty minutes or less. In Detroit’s program, riders without bank accounts can use prepaid gift cards.

The pilot project we recommend would be a low-cost, low-risk test of potential synergies between public transit and private ride hailing. If successful, the lessons learned can and should be applied to additional high-cost transit lines.

Eric Fruits, Ph.D. is an Oregon-based economist, adjunct professor at Portland State University, and Academic Advisor at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article appeared in The Portland Tribune on January 24, 2019.

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What’s at the Root of Oregon’s Rock-Bottom Graduation Rate?

By Kathryn Hickok

Last week the National Foundation for Education Statistics released the 2017 high school graduation rates for all fifty states. Oregon ranked 49th, at 76.7%. On the same day, Oregon officials announced an 80% statewide graduation rate for 2018. Even if Oregon’s graduation rate is making modest year-to-year gains, Oregon is still almost last in the nation.

During the past year, the Oregon legislature’s Joint Committee on Student Success asked local communities what constitutes “success” and began to work on a plan for legislative action to improve public schools. The committee published its report this month.

The committee could have saved some trouble, though, by listening to what one former Oregon college student—Steve Jobs—said about education in 1996:

“What’s wrong with education cannot be fixed with technology….It’s a political problem….The problems are unions. You plot the growth of the National Education Association and the dropping of SAT scores, and they’re inversely proportional. The problems are unions in the schools. The problem is bureaucracy. I’m one of these people who believes the best thing we could ever do is go to the voucher [school choice] system.”

With an almost-last-in-the-nation graduation rate, it’s time to free education from both union control and bureaucracy, and put the power of choice in education into the hands of parents. Oregon has tried everything else.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Education Savings Accounts: Fiscal Analysis of a Proposed Universal ESA in Oregon

By Eric Fruits, Ph.D.

Executive Summary

Education Savings Accounts deposit a percentage of the funds that the state would otherwise spend to educate a student in a public school into accounts associated with the student’s family. The family may use the funds to spend on private school tuition or other educational expenses. Funds remaining in the account after expenses may be “rolled over” for use in subsequent years.

Empirical research on private school choice finds evidence that private school choice delivers benefits to participating students—particularly educational attainment.

Currently, Arizona, Florida, Mississippi, North Carolina, and Tennessee have active ESA programs that are limited to particular groups of students such as those with special needs. The proposed Oregon ESA bill would introduce a universal ESA program for all K–12 students.

ESAs are frequently designed so the amount of funding provided to families is less than the amount the state would otherwise pay for a student to attend public school, with the state recouping the difference. In this way, ESAs can be designed to produce a net fiscal benefit (i.e., cost savings) to state and local government budgets.

A fiscal analysis of the proposed Oregon ESA bill finds that it would cost the state approximately $128 million a year but would lead to savings of about $130 million a year to local school districts, for a net state and local impact of approximately $2.2 million in reduced costs. There is virtually no net impact on per-student spending for students who choose public K–12 education. ♦

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CLICK HERE FOR A ONE-PAGE FACT SHEET ON SB 668

Eric Fruits, Ph.D. is president and chief economist at Economics International Corp., an Oregon-based consulting firm specializing in economics, finance, and statistics. He is also an adjunct professor at Portland State University, where he teaches in the economics department and edits the university’s quarterly real estate report. His economic analysis has been widely cited and has been published in The Economist, the Wall Street Journal, and USA Today. 

Dr. Fruits has been invited to provide analysis to the Oregon legislature regarding the state’s tax and spending policies. He has been involved in numerous projects involving natural resources and Oregon forest products such as analysis for Ross-Simmons v. Weyerhaeuser, an antitrust case that was ultimately decided by the United States Supreme Court. His testimony regarding the economics of Oregon public employee pension reforms was heard by a special session of the Oregon Supreme Court.

Dr. Fruits has produced numerous research papers in real estate and financial economics, with results published in the Journal of Real Estate Research, Advances in Financial Economics, and theMunicipal Finance Journal.

 

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More Money for Schools Is Meaningless Without Controlling PERS Costs

By John A. Charles, Jr.

Several members of the Portland Public Schools Community Budget Review Committee recently co-authored an essay entitled, “The under-funding of schools must end.”

The authors assume that all money problems at public schools are the result of insufficient tax support; but the reality is that schools have been unable to control costs, especially related to pensions.

For example, in 1998 Oregon schools were required to send premiums equal to 9.9% of their salaries to pay for their share of the Public Employee Retirement System (PERS).

Since then, those rates have gone up steadily and will reach 18.3% later this year—an increase of 84% over two decades. Some school districts will pay much more. Sherwood school district will pay 27% of salaries for their PERS Tier 1 and Tier 2 obligations. Tigard-Tualatin school district will pay 28%. Tillamook Community College will pay 21%.

School support from the Oregon general fund has doubled since 2001, but it doesn’t do much good when tax money entering the front door of schools leaves out the back door for retirees. In many cases, those former workers are earning more in retirement than they did when they were actually teaching.

Unless the legislature is willing to take strong measures to control the cost of PERS, there will never be enough money to satisfy public school advocates.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Press Release: Hillsboro CPA and Former Oregon State Legislator Katie Eyre Joins Cascade Policy Institute Board of Directors

FOR IMMEDIATE RELEASE

Media Contact:
John A. Charles, Jr.
503-242-0900
john@cascadepolicy.org

Portland, OR – Katie Eyre was recently elected the newest board member of Cascade Policy Institute, a nonprofit, nonpartisan public policy research and educational organization based in Portland. Eyre, a Certified Public Accountant, is a Tax Partner at Fordham & Co LLP in Hillsboro and is a former Oregon state legislator. The Cascade Board of Directors elected Eyre in late 2018 to begin her term in January 2019.

Katie Eyre joined Oregon accounting firm Fordham & Co in 1998 after gaining broad tax experience in several long-term positions with other firms. She assists business and individual clients with complex tax and compliance issues.

Prior to joining Fordham & Co, Eyre served as controller at a financial service company with more than $1 billion under management, all in multi-family housing. There, she gained experience in integrating and consolidating the financial operations of multiple companies. Since joining Fordham & Co, she now manages the firm’s tax practice as well as providing tax consulting services for closely held business, mergers and acquisitions, and estate planning.

Eyre represented House District 29 in the Oregon House of Representatives during the 2011-12 Oregon Legislative Session. She has also served on the Hillsboro Planning Commission for more than ten years, most recently as President.

Katie Eyre joins nine current Cascade board members, including Chairman William B. Conerly, Ph.D., Vice Chair Gilion Dumas, Cascade President and CEO John A. Charles, Jr., Michael L. Barton, Ph.D., Manuel Castañeda, Pamela Morris, Ruppert Reinstadler, William Udy, and Peter Wendel.

Cascade President John Charles stated, “Katie Eyre has a long record of community service at both the local and state levels. She also understands complicated tax-related problems. Her life experiences and leadership skills will significantly strengthen Cascade’s capacity to design innovative public policy solutions.”

About Cascade Policy Institute:

Founded in 1991, Cascade Policy Institute is a nonprofit, nonpartisan public policy research and educational organization that focuses on state and local issues in Oregon. Cascade’s mission is to develop and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity. For more information, visit cascadepolicy.org.

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Press Release: Report shows Oregon’s “smart growth” policies make housing less affordable for Oregonians

FOR IMMEDIATE RELEASE

Media Contact:
John A. Charles, Jr.
503-242-0900
john@cascadepolicy.org

PORTLAND, Ore. – Cascade Policy Institute has released a new report examining the links between anti-sprawl, “smart growth” regulations and increasing housing costs in Oregon. The report measures the extent of supply restrictions in Oregon and their impact on housing prices. It concludes that “smart growth” policies contribute substantially to the decrease in affordable housing and single-family housing options in Oregon.

The report, The Housing Affordability Crisis: The Role of Anti-Sprawl Policy, was written by Randall Pozdena, Ph.D. Pozdena is president of QuantEcon, Inc., an Oregon-based economics consultancy.

Over the last fifty years, many states have adopted “smart growth” or “anti-sprawl” policies. Enough time has elapsed for the effects of these policies to be studied. The evidence shows that many urban areas now have housing prices that make either home ownership or rental increasingly unaffordable.

In the face of resulting “affordable housing crises,” cities and states are currently considering additional regulations and subsidy policies to attempt to provide residents with more affordable housing options. There is virtually no public policy discussion of whether regulatory interventions precipitated the housing crisis in the first place, let alone consideration of abandoning these damaging policies.

In The Housing Affordability Crisis, Pozdena examines the links between anti-sprawl regulations and the spectacular increases in housing costs and the virtual disappearance of affordable housing in many markets. Specifically, he measures the extent of site supply restrictions and its impact on housing prices using an economic model of housing markets, data on the economic conditions in housing markets, and trends in development revealed in satellite inventories of U.S. land uses. At the national level, using state and Metropolitan Statistical Area data, Pozdena concludes:

  1. Twenty-three of the 50 states studied fail to provide housing units at a volume adequate to keep housing prices and incomes growing at a rate consistent with affordability. On average, these states under-provided housing units by 6.4 percent of their current stock of housing units.
  1. Those states that fail the affordability and supply adequacy test are overwhelmingly those with documented adoption of one or more aggressive anti-sprawl growth regulatory initiatives.
  1. Annual housing price inflation exceeded annual income growth by 14 percent each year during the study period in those states that failed to provide housing in sufficient quantity to keep it affordable. Extrapolating the findings to the nation, the housing stock is smaller by as much as 4.5 million housing units than it should have been to preserve affordability.

Cascade Policy Institute President and CEO John A. Charles, Jr. said, “Oregon land-use planners have long pretended that Urban Growth Boundaries and other site restrictions have no real effect on housing supply. Dr. Pozdena’s analysis clearly shows that this is wrong. We cannot solve the housing crisis by simply ‘throwing money’ at public housing projects; growth controls need to be reduced or repealed if we want to make the American Dream affordable.”

The full report, The Housing Affordability Crisis: The Role of Anti-Sprawl Policy, can be downloaded here.

Founded in 1991, Cascade Policy Institute is Oregon’s free-market public policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity. For more information, visit cascadepolicy.org.

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Taiko Drums, Jazz Choir to Perform at Salem School Fair during National School Choice Week

RSVP for FREE to Options in Education Fest – 2019

SALEM (Jan. 11, 2019) – Japanese Taiko drums, a jazz choir, and an acting class will perform at the Options in Education Fest featuring a wide variety of schools from 11 a.m. to 2 p.m. Saturday, Jan. 19 at the Salem Convention Center.

Nearly 1,000 people are expected to attend the National School Choice Week celebration.

Dozens of schools from every sector – public charter, public magnet, private, virtual, and homeschool – will be represented, helping hundreds of families find the right school or educational setting for their children.

This event is planned to coincide with the history-making celebration of National School Choice Week 2019, which will feature more than 40,000 school choice events across all 50 states.

“School choice is the pathway to success,” said Bobbie Jager, school choice outreach coordinator at School Choice for Oregon. “Helping all children and parents find the right fit builds confidence and gives students the power they need to become their greatest selves.”

 

School Choice for Oregon is hosting the event. School Choice for Oregon is a project of Cascade Policy Institute, a nonpartisan, nonprofit research and education organization based in Portland. Cascade Policy Institute has promoted educational choice for all Oregon families since 1991. For more information about the Options in Education Fest and School Choice for Oregon, contact Bobbie Jager at bzmama@onlinemac.com or 503-510-9106.

 

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As a nonpartisan, nonpolitical public awareness effort, National School Choice Week shines a positive spotlight on effective education options for students, families, and communities around the country. From January 20 through 26, 2019, more than 40,000 independently-planned events will be held in celebration of the Week. For more information, visit www.schoolchoiceweek.com.

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Can National Parks’ Operations Be Funded with User Fees? National Park Service Says Yes!

By Rachel Dawson

Whether or not you have ever visited a national park, you have contributed to their budgets by paying a federal income tax. These funds help to pay for operational services like removing trash, operating camp grounds, and maintaining roads.

If you want to enjoy a national park in person, you’ll (usually) also pay an entrance fee. Under the Federal Lands Recreation Enhancement Act, park fees are designated for “repair, maintenance, and facility enhancement related directly to visitor enjoyment, visitor access…” and other visitor services. Under this law, entrance fees do not fund the previously mentioned park operations.

However, the current federal government shutdown changed this. During the shutdown, some of the nation’s most popular parks have used entrance fees to fund necessary operational expenses, due to fear that keeping the parks open during the shutdown would become unsustainable.

This change demonstrates the benefits of giving local park managers more flexibility with the use of visitor fees. Allowing individual parks to have greater control over the use of fees could reduce the parks’ reliance on Congressional (taxpayer) funding allocations, give local staffs more incentive to manage their parks efficiently, and provide a better experience to visitors. That would be an improvement both for the National Parks and for the taxpayers whose money provides for them.

Rachel Dawson is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Housing Affordability Crisis: The Role of Anti-Sprawl Policy

By Randall Pozdena, Ph.D.

Executive Summary

So-called smart growth policies are advocated as a means of avoiding sprawl.  These policies have at their heart a policy of reducing the availability of land for housing in urban areas. In Oregon and some other states, anti-sprawl policy is implemented by regulations that impose urban growth boundaries (UGBs).  Other regulations impose minimum density policies and others reduce spending on highways and increase spending on transit service—especially light rail—as an alternative.  Advocates of anti-sprawl policies argue that such regulations would allow urban growth to proceed at a lower overall cost.

Many states adopted smart growth policies in the last five decades—enough time for the policies to have demonstrated their purported advantages.  The evidence, at least on the housing front, is that the cost-containment claims have not materialized.  Instead, many urban areas are finding themselves with home prices that make ownership and rental of housing increasingly unaffordable.  Cities and states are thus using or considering additional regulations and subsidy policies to provide their residents with more affordable housing.  There is virtually no discussion of whether anti-sprawl regulatory interventions precipitated the housing crisis, let alone consideration of abandoning the policy.

The purpose of this study is to examine the links between anti-sprawl regulations and the spectacular increases in housing costs and the virtual disappearance of affordable housing in many markets.  Specifically, we measure the extent of site supply restrictions and its impact on housing prices using an economic model of housing markets, data on the economic conditions in housing markets, and trends in development revealed in satellite inventories of US land uses.

We apply the analysis to data from all 50 states and identify those states whose development policies reflect constrained site supply and those that do not.  Because Oregon has among the longest-standing and most aggressive implementations of smart growth land use policy, we pay particular attention to the state, and drill down with analyses at the Metropolitan Statistical Area (MSA) level in Oregon to demonstrate that the state-level findings are corroborated for all of its MSAs.

The primary metrics examined in this study are the rate of housing price appreciation, the degree of rigidity (“inelasticity”) of the supply of new homesites, and the degree to which the housing stock has failed to increase enough to affordably provide additional housing services.  Since we note that the adverse trends in house price inflation and slowing of site supply took greatest effect the last 30 years or so, we scrutinize market behavior subsequent to this period.  Because of the onset of the Great Recession in 2007, however, we estimate our models on this period.  This is because we do not wish to conflate the effects of anti-sprawl policy with the collapse of mortgage markets and home construction that persisted for the next half decade.

After establishing the linkage between constrained site supply and housing prices and affordability, we turn to the evaluation of the various policies that are in place or proposed to redress these problems.  This analysis is performed for the state of Oregon only.  The State’s wide-ranging and aggressive policies and proposals make it broadly representative of the nature, cost, and effectiveness of these policies—both those in place and those recently proposed.  With theory as a guide, and our acquired knowledge of the reactivity of the housing market to various stimuli, we can then opine on the likely effectiveness of these policies.  We also offer our own suggestions.

At the national level, using state and MSA data, we find the following:

  1. Twenty-three of the 50 states studied fail to provide housing units at a volume adequate to keep housing prices and incomes growing at a rate consistent with affordability. On average, these states under-provided housing units by 6.4 percent of their current stock of housing units.
  2. We demonstrate that those states that fail the affordability and supply adequacy test are overwhelmingly those with documented adoption of one or more aggressive anti-sprawl growth regulatory initiatives.
  3. Annual housing price inflation exceeded annual income growth by 14 percent each year during the study period in those states that failed to provide housing in sufficient quantity to keep it affordable. Extrapolating the findings to the nation, the housing stock is smaller by as much as 4.5 million housing units (in 2015 likely) than it should have been to preserve affordability.

Because Oregon has aggressively pursued anti-sprawl policy, it was given special attention in the study.  We found the following:

  1. All eight of Oregon’s MSA housing markets failed the test of affordability and adequacy of supply over the various study periods for which data was available. The estimated total shortfall in supply equals approximately 18 percent of the existing stock—virtually identical to that found for Oregon using state-level data.
  2. We analyzed the current and proposed housing policies of the state of Oregon. At present, proposals include approximately $2.3 billion by the State and the Department of Housing and Urban Development (HUD) to assist housing access and over $600 million in new affordability-related programs. This study finds that there is little hope that these policies can redress the scale and extent of Oregon’s affordable housing problems and, in some cases, may worsen them by burdening developers of housing with new regulations.

In summary, this study finds anti-sprawl policy to have been implemented in a manner that has pernicious effects on housing affordability.  Specifically, regulatory constraints on site supply have caused an on-going crisis of housing supply and affordability.  In many markets, the development of land for housing is regulated too aggressively.  Additionally, existing and new programs for addressing housing affordability rely on other regulation and spending programs that will not have the designed effect of providing affordable housing.  This study strongly recommends, instead, relaxation of regulations that limit the land area available for housing development.  Any residual concerns about sprawl should be addressed by reforming current highway and transit pricing and finance practices, which are known to be economically inefficient.

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Ride-Hailing Could Give an Uber-Needed Lyft to TriMet Service

By Miranda Bonifield

TriMet’s ridership has been steadily declining in recent years, to the great concern of transit advocates and fiscally conscious citizens alike. Proposed solutions involve sending expensive new bus and rail lines to underserved locations. But what if TriMet could reach new customers at a fraction of that cost?

Cascade Policy Institute recently released a study by economist Dr. Eric Fruits which found one or more high-cost and low-ridership bus lines could be replaced by facilitating the use of ride-hailing services in partnership with transit. Riders within particular areas could call an Uber or Lyft, ride to the bus, and then take public transit the rest of the way—a much more efficient and comfortable method than walking or biking through the rain. It could cost 55% less than expensive proposed bus lines—saving TriMet money—and slightly less than current bus and Max fares—saving customers money.

This isn’t a new idea; transit companies across the country have taken advantage of ride-hailing services’ ability to complement public transit. Studies have found a small but significant increase in transit ridership in cities with large transit systems which chose to partner with ride-hailing services. TriMet should pursue this low-risk, high-benefit option with a one-year pilot project beneficial to taxpayers, riders, and TriMet alike.

Miranda Bonifield is Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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