Steve Novick explains the "stampede" of businesses to Oregon

Just kidding, folks: "No, there is not a Vancouver dermatologist named Jim Dunning ..."

The mysterious and elusive Jim Dunning

At BlueOregon, Steve Novick writes a man-bites-dog story of Washington businesses forming a "stampede" to relocate to Oregon:

632 Washington business owners announced today that they were moving their businesses across the river to Oregon, after the Washington Legislature announced plans to increase the Business and Occupation Tax - in effect, a gross receipts tax - on service businesses from 1.5% to 1.8% in order to balance the state budget.

"Many of us started thinking about making this move a few months ago, when we started reading about the Measures 66 and 67 campaign and discovered that Oregon was planning to adopt an alternative minimum tax that looked sort of like the B&O tax, but was only 0.1% or a flat $150," said Vancouver dermatologist Jim Dunning. "We had no idea that before this, Oregon had nothing like the B&O tax at all. Now that Washington's raising the B&O tax even higher, we'd be fools - not just in April but year 'round - to stay in Washington State another minute."

Interesting story ... And all the more interesting because there appears to be no one by the name of Jim Dunning licensed to practice dermatology in the entire State of Washington.

Over at Oregon Business, managing editor Ben Jacklet has dropped the gauntlet to any businesses who claim that Measures 66 & 67 have caused them to relocate out of state.

Once I get such a name, on the record, I promise to explore in great detail the specific reasons behind that person's departure .... I think that would make a great story, but to get started I'll need some proof that people are indeed leaving because of the taxes.

Let's see if Mr. Jacklet turns his attention to report all sides of the story.

Mary Nolan's economic development plan: "Repeat after me, 'Oregon is great for business'"

Oregon House majority leader Mary Nolan has a plan to bring back business to Oregon. It's simple: Just tell people that Oregon is a great place to do business. And then keep repeating it until some business believes it.

Mary Nolan has a reputation in Capitol for being one of the most anti-business Democrats in the building. But now she is belting out a tune from the same hymnal that the rest of the Salem's Democrats are singing from. The tune is, "Oregon is Great for Business."

Oregon is, objectively, a great place to do business. Oregon offers entrepreneurs and business leaders an educated and well-trained workforce; a strong transportation infrastructure; among the nation's most robust, low-cost workers' compensation systems, and, yes, the fifth-lowest business tax burden in the country.

You can expect Mary Nolan to support Oregon's business right around the same time you can expect Osama Bin Laden to deliver Easter Mass.


She names 2 solar cell companies (that have consume copious amounts of tax dollars through the Business Energy Tax Credit). Even the brewery she mentions made it's energy efficiency "investments" because the state's BETC program threw a bucket of money at the brewer.

After that, you get to play buzzword Bingo: solar, family wage jobs, biomass, livability. Remember you get to use clean-tech only once!

Measuring the impacts of Measures 66 and 67

Today, the Alliance of Oregon’s Business Associations announced the launch of a website, OregonTaxResponse.com, which intends to capture and quantify some of the real-life impacts of Measures 66 and 67 on Oregon companies and their employees.

“Businesses are telling us that the tax hikes are resulting in postponed investments, business expansion in states other than Oregon, and loss of employment,” said J.L. Wilson, spokesperson for the Alliance.

To track the employment consequences of Measures 66 and 67, the Alliance has established a web site where Oregonians can record the impact of the legislature’s tax increases.

• Did a business leave the state because of Measures 66 and 67?

• Did a business choose not to locate in Oregon due to the taxes?

• Did an business fire or layoff a certain number of jobs or scrap plans for expansion?

• Did employees experience salary reductions or benefits cuts as a result of these tax increases?

Information gleaned from the website will be used to demonstrate the impacts of tax increases on Oregon employers so that policymakers and legislators have a better grasp of how specific taxes affect Oregon’s economy.

New feature: Oregon businesses that are out of business

We have been given access to a database of businesses coming and going from our great state. The database application is experimental, so there may be some kinks to work out moving forward.

Over on the right hand side, we will list Oregon businesses that are out of business as soon as the information is made available in the database.

Portland Development Commission offers flimsy aid to firms following the latest fads

Oregon is a funny place. If your business surfs the latest fads of buzzwords like green, sustainable, or (our faddishly favorite) clean-tech, you'll find politicians playing an economic version of What-would-you-do-for-a-Klondike-Bar?



Problem is, Oregon's efforts to boost business are half-hearted at best. Even worse, they come with so many strings attached that even a marionette would run screaming for Idaho.

The Portland Business Journal reports that latest massively misguided effort comes from the Portland Development Commission, the city’s economic development arm. The PDC has launched a program that it hopes will help small businesses create jobs. But, the program is limited only to those businesses that will satisfy the mayor's fondness for "clean-tech," or green, jobs.

The program is called the Small Contractors Loan Insurance Program (pdf) and it helps businesses obtain a revolving line of credit. As such, the PDC recognizes that there is substantial financial risk to the city involved. For businesses seeking the loans, there are some strings attached ...

Businesses must meet minimum qualifications, including:

• Pay prevailing wage or 180% of state minimum wage, whichever is higher;
  
• Be Home Performance with Energy Star Building Performance Institute-certified; and
• Hire new worker/installer weatherization employees from a qualified weatherization training program.

Businesses get bonus points if they have a track record of hiring or retaining underserved populations, or a detailed plan for welcoming diversity in their workplace.

And some more strings ...

Workers must come from "qualified training programs" such as those that:

• Provide weatherization training using curriculum developed by an accredited organization to meet United States Department of Energy standards and any additional specifications and standards designated by the Oregon Department of Energy and Energy Trust;
• Have at least three defined partnerships with state recognized pre-apprenticeship programs or signatory community organizations that serve historically disadvantaged or underrepresented populations, including women, and people of color; and
• Offer mentoring, follow-up monitoring and/or other support to assure retention of participants in the program and in weatherization careers.

All that for a glorified credit card!

Oregon Business magazine says good riddance to Oregon business

Ben Jacklet, the managing editor of Oregon Business, unloads both barrels on Measures 66 and 67. What's most surprising is that the editor unloads on ... Oregon businesses.

Mr. Jacklet's take on the businesses thinking of leaving for more business friendly states? "Don't let the door hit you on the butt on the way out."

That's a pretty surprising sentiment from a business magazine. But it's not all that surprising from Oregon Business magazine.

Over the years, Oregon Business has been the model of milquetoast reporting. Everything is awesome in Oregon and business is booming! Green! Sustainable! Wine! Streetcars! Windmills! It's all awesome! Taxes are low! Children are smart! Government is savvy!

I have long since given up on Oregon Business to report on Oregon's business environment. Maybe that's why the only place I see the magazine is in the doctor's office nestled between Highlights for Children and the AARP magazine.

Historical society hits up county for higher taxes

The Portland Tribune reports that the Oregon Historical Society is exploring creation of a “heritage taxing district” empowered to collect a modest amount of property taxes, with voter approval, in Multnomah County.

A tentative proposal is to charge 5 cents in taxes for every $1,000 in assessed property value, or $10 a year for owners of a house with a $200,000 tax assessment.

That rate would raise $2 million a year for the Oregon Historical Society, plus smaller amounts to be shared with other museums in the county.

Governor candidate Bill Bradbury say Measures 66 and 67 should be repealed

Portland Monthly recently had a Q & A with Bill Bradbury, who is running as a Democrat for Oregon governor. Despite his reputation for being the most left leaning of the candidate, Bradbury recognizes that the tax increases of Measures 66 and 67 are hurting Oregon's business environment.

Forbes: After Measures 66 and 67, we’ve given up the ability to do all the reform that needs to be done. There’s no trust.

Bradbury: I wish 66 and 67 were temporary.

Chambers: How are you going to keep businesses and individuals from leaving Oregon because of 66 and 67? Some are already planning to.

Bradbury: I think you need to repeal 66 and 67. That’s a huge challenge given the fiscal situation. But, frankly, I think 11 percent is a pretty high income tax. Let me be clear, I’m not proposing repeal. But I’d certainly look at it if we have serious impacts from the increase. I don’t think it’s sustainable.

Peppler: Keep in mind that part of the deal with the Oregon Business Alliance was that the members would agree to the temporary business tax and then we would help fund the campaign for kicker reform. Unfortunately, it was rejected out of hand by the legislative majority.

Bradbury: When you have the business community coming to the legislature, saying, “We recognize the need; we’re willing to pay our fair share,” my advice would be, go for it. Come out with a remarkable coalition. That’s the role of the governor.

UPDATE: Bradbury backtracks on his recorded statement and claims he misspoke about repealing the tax measures. His new campaign slogan: I was for the taxes before I was against the taxes, but now I'm for the taxes.

As wealthy exit Oregon, Saks shutters Portland store

Saks Inc. said Tuesday it plans to close its Saks Fifth Avenue stores at Pioneer Place Mall in Portland, Oregon. Saks will close the men's store in April and shut the main store in July. About 100 employees will be affected by the move. The decision is in line with Saks' strategy to focus resources on productive stores, Chief Executive Steve Sadove said in a statement.

In a 140 character announcement, Portland's mayor Sam Adams blames the exit on an ending lease and tough times "all over."

Are higher property taxes next for Oregon?

A column by Oregonian columnist, Steve Duin, targets Coos County's biggest property tax payers for ... gulp ... not paying enough property taxes.

As if on cue, Chuck Sheketoff, architect of Oregon's recent income tax increases known as Measures 66 and 67, chimes in to sing the tune of raising business taxes even more: "The wealthiest among us contribute the least share of their income to state and local taxes."

Hang on to your wallets!

Portland's foreign policy foray blows up business opportunities with Oregon's largest trading partner

Ah, those were the days ...

It seems like just six months ago that Portland's mayor, Sam Adams, was joyfully celebrating 60 years of Communist rule in China. On his blog, the mayor declared, "This is a seminal year for China and for Portland-Chinese relations." Since then, Portland has hosted an exhibition of modern Chinese art and the mayor attended the ribbon cutting at the first retail store in the U.S. for China's version of Nike.

Fast forward to today. With a flip and a flop and a slap in the face, the mayor tried his hand at crafting U.S. foreign policy by issuing a proclamation that March 10 is "Tibet Awareness Day" (pdf).

What the mayor hoped would be feel good--but empty--gesture toward the Free Tibet bumper sticker crowd, turned into an firestorm that threatens to engulf much of Oregon's business community.

In the wake of the announcement, some government agencies have threatened to pull the plug on televised Trailblazers games.

One business owner who regularly travels to China to meet with suppliers and customers has informed this blog that he may cancel his upcoming trip because his business partners do not want to speak with him. He is now worried that this latest blow-up will drive him out of business.

Commissioner Randy Leonard first urged the mayor to make the proclamation based on his assessment that the desires of 100 Tibet supporters vastly outweigh the viability of Oregon's business community.

According to his blog, Commissioner Leonard was asked by a reporter if he was concerned that the proclamation in support of Tibet would damage Portland's economic relationship with China, the state's biggest trading partner. In response, the commissioner said, "We should not have to sacrifice our principals of free speech and religion to do business with China." Tell that the next firm that loses business with a Chinese customer.

Portland city council candidate Jesse Cornett: A plan for jobs

Jesse Cornett's 5 Ideas to Create Jobs in Portland:

1. The City should have a Commissioner of Jobs to interact with each City Bureau to ensure it's operating in as business friendly manner as possible and to suggest changes when they are not.
2. Think globally but bank locally. City funds should be deposited into a locally owned community bank or credit union that is more likely to invest its money in Kenton rather than Dubai.
3. The City should provide low-interest loans and grants to neighborhood business owners through creation of a Neighborhood Business Development Fund.
4. As a city, we should do our part to encourage the efforts of homeowners and businesses to lower their energy usage. Portland should reduce or even waive permit fees for energy conservation improvements that qualify for state and federal incentives if local contractors are utilized.
5. Portland should waive business license fees for 12 months for any existing or new small business with between 2-10 employees.

Editor's note: This is the first in a series of candidates' observations, opinions, and proposed policies regarding Oregon's economy and employment situation. Statements are limited to 150 words. To the extent possible, Exit Oregon use the candidates own words. Any editorial statements by Exit Oregon will be put in the comments.

La Grande hopes tourism taxes will tackle tapped out city budget

With the City of La Grande contemplating a hike in the transient room tax, there’s a ripple of discontent running through the local lodging industry. The La Grande Observer reports that some of La Grande’s motel owners aren’t happy with the idea of bumping the tax by 2 percentage points.

Currently, the city charges a 5 percent room tax. On top of that, Union County charges 3 percent and the state of Oregon 1 percent. For a total tax of 9 percent. A 2 point increase in the city tax brings the total to 11 percent.

The paper reports that conventional wisdom says travelers will tolerate a total tax rate of 10 percent, but above that, they start to balk.

By law, most of the tax increase must go to tourism related activities. Even so, in a move reminiscent of Portland's diversion of sewer charges to bike riders, the City of La Grande has argued that it can divert a portion of the lodging tax to fund the city's parks.

Hotel and restaurant owners argue that higher taxes will hurt them, but provide little relief to the city's budget shortfall. “It’s not going to help the city that much and it’s not going to help us at all,” says Karl Swanson of the Royal Motor Inn.

Later, gator: Albany sues Pepsi for pulling out of development deal

The Democrat Herald reports last week that the Albany City Council accepted a $20 million cash settlement in its lawsuit against a subsidiary of PepsiCo.

During the peak of the economic boom in 2006, SVC Manufacturing Inc., part of PepsiCo, had signed a development agreement with Albany to build a Gatorade plant and bottle-making factory on a long-vacant 242 acres in the city.

As the recession was deepening in the fall of 2008, SVC said market conditions had changed and dropped the project. Albany sued for more than $100 million in February 2009 to compensate the local economy for the lost benefits the city had eagerly hoped for.

City Attorney Jim Delapoer tried to blunt local criticism that suing the company had made Albany look hostile to business. He said the process “shows how an American community and a Fortune 50 company worked their way out of a contentious deal.”

Even so, it is obvious to many observers is that Albany has sent a loud message that the city backs up business when times are good, but turns on business when times are bad.

Deschutes County Commission race highlights Oregon's unhealthy business climate

The Bend Bulletin reports that voters and businesses in Deschutes County want to hear ideas on how to create jobs and attract new businesses from candidates running for two County Commission positions this year.

The Bend area candidates said county commissioners should hold the line on taxes, or even cut them. They also emphasized that maintaining good roads and other infrastructure is important to attract businesses.

County officials need to work on public relations and outreach to out-of-state businesses, says Tim Knopp, vice president of the Central Oregon Builders Association, because some businesses might view the state as undesirable after voters approved tax increases with Measures 66 and 67 in January.

Bill Robie, government affairs director at the Central Oregon Association of Realtors, said that how county officials handle land use issues is important to his organization’s members. The county should check whether land is incorrectly zoned for farm use, as allowed under a state law passed in 2009, Robie said.

“We need to make sure (exclusive farm use zoning) is not being used as a proxy for open space protection,” Robie said.

Even stimulus spending can't save Oregon construction jobs

The Oregonian reports that the state lost 15,900 construction jobs between January 2009 and January 2010, falling from 82,300 to 66,400. That’s a 19 percent fall and 6th highest in the country, according to figures from the Associated General Contractors of America. The only state’s with biggest percentage drops were Nevada, Arizona, Colorado, Idaho and Florida. Washington state was right behind Oregon, also at 19 percent.

This latest report comes on the heels of another Oregonian investigation showing that the state has has grossly exaggerated the number of jobs created by the legislature's stimulus program, called "Go Oregon." The newspaper found that on average, Go Oregon jobs lasted only about two weeks and did little or nothing to dent the state's bleak employment outlook.

The Oregonian recalls that the legislation was put on a fast track and zipped through both legislative chambers. Gov. Ted Kulongoski signed the bill just hours after it emerged from the House, saying it would "help families and get our economy moving."

But contractors say the program, which will cost Oregon's general fund more than $300 million over 20 years because of interest rates, has done little to cushion their industry's free fall.

"It's been a huge disappointment," said John Killin, president of Associated Builders and Contractors, whose members are scraping for every bit of work they can find. Since 2007, the number of construction workers in Oregon has fallen from a peak of 114,000 to fewer than 68,000, he said.

Idaho's "love letter" to Oregon and Washington businesses facing stiff tax increases

The Kitsap Peninsula Business Journal has published a copy of the Idaho governor's letter to Oregon and Washington businesses.

It’s true that a rising tide lifts all boats. But how those boats are handled makes a big difference when the tide is out and the waters get rough.

State governments across the country are dealing with the continuing national recession in different ways. In Idaho, our focus is on stability. Predictable tax and regulatory policies are what our employers need in order to maintain their operations through this rough patch, and it’s what employers elsewhere are looking for when they consider expanding or relocating.

Other states, however, have chosen some interesting and in my view counterproductive approaches. Last month, for example, Oregon voters approved their legislature’s decision to raise taxes on the wealthy and on many businesses by $727 million. The immediate result was that my phone started ringing — and so did phones over at our Department of Commerce. It seems that word has spread about our Project 60 initiative, and that we are open for business, including theirs!

The businesses that have called are emotional about this subject, and they have every right to be. Rising costs — especially during a recession — could put some employers out of business, or at least prompt layoffs. More than 2,000 Oregonians joined a Facebook group to protest the tax increase and commiserate about the repercussions. No less an Oregon business icon than Nike’s Phil Knight calls it “Oregon’s Assisted Suicide Law II.”

Legislators in the state of Washington are talking about even bigger tax increases to tackle a budget deficit that figures to be as big as Idaho’s entire State budget. Businesses in both states are like those in Idaho; they are facing the most challenging times in decades, and even incremental cost increases can mean the difference between surviving and closing up.

The problem in Oregon is that folks were convinced that state government was what needed to be shored up rather than the jobs- and revenue-producing private sector for which state government is supposed to work. As a result, they’re chasing some of their cash cows to the border. And I welcome those businesses with open arms.

We now are reaching out to hundreds of Oregon businesses, and will do the same with those in Washington if the legislature there follows Oregon’s lead. We aren’t offering many bells and whistles, but what we can offer is a business-friendly State government, a highly qualified and motivated work force, and communities where people understand that while government cannot be the solution to their problems it can and must be a champion for their own solutions.

Businesses small and large are the backbone of Idaho’s economy. They employ our citizens, who in turn can provide for their families. Businesses and individuals also pay reasonable taxes that enable State and local governments to provide such essential services as public schools and public safety. And make no mistake: Any business that doesn’t pass along its operating costs to consumers — including their tax bills — doesn’t stay in business for long.

Of course, Oregon businesses can choose to accept their higher tax burden, and many will. After all, I understand that the quality of life over there is pretty good. But they have nothing on Idaho in that regard.

For those Oregon businesses facing a decision about whether to lay off employees or close their doors entirely, I have a proposal: Move to Idaho. The Tax Foundation rates our corporate tax burden at 17th in the nation, compared to Oregon’s ranking of 31st. Our individual tax burden is lower, too. Those kinds of numbers can make a real difference to a bottom line.

For Oregonians reading this: Find the best Idaho community for your business by visiting us online at www.gemstateprospector.com. Or call our Department of Commerce toll free at (800) 842-5858 for details about available land, buildings and incentives.

I’ll continue to share information wherever I can about Project 60 and our business-smart state. Find out what so many folks already know — Idaho is a great place to live, to work, and to create career-path jobs and opportunities.

Oregon's new taxes spark an entrepreneurial crisis

The Oregonian reports that for a couple of hours, the 75 or so investors, entrepreneurs and elected officials gathered at Portland's World Trade Center.

Eric Pozzo, who manages the Oregon Angel Fund, which screens and invests in startup companies, said potential investors have to ask themselves now, "Why would I choose Oregon with our tax structure?"

Wayne Embree said his seed-stage investment firm was considering leaving the state, depending on the advice he and his partner get from tax experts about the impact of Oregon's new tax structure on his fund's investors.

"These guys," muttered Embree, referring to the proponents of Measures 66 and 67, "have no idea what they've done."

Even political activist Steve Novick, the relentlessly cheerful advocate of Measures 66 and 67, showed a trace of regret last week, writing on BlueOregon: "If there are ways to make some of these folks feel more valued, we should try them out. If we can convince even a few of the few to stay, that's a good thing."

Double taxation: Measure 67 hits Oregon farmers hardest

Remember when Oregonians were told that Measure 67 would affect only Big Out-of-State Banks and Walmart? Remember when farmers were told the higher taxes wouldn't hit them?

Well, it looks like the chickens have come home to roost.

The Capital Press reports that Oregon agricultural cooperatives face extensive tax hikes this year thanks to Measure 67, the corporate tax increase voters approved in January.

The measure, which is retroactive to 2009, in some cases will add $100,000 to a co-op's taxes, said Dave Buck, a partner in AKT CPAs of Salem.

"One co-op that just did the math said they will be cutting three to four to five positions," Buck said.

Others, such as Norpac Foods, are planning to absorb the cost.

"We have to compete in the world market, so we will probably just absorb that. And ultimately our patrons (members) will absorb that because we can't just pass on that cost to the market," Norpac CEO George Smith said.

"There is a double tax going on when you consider the members have all been taxed on their individual profits," Buck said.

"We have to treat sales we make of our patrons' products as sales, and a member has to treat his sales to Norpac as sales," Smith said. "It's doubling up their tax burden."

"A cooperative is meant to be a pass-through entity, which means patronage-based sales or income should be taxed at the member level only," said Heidi Luquette, communications manager for Tillamook County Creamery Association.

"As it stands, cooperatives are essentially double taxed" under Measure 67, she said.

PDC doubles down on failure: Now seeking formal proposals for new HQ

In yet another display that government spending is recession proof, the Portland Development Commission currently pays $24 per square foot per year (plus utilities and maintenance) on its headquarter's office space. That's on the high side considering asking rents for Class A offices are about $25 per square foot with utilities and maintenance included. Class B/C space, which is more in line with PDC's offices, is more like $19 per square foot.

According to the Oregonian, PDC is in its current space because one of Mayor Vera Katz's ideas backfired. She pushed a creative services center for the space in the late 1990s. But the idea never caught on. PDC, tasked with recruiting tenants, never filled more than half of the seven-story building. So Katz moved PDC to fill the building.

PDC's expensive lease is coming up in August 2011. Now, the PDC is formally seeking "requests for information" for potential space. Replies due by March 22.

Western states roll out the welcome mat for Oregon's businesses

The Portland Business Journal reports that recruiters in Idaho, Montana and Washington believe January’s voter-approved corporate tax hikes have made Oregon businesses vulnerable to relocation overtures.

Bruce Hanna is the minority leader of the Oregon House of Representatives. He also owns a beverage bottling business and distribution business in southern Oregon. In an Oregonian op-ed, he reports:

As a business owner, I recently received a letter from Idaho Gov. Butch Otter inviting me to bring my company and my jobs to his state. Although I have no intention of leaving Oregon, I'm deeply concerned when other states and cities are actively courting our businesses. Otter recently told The Associated Press that his phone has been "ringing off the hook" from Oregon businesses since Measures 66 and 67 passed.

Welcome to Exit Oregon: A Lesson from Maryland

Welcome to Exit Oregon, where we chronicle the exodus and extermination of Oregon business.

When Oregon was debating its permanently higher income taxes on business and high income household, proponents of the higher taxes said that only Big Out-of-State Banks would be affected. In fact, its the home-grown businesses--both profitable and unprofitable--that are hit hardest.

Now, one of the most vocal advocates of the new permanent tax increases is backtracking on the higher taxes. Apparently, he is worried that Oregon will be perceived as unfriendly to business.

Oregon is not a pioneer in soaking businesses and "the rich" to fund an ever growing government. Maryland tried the same thing and found out that the higher taxes actually reduced tax revenues. (So it seems there really is a Laffer Curve). From the Wall Street Journal:

A Bank of America Merrill Lynch analysis of federal tax return data on people who migrated from one state to another found that Maryland lost $1 billion of its net tax base in 2008 by residents moving to other states.

Oregon's tax advocates point out that the recession probably knocked off Maryland's millionaires. That is partially true but, in fact, many of the missing millionaires have simply disappeared from the state:

One-in-eight millionaires who filed a Maryland tax return in 2007 filed no return in 2008. Some died, but the others presumably changed their state of residence. (Hint to the class warfare crowd: A lot of rich people have two homes.)

Stayed tuned for more.