The Politics of Fear
(Speech to the Eugene City Club, March 26, 1999, Oregon Public Broadcast radio, and reprinted Oregon Planners' Journal ,March/April 1999).
By Richard Carson
If you are here to listen to an argument simply about the cost of growth, then you aren't going to hear it from me. There have been three studies done in Oregon - mine, Eben's [Fodor] and the one done by Governor Kitzhaber's Task Force on Growth. When you adjust my estimate up to current dollars, it works out to about $24,000 per new single family residence. If you adjusted Eben's estimate down from $33,000 - by taking out the rate-payer funded private utility costs - then you would get about $24,000.
That leaves the Governor's task force. They did no original research - and in fact, their main recommendation was to undertake a "more thoroughly" researched report to answer the question, "Who should pay for growth." But, the good news is I can spare them the trouble - because I have already done it for them.
However, the task force report did cite the work by ECO Northwest and W&H Pacific - who put the cost at about $33,000. They also cite studies for Texas, Virginia and New Jersey that push to the cost of growth up to $50,000.
So to summarize, the low-end cost of growth of the estimates are tied to the Oregon specific work of Eben, myself and ECO Northwest. The high-end estimates are taken from out-of-state studies - that don't equate to the Oregon experience. Much of the Oregon experience is about using growth management to create a compact urban growth form and to decrease infrastructure costs.
So what is the answer to the question, "What is the cost of growth in Oregon?" It is probably around $24,000-33,000 per single family residence.
However, what I have really come to talk to you about the implications of asking and answering this question. This is not a discussion about dueling economic data. The real implications are that there are hidden political agendas behind the numbers. The real questions that need to be asked are:
- How much of the cost of growth is actual being paid?
- Who should pay for and how do we pay for the fiscal shortfall?
- And finally, is the cost of growth even the real issue? Or is there something else going on?
The first question - how much of the cost of growth is being paid for - is the major distinction between my work and the research of others. I asked this question because it is a simple municipal budget question. I have worked in local and state government for 25 years. We, unlike the "no growth" folks - are required by law to answer this question.
Just asking about the cost of growth is a worthless, one-sided question. You see, we local government types - unlike the no-growth folks - are required to balance our budgets. The no-growth folks act like an adolescent child who claims they can't be out of money because they still have checks left.
If they tell you only about the cost of growth, that's because they hope you are not smart enough to ask the budget question and simply believe that no one is paying for it. The fact is that 59 percent of the cost of growth is paid for by the developers. This is done by having them pay for all of the on-site infrastructure cost - such as the roads, sidewalk, water and sewer systems... and also paying system development charges or SDCs -- for the off-site water, sewer, storm water, street and park systems.
So who should pay for the 41 percent shortfall? I would argue that part of this cost - or 13 percent - should he paid by the state. The state currently funds 70 percent of the school district costs statewide. I argue that the state should pay their fair share through corporate and personal income taxes.
That leaves 28 percent of the cost of growth - or less than 1/3 - that is not being collected today by local governments - and this could be paid for by the development industry. About 8 percent could be easily collected by local governments today, but is not because they don't have the political will to collect all the SDCs they should.
In the end, there is about 20 percent of the cost of growth that can't be collected. This is because the Republican legislature has put prohibitions in place to make sure it isn't collected. For example, cities are expressly prohibited from collecting SDCs for schools, police, fire, and the libraries. They are also prohibited from collecting what is called a Real Estate Excise Tax - or a tax on the sales of real estate. Washington County collects such a growth tax today, However, their adopting this tax resulted in a legislative moratorium being created to stop the rest of us from ever trying.
How do we pay for the shortfall? Currently the voters and elected officials of most jurisdictions have decided not to pay for the cost of growth. Or to be more accurate, we are "subsidizing" it through the deferred maintenance of our infrastructure and by lowering our "levels-of-service" by reducing the library's hours of operation and the emergency response times of our police and fire personnel.
If we truly want to pay the cost of growth, then having our legislature lift the prohibitions on both SDCs and the Real Estate Excise Tax is a great start. However, cities also have another tool at their disposal that they don't use. I think we should tax the windfall profit made by property owners at the point of. The government alone creates value for the property owner through the simple legislative act of moving a line during annexation toto the urban growth boundary and to the incorporated area of the city. In total, this added value is about $53,000 per acre. I suggest the government levy an assessment of about 1/3 that value or about $18,000 per acre for the privilege of buy-mg into the existing urban services. I estimate that $18,000 per acre covers the 20 percent of the unfunded cost of growth that governments are prohibited from collecting today.
Finally, there is the politics of growth. What do Bill Sizemore -- head of Oregon Taxpayers United -- and Andy Kerr; former head of the environmentally litigious ONRC, and now poster boy for the "no growth" movement -- have in common? Actually quite a lot.
In the last few years, the anti-government movement and the anti-growth movement have discovered that their constituencies are merging. You see, their membership bases have the common characteristic of being provincial xenophobes who are afraid of change, and specifically the immigration of foreigners into Oregon. These folks have come to a truly insightful, yet warped conclusion that if they can reduce planning and taxation, then they can effectively' make Oregon a place that newcomers won't want to live in. We have become a state that has replaced the phrase "kill the lawyers" with "kill the planners."
The political twins against progressive government are Bill Sizemore and Andy Kerr. The battle being waged today in Oregon, over the cost of growth is not the same as it was in Torn McCall's day. The answer then was to create a statewide land use planning system to manage growth. The answer today is that they must destroy land-use planning and government financing in order to further the politics of fear
It is like the story of the taxidermist and the veterinarian who went into business together. Although it was an odd business partnership, they did come up with a catchy business slogan: "Either way you get your dog back." That is what the union of these two forces is doing to Oregon. In the end, they will give us a stuffed dog.
And what is the politics of fear? In the past, the unhappy folks had lots of people to blame for the miserable condition of their lives. But today they have limited choices. It is against the law to blame people simply because of their race or religion - and even the commies are gone. So who's left? Why developers, government bureaucrats and of course those worthless Californians. Why blame Californians? Because they are unfairly taking advantage of us - they are ruining Oregon ecologically and financially.
Of course, these anti-everything folks intentionally ignore the fact that we are all immigrants, or the sons and daughters of immigrants. In 1850, the first census found 25,000 people living in Oregon. Half were native-American and half were immigrants. After 150 years, we approach the end of the 2nd millennium -- and another census -- only to find more than 3.2 million people living here - 99.9 percent of them of immigrant stock.
It is as the great sage Pogo told us on Earth Day of 1971, "We have met the enemy - and he is us!"
When Andy Kerr tells the Governor's Task Force we must stop growth in Oregon, then I have to agree. Why doesn't Andy just volunteer to leave? Wouldn't that be the intellectually honest thing to do? Think what a great place Oregon would be to live in without Andy Kerr, Bill Sizemore and their small-minded friends! Oh well, I am having way too much fun with this. It's time to wrap up my comments.
Richard Carson is the managing editor of the Oregon Planners' Journal.