Perceptions and misperceptions about Oregon's business climate

The Oregonian
June 4, 2010By Chuck Sheketoff

One rule for offering constructive criticism says to sandwich the criticism with praise.

So, I'll begin by praising The OregonIan's editorial board for its Tuesday editorial "To the bitter end, Oregon keeps kicking." The analysis of why Oregon must scrap its destructive kicker law so that it can build an adequate rainy day fund as a hedge against tax volatility was dead on.

Sadly (we've left the praise stage), the same sort of critical analysis was absent from The Oregonian's Sunday editorial "After 66 & 67: The blowback." This piece essentially argued that the self-serving perceptions of unnamed corporate CEOs matter more than the realities of Oregon's business climate.

The editorial trumpeted a recent Chief Executive magazine survey of CEOs on the best and worst states in which to do business. In the ranking, Oregon had the biggest favorability drop, from 24th to 38th best in the nation.

The editorial board called this "blowback" from Oregon voters' approval of the January tax measures. "Oregon businesses continue to feel bruised by the rhetoric and results of the campaigns for Measures 66 and 67," the editorial board wrote, and their "perceptions ... matter because they make critical business investment decisions and they influence others to do the same."

In other words, members of the business community are still fuming about the January vote and are badmouthing Oregon among their peers.

And the editorial board sympathizes with them.

Strangely, the board failed to examine whether reality matters. The reality is that even if you wrongly assume that taxes matter much when it comes to determining a state's business climate, corporate-funded studies have found Oregon to have low business taxes. The relatively small increases contained in 66 and 67 don't change that.

Proof that the CEOs' alleged "perceptions" are in fact misperceptions can be found in The Oregonian's own pages. News that companies like Solexant are choosing to locate here to take advantage of our clean water, cheap power, solid transportation infrastructure and high-quality workforce (not to mention quality-of-life amenities that can't be found in other states) show that Oregon's business climate is not defined by the grumblings of the losing side of a tax vote.

Consider also the example of a company that got its good start in business-friendly Oregon that recently moved its headquarters, Jive Software. The Oregonian reported that Jive's top brass stated that Oregon's tax structure did not figure into the headquarters decision. And guess what? Jive moved its headquarters to California, the state ranked dead last in the Chief Executive magazine survey on which the editorial board puts so much faith.

What other states besides the home of Silicon Valley rank among the five "worst for business" in the magazine's survey? Two notables are New York, financial capital of the U.S., if not the world, and Massachusetts, which is a technology and higher education hub that other states would kill for. So the facts show the Chief Executive magazine survey to be nothing more than self-serving perceptions of a mysterious group of corporate executives, detached from the realities of where and why businesses locate.

But if the editorial board would rather see Oregon do better in the survey in the future, it ought to counsel business leaders to get on the bandwagon to end the kickers and save unanticipated revenues in a robust rainy day fund.

When we have the adequate rainy day fund that the editorial board so well argues for (the sandwich of positive feedback), our business climate will be even better than it is today. Slashing budgets and raising taxes will not be the only options available during downturns. Then even Chief Executive magazine and The Oregonian's editorial board will have to acknowledge Oregon's great business climate.

Charles Sheketoff is executive director of the Oregon Center for Public Policy.

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