RoguePundit

A New and Unnecessary Fee for Some Oregon Businesses

There are a number of areas where the state could wisely spend a small amount of time and money on things that would benefit the environment.  Collecting greenhouse gas emission data from a select minority of businesses for a non-existent cap & trade system certainly isn't one of them.  But leave it to our job-destroying governor to push for it anyway.  

Oregon environmental regulators are proposing fees ranging from $54 to $6,000 a year for 180 businesses required to report greenhouse gas emissions beginning in 2010.

The Department of Environmental Quality's proposal would apply to sources from electric power plants to paper mills to landfills. It goes before the Environmental Quality Commission next month.

DEQ says the fees will pay for two staff members to implement the reporting program, provide workshops and technical assistance and audit emitters' reports. The agency's annual budget for greenhouse gas reporting is $330,000.

Costs for businesses are capped at the lower of 15 percent of the air permit fees they currently pay or $6,000, whichever is less. Fourteen businesses would pay the maximum $6,000 charge, DEQ says. Thirty-seven would pay less than $200.

Gee, let's raise the cost of doing business here in Oregon for absolutely no benefit....and sneak the proposal out just before Thanksgiving in hopes that no one will notice.  The goal is for it to take effect in just over a month.

What's the point of building a bureaucracy in anticipation of regulations that might someday be implemented?  And don't forget that in addition to paying the fee, the businesses will have to spend time and money getting folks trained, gathering and reporting the data, etc.

The best way to cut fat from the government is not to add it in the first place.

A "Bouncing Along the Bottom" Recovery

Earlier this week...

It's tempting to present the flattening of Oregon's unemployment rate--at 11.3 percent in October--as good news. But economists, dismal scientists to the core, paint a negative picture.

First, October's number--the same seasonally adjusted 11.3 percent as September's revised rate--remains stubbornly higher than the nation's towering 10.2 percent level.

Second, Oregon's jobless rate hasn't fallen from its 12.2 percent May high because employers have embarked on a hiring spree. On the contrary the state lost another 1,900 jobs in October, officials said Monday, following a revised loss of 6,000 in September.

Instead what appears to be happening is that many job hunters--retirees and nonworking spouses who dusted off resumes as the financial sector imploded and stocks plunged--are leaving the hunt. Their disappearance from the ranks of the officially unemployed lowers the jobless rate, said David Cooke, a state labor economist.

Considering that Kulongoski claims he's a "jobs Democrat" (previous blog here), guess we shouldn't be surprised by the following reaction to that data.

Oregon's recession is over. Or nearly over, state economist Tom Potiowsky declared Thursday.

While there's no state agency that officially designates Oregon either as in or out of recession, Potiowsky told state lawmakers "we have enough indicators that technically the recession has ended in Oregon or is about to."

Don't get too excited. Potiowsky also described the state's economy as "bouncing along the bottom." And it's likely to do that for a while.

Oregon economists are sticking with predictions of a "jobless recovery."

"Jobless recovery" is a noxious oxymoron.

By the way, if Potiowsky sounds familiar, he's the guy whose "accurate" economic forecasts have allowed Oregonians to receive several large kicker checks (previous blog here).

The Growing Renewable Energy Scandal in Salem

It's been obvious for years now that Oregon's Business Energy Tax Credit is a money pit.  Finally, the scandal is getting some legs. 

In a letter to two state agency heads, Kulongoski asked for recommendations on whether the increasingly expensive Business Energy Tax Credit "is necessary for continued economic opportunity in renewable energy and, more specifically, wind energy."

He said he wants the recommendations in his hands by the end of the month -- an unusually rapid turnaround for such studies. Lawmakers had been gearing up to reduce the tax credits when the Legislature meets in February.

The governor's request comes on the heels of an investigation by The Oregonian that revealed state officials downplayed the estimated cost of the incentives before they were expanded by the 2007 Legislature at Kulongoski's urging. It also comes as the newspaper is preparing to publish an investigation into the relationship between the tax credits and the wind energy industry in Oregon.

...

Since 2007, the cost of the energy tax credits has increased from about $10 million a year to an estimated $167 million for the 2009-11 biennium. Estimates for 2011-13 approach a quarter-billion dollars.

Regardless the lies regarding the anticipated cost of the tax credit, it's appalling that any of our legislators would ever vote for a subsidy without setting an upper limit.  There are only two possible excuses--incompetence and intent.  Governor Kulongoski, an avowed climate catastrophist (previous blog here), clearly wanted to spend as much as possible on the program...jobs were a secondary consideration at best.  Once the construction is done, it doesn't take many people to maintain and run a wind farm. 

And never mind the fact that millions were invested in wildly-speculative projects that are now mired in bankruptcy.  Of course, that's small change compared to the dangerously high-risk PERS investments that have tanked and cost the state billions.  Oh for a governor with some business acumen...Kulongoski has done a frightening job of helping to drive this state financially into the ground.  

"We're already clearly on record that there are issues that need to be dealt with," said Geoff Sugarman, spokesman for House Speaker Dave Hunt, D-Gladstone. "We are committed to fixing the issues."

Hunt is one of the many irresponsible legislators who voted for the uncapped tax credit.  Finally this year, he belatedly helped pass a bill (pushed by Sen. Ginny Burdick, D-Portland) that would have set a still-excessive limit of $120 million...which Kulongoski then got away with vetoing in August.  Yep, they're clearly on record.  

Warning, hold your watch up...

In his letter to Mark Long, head of the Oregon Department of Energy, and Tim McCabe, director of the Oregon Business Development Department, Kulongoski said recent changes in the economy and energy policies elsewhere should be factored into the review of the incentives.

"Our economy has begun to stabilize," he said. Furthermore, neighboring Washington has begun a phase-out of tax breaks for wind companies, and California has upped its requirements for renewable energy, which makes electricity produced by windmills all the more valuable.

- Our economy has begun to stabilize at an unacceptable level...maybe it's finally time consider spending our tax dollars in ways that would help create more jobs than do energy tax credits.

- Oregon's a leader...let's do what Washington is doing. 

- We'll just ignore the fact that California's utilities sign long-term contracts for wind energy.  Thus, it will be years until those wind farms can try to raise prices.

And remember that gubernatorial hopeful Bill Bradbury is another climate catastrophist.

Addicted to Gambling Addicts

Governments at the state and federal level make huge sums by taxing addictions.  Oregon's legislature is so addicted to those revenue streams that there's a constant battle to boost sin taxes, yet squeeze the revenue dedicated to prevention and treatment programs. 

Over the weekend, The Oregonian highlighted some rather impressive numbers regarding who generates how much of the lottery revenue.  

More than half the money the lottery collects from video gambling -- about $375 million last year -- comes from a small number of Oregonians, many with big gambling problems.

These gamblers tell the lottery they lose more than $500 a month, every month. They represent only 10 percent of Oregon's video gamblers but account for 53 percent of the money lost, according an analysis of three years' worth of the lottery's data obtained by The Oregonian under the state's public records law.

And then we were offered this absolutely ridiculous excuse.

"People in the Legislature have no idea about these numbers and the damage that is done to people's lives," says Rep. Carolyn Tomei, D-Milwaukie. "It's a message that frankly wouldn't be welcomed in the Legislature right now, because we've become so dependent on the lottery's money."

It must have been her week to be the designated liar.  The leadership in Salem knows...and chooses to not to rank the issue very highly.    

The lottery is a leading player in statewide campaigns to discourage problem gambling, and 1 percent of lottery profits cover all costs for all gamblers seeking state-funded treatment.

"We understand there is a portion of our players that have a problem with gambling," says Carole Hardy, the lottery's assistant director for marketing. "We try to educate them and their loved ones about what's available to help them."

But the lottery doesn't know how many of its players fit the profile of problem gamblers even though officials acknowledge there are ways to gauge that number. Despite spending tens of thousands a year to learn the habits of their customers, lottery officials don't ask the question.

...

State officials say there are about 74,000 problem gamblers in Oregon. To get that number, researchers ask questions such as: Are you borrowing money, lying, not paying bills, or losing time at work or home -- all to keep gambling?

And that number is obviously low, as many gamblers are in denial and can't answer those questions honestly.

About $11 million in lottery profits will go to problem-gambling treatment and prevention programs over the next two years. The lottery spends an additional $1.5 million a year on advertising to discourage problem gambling. Every video gambling machine has a sticker that tells people how to reach the state's hotline, 1-877-MYLIMIT.

The problem is that those ads are like the anti-smoking campaigns designed by cigarette companies...they know what doesn't work.

Less Customers to Serve

Many organizations outsource customer service operations.  This has been good for Sykes, a company of 33,000 employees which turned a profit last year of $60.6 million on revenues of about $820 million.  Its customer service center in Milton-Freewater OR--which is less than 10 miles south of Walla Walla WA--was growing last year.

Sykes Enterprises, Incorporated, a global leader in providing outsourced customer contact management solutions and services in the business process outsourcing (BPO) arena, hosted an Open House on Thursday, February 7, 2008 to celebrate it’s recent growth at it’s Milton-Freewater, Oreg. operations as the Company seeks to hire more than 400 positions within the next six months.

However, we learned this week...

Sykes Enterprises in Milton-Freewater could lay off 336 employees effective Jan. 15, 2010. But City Manager Linda Hall said the company may just be between big contracts and may not cut any jobs.

...

"According to the best information currently available, the layoffs are intended to be permanent," the notice said.

The 336 job losses include 302 customer service agents, 16 team managers and seven quality assurance technicians. Hall, though, said a call from Andrea Burnett, Sykes' director of marketing communications, alleviated some worry.

...

Hall explained Sykes was following the federal law that requires companies to issue notices within 60 days of knowing about a potential layoff.

This article provided further explanation as to why the mayor said "some worry."

Burnett said she didn't know if the company would offer severance payments to laid off workers. 

Unlike so many of the subsidies the state has lavished on green energy initiatives, the financial aid that helped lure Sykes to Oregon looks like it's paid off--even with the threat of layoffs.

Since the 1990s, state and local governments have invested $300,000 directly into the company to attract the jobs. Burnett wouldn't disclose the wages for those jobs. The direct state support includes a $200,000 forgivable loan from Gov. John Kitzhaber's economic development fund. Marc Zolton, spokesman for the Oregon Business Development Department,  said Sykes met job creation targets and the state forgave the loan.

The state also invested another $2.35 million  in infrastructure improvements to the industrial park where Sykes is located, Zolton said.

Would Oregon be one of the 10 states facing fiscal peril if Governor Kulongoski had spent our money on green initiatives more wisely?  Unfortunately with PERS, the answer would still be yes.

Ashland, Garbage, Trains, and PERS

Currently, Ashland Sanitary Service takes the city's garbage (sans recyclables like glass) to the Dry Creek Regional Landfill, which is owned by Rogue Disposal & Recycling.  Eagle Point is a lot closer to Ashland than Winnemucca NV.  Why that thought?

The Ashland City Council has cleared the way for Ashland Sanitary Service Inc. to be sold to Recology, a solid-waste collection company based in San Francisco.

Last month, I blogged about Recology--the former Norcal Waste Systems--working to get a major landfill approved near Winnemucca NV.  It's usually cheaper for waste companies to use their own landfills, even if it involves shipping garbage hundreds of miles.  From this link...

Recology intends to collect household garbage from San Francisco and about 50 other communities in Northern California and haul it over 300 miles of Union Pacific track to a mile-square landfill 28 miles west of Winnemucca.

Senator Harry Reid (D-NV) is still fighting the proposal.  He's encouraging state officials to deny the necessary environmental permits, and about three weeks ago...

The U.S. Senate has approved a measure sought by Sen. Harry Reid to study the environmental impacts of a proposed landfill near Winnemucca and tons of imported trash from California.

An amendment to the Interior Department's appropriation bill approved Tuesday night funds a study by the U.S. Geological Survey on seepage from trash at the site.

...

Reid says the study would evaluate how long it would take seepage from the dump to contaminate local water resources, and how far contamination would travel over the next two centuries.

Considering that the landfill would be lined, seepage wouldn't go anywhere unless the liner fails.  Nonetheless, studying that should stimulate the economy.

If Recology wanted to ship Ashland's garbage to Winnemucca by train, it would either first have to truck it over the Siskiyous or send it by rail via Eugene...the rail line over the Siskiyous is closed.  Though that rail line is owned by Union Pacific, it's operated by Central Oregon & Pacific Railroad (CORP).  From this link...

It's been [over] a year since the shippers coalition filed an emergency Petition for Alternative Rail Service with the Surface Transportation Board to allow West Texas & Lubbock Railway and Yreka Western to operate the Siskiyou Summit line.

The [Coos-Siskiyou Shippers Coalition has] been at odds with the CORP for nearly two years since the RailAmerica unit shut down the line connecting Coos Bay with Eugene and curtailed runs over the Siskiyou Summit between Weed, Calif., and Ashland. CORP hasn't run trains over an 85-mile stretch crossing the Siskiyou Summit since May 6, 2008, forcing Timber Products Co. and Roseburg Forest Products to rely on trucks between Northern California and their Southern Oregon plants.

...

"The 300 percent rate increases on the Siskiyou Summit that CORP threw at us in May of '08 would have prompted a long and costly legal battle to overturn," Ragon said. "Our issue was lack of service, but they turned it into a rate issue. The present system to challenge exorbitant rate increases provides no meaningful relief in a timely, cost-effective manner. Having better oversight by the Surface Transportation Board (STB) can only be a major improvement."

The STB has taken an unacceptably long time with this decision.  The eventual winner may eventually benefit from hauling Ashland's garbage.  If it's CORP...well, earlier today.

The stock opened at $14.35 a share on the New York Stock Exchange, down 4% from its initial public offering price of $15. A total of 22 million shares were sold in the offering, one million more than expected, at a price below its expected $16 to $18 range. It was trading recently at $13.98, down 7%.

RailAmerica owns and operates short lines, which are tracks that carry private facilities and plants' freight to major railways. Most of the freight hauled includes commodities such as agricultural products, chemicals and metals. Like most railways, RailAmerica has suffered during the economic downturn as manufacturing has slowed; carload volumes have fallen, and RailAmerica's revenue declined by 19% in the first half of the year.

...

Of the total shares in the IPO, slightly more than half--11.5 million--were sold by private equity firm Fortress Investment Group LLC (FIG), so those proceeds won't benefit the company. The extra million shares added to the deal after it priced below range went to Fortress, not the company.

Fortress took RailAmerica private for $1.1 billion in February 2007, delisting it from the NYSE and borrowing heavily to finance the deal. The company plans to use the proceeds it raises to pay down debt and for possible investments or acquisitions. Like many companies brought private by private equity shops in recent years, RailAmerica carries a heavy debt load of $714 million, or nearly 60% of its total capitalization.

Actually, Fortress--a publicly-traded manager of hedge funds--paid $639.3 million in cash for RailAmerica.  The company came with roughly $460 million in debt, which is how one arrives at the $1.1 billion purchase price.  In the IPO, Fortress sold 11.5 million shares at $15 per, which equals $1.725 billion.  Add the $714 million in debt, and Fortress essentially sold RailAmerica for $2.44 billion.  That extra $1.34 billion has to be enough for Fortress--which has been hemorrhaging cash (previous blogs here & here)--to have made a nice profit.  Meanwhile, it's obvious from the way the IPO sagged that the average investor isn't thrilled with how the economy and debt load will impact RailAmerica's future.

Fortress made that profit not just by stripping the fat from RailAmerica.  As Oregon has learned all-too-well, it also tried to railroad customers into paying much higher rates and subsidizing some of the track and tunnel maintenance.  Now, a weakened RailAmerica must pick up the pieces...which no longer include the Coos Bay Line and soon may not include the line from Ashland to Weed.

But, at least the IPO should have made PERS beneficiaries happy. PERS has a considerable investment in Fortress, so much so that the OIC helped bail out one of its investment funds that was being hammered by bad investments and thus redemptions (previous blog here). That's the OIC...supporting the few at the expense of the many.

Weak Economy, Weak Candidates

Winn Parish is a rural county in the timber country of north-central Louisiana.  Back when the housing industry was still booming, JELD-WEN (headquartered in Klamath Falls) committed to building a door factory in the county seat--Winnfield...which by-the-by was the home of the infamous Huey Long.  The factory was supposed to open last year; however...

[Louisiana Economic Development Corp] officials granted the extension for Jeld-Wen to finish a site where $85 million has been spent and $20 million more is needed, mostly for equipment, before the 75 workers can be hired with an annual payroll of $2.534 million.

Jeld-Wen now must hit those targets by 2012 and maintain them a year longer to qualify for state economic development aid of $750,000 for a road and water and sewer services at the site.

Louisiana also committed $3.19 million in Enterprise Zone and other state incentives to the project.

The slow economy has driven JELD-WEN to lay off a number of workers at several of its facilities.

Ron Saxton, an executive vice president for external affairs at the privately held firm, said a dreadful housing market has delayed the Winnfield plant. Housing starts of 2.5 million a year when the project was announced plunged to annual rates as low as 500,000 this year and prevent the plant from operating now, he said.

"We just can't do it," Saxton said.

"We'll survive this economy. We’re not going to be filing any bankruptcies. But I’ll be honest with you, it's a really, really tough time. We’re holding on by our fingernails."

Yes, that Ron Saxton...one of the Republicans who lost to the seat-warmer between our previous and probably future governor, Dr. Kitzhaber. 

It's a sad state of affairs that Oregon's Jimmy Carter could get yet another shot to prove that considerable intelligence doesn't guarantee even modest managerial or leadership skills.  For instance as I've noted before, when Governor Kizthaber was inaugurated, Oregon had an unemployment rate of 4.9%, which was lower than the national rate of 5.5%.  By the time he turned over the keys to Governor Kulongoski, Oregon's unemployment rate had risen to second highest in the nation.  Maybe that's why Kitzhaber was ahead of his time in lying to us about the cost of providing health care to the uninsured.

The political careers of Goldschmidt's cronies need to finally be put to rest.

Compensation Inflation

Gee, if we pay more, will the DEQ's e-mailing capability improve?

Monday, [County] Commissioner Sandi Cassanelli received e-mail notice of a potential 60 percent increase in fees from the Oregon Department of Environmental Quality, which regulates the siting, construction and inspection of septic systems statewide, and administers that work directly in 14 of 36 counties, including Josephine County.

Mike Kucinski, manager of the DEQ's septic system program, wrote Cassanelli that "we were recently made aware that you were not on the mailing list for our current rulemaking announcement that proposes to increase application fees. I sincerely apologize for this oversight."

But she still had to ask him for an extension to the Friday deadline.  We now have until October 9 to register any futile objections to this done deal.  The 60 percent increase will keep our manning at 2.5 positions.

According to state officials, costs to operate the program have increased more than 40 percent since 2000, and are expected to continue to rise. Because of the continuing shortfall, the Legislature this year approved DEQ's request to increase fees by 40 to 60 percent, with the understanding that the new fees will take into account rising costs through 2015.

Inflation since 2000 hasn't gone up anywhere near 40 percent.  It's health care and PERS that are driving this huge cost increase...but we're supposed to ignore the latter part.  Wonder what DEQ will do with the windfall?

School Districts Making Us Pay to Sue Ourselves

It's a sign of failure whenever one government agency sues another.  There are all sorts of causes, including badly-written laws, agencies which can't or won't compromise, defending or trying to expand one's turf, an unwillingness to live within one's means, on and on.  It's all unnecessary...or at least should be.

My local Three Rivers School District was one of several that combined to sue the state over the amount of school funding provided by Salem (previous blog here).  To recap...

On March 21, 2006, six school districts and three parents, on behalf of their school-age children, filed a school funding case against the State of Oregon and legislative leaders. Based on the state constitution’s requirements to provide “a uniform and general system of common schools” and to appropriate funding “sufficient to ensure that the state’s system of K-12 public education meets quality goals established by law,” plaintiffs are asking the court to declare the current finance system unconstitutional and order the state to create and fund a constitutional system.

In the Pendleton School District v. State complaint, plaintiffs point, inter alia, to the Quality Education Model (QEM) created by the state’s Quality Education Commission. The legislature established the Commission to determine – using the QEM – the specific qualitative changes and funding required for Oregon’s schools to be able to attain the education goals set by the legislature in 1991. Plaintiffs allege that the state has fallen far short of reaching the funding levels required by the model.

The school districts claimed that they wouldn't spend any school resources in pursuing the case, as a new non-profit, the Oregon School Funding Defense Foundation, would reimburse any costs.  That was never completely true, but at least it wasn't tone deaf.  And never mind the fact that Oregon taxpayers would end up bearing the cost of both defending and adjudicating the lawsuit.  More on that in a moment. 

The lawsuit was a fishing expedition.  Early this year, the Oregon Supreme Court confirmed that the QEM is an accountability check, not a funding requirement (previous blog here).  Yes, the state failed in its Constitutional requirement to provide what's defined as adequate school funding, but that doesn't automatically mean that the schooling itself was inadequate. 

Flashing forward to today...

In a final note on its ruling the Legislature failed to adequately fund public schools from 2005 to 2007, the Oregon Supreme Court has denied attorney fees to the school districts that sued the state.

In a sharply divided opinion, the court awarded the schools $1,056.55 to pay the costs of filing the paperwork in the massive lawsuit but denied them more than $100,000 in attorney fees.

Ahhh...the school districts were going to pay for this, at least if they could backdoor the Oregon taxpayers for the legal fees.  Wonder who's going to pay now?  If the Oregon School Funding Defense Foundation is out of cash, will this money end up coming out of school supplies, maintenance, etc. in our school districts? 

The taxpayers should have never had to spend a dime on this idiotic intergovernmental warfare.

Job Openings on the Grants Pass City Council

In the last few months, many JoCo residents have gone from being embarrassed at the quality of our county government to glad that it's not as bad as the cesspool in Grants Pass.  There's been all the drama with multiple city attorneys, the botched firing of the city manager, meetings that shouldn't have been closed, spending like the city was a little Ashland, myriad claims of a hostile work environment, on and on.  At least some of the responsibility had to lie with the city councilors.

This isn't Portland...a recall effort was a foregone conclusion.  The fates of five councilors rested with the voters, and yesterday the majority (of the meager 41.35 percent who voted) sent them packing. 

Lisa Berger..........58.2 - 41.8

Bill Kangas...........52.8 - 47.2

Rob Pell..............54.8 - 45.2

Mark Townes........52.9 - 47.1

Ward Warren........56.2 - 43.8

I know a couple of them casually...nice folks.  But plenty is rotten in the halls of city government.  I'm not convinced the voters have gone far enough.