“He knows nothing; and he thinks he knows everything. This points clearly to a political career.” Thus said George Bernard Shaw, but he said it at a time when women could not yet run for office. Since then, women everywhere have obtained the vote; in Oregon we’ve been electing them to statewide offices for over a century. Screen shot 2013-05-23 at 7.41.32 AMHas this raised the competence of our political class? Just last week I stumbled over anecdotal evidence that provided little hope. That was the testimony in Salem by our newly-elected state representative Caddy McKeown, whose resumé of “public service” includes the Coos Bay port commission, where she served as a cheery cheerleader for former port manager Jeff Bishop’s multiple flops, including his mythical container terminal, his stillborn coal export terminal, his highly unpopular LNG terminal, and his much-ballyhooed, resurrected railroad. None of those debacles caused Caddy’s support for the Port to waver. When the railroad purchase was finally in the bag, she even raised herself to the stature of a Coos Bay Churchill, with the auto-exaltation: “This happened with a lot of blood, sweat and tears.”

We don’t pay, we only spend

The hearing at which Rep Caddy testified on May 15 was about a proposal, HB (House Bill) 3276, to create a tax exemption for the Port’s railroad. It seems that last year a few property tax bills found their way into the Port’s mailbox, and the Port is not used to paying taxes, only receiving them. Since its railroad acquisition runs from Coquille to Eugene, and traffic on the line is being run by a private company, the property tax bills came from Coos, Douglas and Lane counties, demanding sums which came to about $183,000 for the year, all told. What, a drop in the bucket, you say, after all the tens of millions in state and federal funds that have come to the Port already, to buy and fix that rusty relic? Isn’t it high time for the Port to “give something back to the community”? [audio:SenateHearingRailLink.mp3]Uh, no; and that’s why Rep Caddy promoted her bill with the Legislature, in a 25-minute hearing before the Senate Finance and Revenue Committee. You can listen by pressing the play arrow.

One odd aspect of that hearing was the participants’ vagueness about the actual amount of the property taxes to be forfeited by the three counties, if the legislature passed the bill. At its introduction the bill was described as having a “minimal fiscal impact” of a mere half million over its ten-year-lifespan (it has a sunset clause). Half a million is not minimal except for those who work in government, which may help explain why state spending has tripled during the last twenty years. But then, toward the end of the hearing, someone else said that the half million would be the average amount of taxes forfeited per biennium. Given that the first year’s tax bills came to $183,000, that makes more sense, and with the automatic annual increases that could well add up to five million during the ten years. Hopefully five million would seem less “minimal” and hopefully, with all the predictions of doom for county finances, five million would get some consideration. After all CORP, the railroad’s former owner, WAS paying taxes.

But instead, the three counties’ future revenue losses were buried under a slurry of high-minded drivel. The purpose of the bill was not to escape paying taxes but

“to encourage infrastructure investment . . . by ports in Oregon that help to retain and improve competitive multi-modal transportation connections for Oregon communities and businesses. The investments will lay the groundwork for future economic development related to industrial and natural resource commodity movement.”

Ah yes. Why is it that when government talks about “investment”, I get this weird feeling that we’re really talking about wasting large sums of money? And while the bill spoke of encouraging infrastructure investment “by ports in Oregon”, the fine print left no doubt that it applied only to Coos Bay. All these legislators wanted to do was pour more public money into that bottomless pit, the Port of Coos Bay. And the biggest laugh may be the bill’s prediction that these “investments will lay the groundwork for future economic development”. Screen shot 2013-05-23 at 7.56.06 AMThis echoes the Port’s claim, back when it was on its unstoppable campaign to buy the railroad, that rail was essential to attract more industry to Coos Bay. When CORP was still running the line, it did not attract any. Why would the future be different from the past? Clearly, the purpose of resurrecting the railroad was to provide corporate welfare to a very small number of existing local industries, thereby achieving the Port’s real goal. That goal was to avoid its own extinction by sucking up to the local power structure. Rep Caddy’s praise for the local mills’ patience in waiting for her train seemed to be part of that: . . . We are very, very fortunate that we have industry on our line that was willing to hang on by their fingernails through these very difficult times,” she gushed. I’ve spent a lot of years in Coos Bay, but I’ve never heard of a money-losing lumber outfit that hung on by its fingernails for five and a half years.

As is customary with arcane money measures in Salem, all the testimony came from a few insiders, all of whom spoke in favor. The insiders were Senator Arnie Roblan, Rep Caddy, and Martin Callery of the Port. “Since the acquisition we invested almost $30 million in the rehabilitation of the rail line,” Callery told the Finance Committee. He was being modest, or perhaps he didn’t want to press his luck. Before the Port got that $30 million in repair funds from the state and the feds, it had already spent $6.5 million for a brand-new railroad spur on the North Spit, to haul lumber from a mill that employs eight people, plus $8 million for a temporary “band-aid” repair job for the very old and very rusty Coos Bay railroad bridge. All that money, from state and federal sources, had been spent before CORP abandoned the line in 2007. At that point the Port, now highly but quietly embarrassed, felt it HAD to acquire the entire line, which was done by spending $2 million for high-priced lawyers from D.C. to argue that CORP should give it to the Port for free. That did not fly, and the Port had to pay $16.6 million for it, again from state and federal sources. Adding all that money to Callery’s $30 million makes over $63 million of public funds, spent by politicians who furiously rebuffed CORP when that company, back in 2008, offered to get the line moving again for $23 million raised by a “public-private partnership,” in which the port, the state and the shippers each would contribute $4.5 million, as would CORP. And at the recent hearing, Callery admitted that $30 million (actually $63 million) will not be the end of it. A lot more money will be needed, one reason being that the Port has used a large federal grant, intended for a second repair job on the bridge, to pay for CORP’s railroad instead. This may explain why, when the Port’s first little choo-choo engine drove across that bridge a few months ago, it was shadowed by a boat in the water below, just in case there was a major breakthrough. No wonder Callery talked in terms of “. . . if at some point the line becomes a viable piece of rail infrastructure . . .” If that doesn’t betray the utter lack of consideration spent on this railroad acquisition, I don’t know what does. Well, actually I do, because there is more.

Turning Coos Bay into San Francisco

Rep Caddy’s speeches are odd combinations of schoolmarm-lecturing, valley-girl-talk and gullibility. Proving the latter, she proclaimed the old, tired cliché about Coos Bay being “the only deepwater port between Seattle and San Francisco.” We needed to “re-energize this wonderful asset,” and the railroad was “a critical piece of us re-establishing the Port of Coos Bay in a way that is viable and bring that industry back that we lost.”

She doesn’t seem to know it, but nearly every water-filled hole on this coast has compared itself to San Francisco. Consider: starting 250 miles to the south, the Port of Eureka has long called itself “the best natural harbor between Coos Bay and San Francisco.” Closer to home, Port Orford was once promoted as “the best and most capacious roadstead or summer harbor between San Francisco and Puget Sound.” Screen shot 2013-05-23 at 8.00.03 AMCloser yet, Floras Lake (Yes, Floras Lake!!!) was being promoted around 1900 as “The best harbor on the Pacific between San Francisco and Seattle. . .” (That was with the assumption that a canal could be dug to connect the lake to the ocean, which proved impractical.) North of us, the Port of Newport used to be promoted as “the San Francisco of the Northwest.” Further north yet, John Jacob Astor, the founder of Astoria, predicted that his town would become “more important that San Francisco in the movement of cargoes to and from the Pacific Coast.” Continuing on to Grays Harbor in the state of Washington, you will find the same history of promotional blather. But by now most of these northwest ports have realized that their San Francisco aspirations are pretty silly. One reason may be that as a port, San Francisco itself no longer amounts to much. The development of container shipping has moved most ship traffic to Oakland. The other reason is that unlike Coos Bay, other northwest ports have accepted that their past prosperity was entirely due to the lumber industry’s need to ship out its products, and the lumber industry would never again be what it was. So they accepted reality and moved on. Those were wise decisions, since the one port that didn’t move on, Coos Bay, is a sorry sight to see. Coos Bay’s incurable obsession with its “deepwater port”, and with bringing back heavy industry, has made it the only economic disaster area in all of thriving western Oregon.

Talk, talk, talk

Some fine but distant day, a scholar may work up the nerve to publish his finding that although electing women has not boosted effectiveness in high places, it has done wonders for talkativeness. When Arnie Roblan tried to get in a few words, this is what happened:

(Arnie Roblan:) “When the rail was embargoed we first had to find the money to buy it – and they had to be willing to sell it so that took another whole process – but the reality was it took three times in the history of rail or – four –
(Caddy McKeown:) Would you like me to comment for just a moment?
(Arnie Roblan:) Sure –
(Caddy McKeown:) I didn’t want to go into too much detail and take up your valuable time but it was a very interesting process by which we acquired this piece of property – when the railroad was embargoed it put our shippers at a tremendous disadvantage – with no notice, we had one day’s notice, the rail was shut down – we have a number of shippers on the line – primarily timber products but we also had organic grain for our dairy farmers, American Bridge, which is a company that moved out to Oregon, their headquarters is in Pittsburgh so they could take advantage of manufacturing opportunities on the West Coast, they were moving their feedstock in and their components out on rail to build bridges all around the West Coast – they’re actually building the components for the Milwaukie rail bridge now, all of those things . . . ”

Instead of taking just a moment of Roblan’s time, without hardly taking a breath she monopolized the conversation for close to five minutes, hopping from American Bridge to the Surface Transportation Board to Roseburg Timber to replacing 96,000 railroad ties, but all of it had the same characteristic that has given old-fashioned light bulbs a bad name: producing more heat than light. And then she did it again.

Saving corporations from their own mistakes

For us taxpayers, the most appalling aspect of hearings like this is not the superfluous talk, but the fact that nobody, but nobody, ever talks about cost-effectiveness, or about the wisdom of NOT spending all this money in yet another attempt to walk backwards into the future.

Take one small example from Rep Caddy’s soliloquy: the organic grain the railroad used to haul for local dairy farmers. That never amounted to enough carloads to make a noticeable contribution to the railroad’s need to generate revenue. At one time this railroad carried 40,000 carloads a year. It was down to about 5,000 when CORP threw in the towel.

And then she mentioned American Bridge, a company about whose sanity I have wondered ever since it decided to come to Reedsport ten years ago. When construction of its plant started on a former waterfront mill site with a barge slip and a railroad spur, the project manager gushed that they had chosen that site for its “. . . ability to transport both supplies and finished products to and from Reedsport by road, rail or sea.” Obviously American Bridge had not done its homework, or it would have known that Congress had been threatening to reduce dredging for small West Coast harbors for years, so the handwriting was on the wall for many of those including the Umpqua channel to Reedsport.

Screen shot 2013-05-23 at 8.05.18 AMBut apparently American Bridge had given no thought to the local railroad’s long-term viability, either. In the year it built its plant, 2003, that railroad’s carloads amounted to 7,600, and a little bit of investigatory zeal could have shown that its largest customer, the Weyerhaeuser containerboard mill on Coos Bay’s North Spit that had generated 3,000 carloads, was in a declining industry which had seen plant closing after plant closing for over a decade. After being in a temporary closure, Weyerhaeuser also shut down permanently, that same year. And American Bridge’s expected use of the railroad would not even come close to replacing that mill’s transportation needs; the company expected to use between 50 and 150 carloads a year. Why didn’t it build in a place with more reliable connections? A healthy economy should not protect people from their mistakes; they’ll just make more, and the country’s productivity inexorably declines. Besides, it is clear that even though the bridge fabricator has been “saved” at incredible public cost, nobody is making any bets on the railroad’s existence, say, ten years from now. The Port itself has said that it will only continue to operate if traffic can be boosted substantially. Like every other local “development” scheme I have studied, this one raised the question if throwing all that money out of an overflying helicopter would not have produced better results.

Well – maybe we get the politicians we deserve.