E-Newsletter                         February 6, 2009 

       First, we made a significant transcription error in our last newsletter. The letter stated that the 2 percent surcharge in PacifiCorp rates resulting from the demolition of the dams on the Klamath River could be about $34 per month and that the cost of replacement power could be about $65 per month. The correct numbers are up to $34 per year and up to $65 per year respectively resulting in up to a 10 percent increase in the average annual bill. The first number was derived by multiplying PacifiCorp’s 2007 $929 million Oregon revenue by the 2 percent surcharge and dividing the product by PacifiCorp’s 548,000 ratepayers. The second figure was derived by dividing the FERC estimated $35 million annual power replacement cost by PacifiCorp’s 548,000 Oregon ratepayers. That $35 million estimate is widely believed to be very conservative. In fact, if the power was replaced with renewable energy the estimate could be an order of magnitude low. We strive to provide you with accurate information and I regret my typographical error.

       We want to thank all those who travelled to Salem to testify regarding the demolition of the Klamath River Hydroelectric project, as well as all those who provided written testimony and who emailed their thoughts to the committee members. In a news conference held before the committee hearing some proponents of Senate Bill 76 suggested that there is virtually no opposition to the Governor’s plan to destroy the dams. Your efforts made it abundantly clear that no consensus exists, and that in fact many Oregonians are categorically opposed to dam removal. Your testimony introduced many issues that the committee members had not contemplated, and highlighted other important issues that the Agreement in Principle fails to adequately address.

       Please know that we are grateful because without your efforts these issues would never have been heard. The scheduled Thursday work session for SB 76 was postponed until February 10.

SB 430 – Destination Resorts

       This week the Committee on Environment and Natural Resources introduced Senate Bill 430. The bill states that a county may not approve an application for siting a destination resort. The prohibition applies to an application for siting a destination resort that was submitted or completed on or after January 1, 2008 without regard to the status of the application including whether or not the county previously purported to grant final approval of the application. In short, the bill retroactively prohibits approval of an Oregon destination resort until January 2, 2012. The prohibition includes resorts that have already been approved and where there have already been expenditures of significant funds and resources. SB 430 will take affect immediately upon passage.

       In my opinion, this half page bill is a direct assault on the right of Oregon counties to self determination.  It is yet another attack on economic development in rural and small town Oregon. Destination resorts were designed in part to help our rural economies deal with the draconian economic losses inflicted by the spotted owl and the adoption of the Northwest Forest Plan. They were meant to provide a planned and controlled means to develop certain farm and forest land to help stimulate those rural economies.
 
       SB 430 stops that process in its tracks. It prevents the counties from growing their property tax base at a time when our economy is in free fall and the counties are struggling to maintain services. It thwarts the creation of thousands of jobs in the construction and building trades. Our rural unemployment rates are soaring in an upward spiral well into double digits with no end in sight. Oregon’s land use regulations and specious restrictions were instrumental in creating Oregon’s current economic and employment crises.

       This bill will certainly add more grief to that sad reality. Our office knows of at least five destination resorts in our own district that will be thwarted by this measure. In their zeal to lock up our resources and prohibit the development of our natural resources, the protectionists are destroying our state and national economies. The governor and other supporters of SB 430 do not seem to understand, or to care.

       SB 430 has not yet been scheduled for a hearing.

HB 2436 – Real Estate Transfer Tax

       House Bill 2436 creates a $15 “fee” for recording documents and deeds. It would create about $17 million in revenue during the 2009-11 budget cycle to be spent on various affordable housing programs.

       It is my understanding that a fee is a charge made to pay for a specific related service while a tax is a charge levied to collect revenue for unrelated purposes. If the charge established by HB 2436 was actually a fee, it would be levied for the purpose of paying for the service of recording documents in the deed and mortgage record. However, the entire revenue from this charge is to be deposited in accounts that are unrelated to the service of recording documents and deeds. It actually creates yet another unfunded mandate by prohibiting the county clerks from keeping even a portion of the revenue to pay for the service of recording documents and deeds. The fact of the matter is that HB 2436 creates a real estate transfer tax to develop a revenue source to be used to subsidize affordable housing.

       While HB 2436 may address a noble cause, the time to levy $17 million in NEW taxes is NOT when our economy is in free fall, when our rates of unemployment are in an uncontrolled upward spiral, and when our state faces a projected two billion dollar shortfall to maintain current services during the next budget cycle.

       HB 2436 passed out of the House on Thursday and was heard in Ways and Means this morning.
 
       For the reasons stated, I voted no.

Update on SB 5562 & SB 338 – Stimulus Package

       Thursday the Oregon House of Representatives passed Senate Bill 5562 and Senate Bill 338, which imposes $177 million of long term debt on Oregonians to carry out deferred maintenance on state owned properties.

       Although these bills are well intended to help create jobs, the methodology is fatally flawed. Many of the repairs are actually badly needed such as the remodeling of Owens Hall at OIT. Other projects are less pressing such as moss removal from the roof of an ODOT building. But borrowing money for operations and maintenance is not good fiscal policy. Amortizing the cost of maintenance over 20 to 30 years is certainly not acceptable in the private sector and should not be tolerated in the public sector either.

       The legislature had the opportunity to thoughtfully and prudently select infrastructure projects to invest in, that would have provided long term benefits and employment opportunities. For instance, the League of Oregon Cities provided a list of much needed infrastructure projects in virtually every town in all 30 Senate districts. The governor’s own Economic Revitalization Team had prepared a similar list. Sadly, these bills dedicate much of our remaining state bonding capacity to be used for short term projects with short term employment prospects.

        This stimulus package represents an opportunity lost.