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.