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Portland’s bus pass giveaway cost taxpayers over 3 million

September 4, 2009

By Dr. Eric Fruits
Econinternational

The Portland mayor announced that the City Council has entered into an agreement with TriMet in which the City provides free bus passes to 14,000 students in Portland Public Schools. According to the agreement (pdf), the estimated cost of the program will be $3.64 million and will take advantage of the state’s large and growing subsidies for “green” projects to fund the giveaway.

Oregon’s green subsidies come in the form of tax credits. Corporation that use the credits can reduce their tax bills. Organizations that do not pay taxes—such as local governments and nonprofits—can sell the credits to corporations that have a tax obligation, thereby reducing state income tax revenues. This means that local initiatives like the Portland’s bus pass program reduce the amount of corporate tax revenues the state government collects. This puts pressure on the state to increase personal and corporate income taxes and diverts funding from other state programs, such as K-12 classroom instruction.

A study commissioned by Oregon’s Department of Energy found that bus pass projects that qualify for the tax giveaways actually have a net negative impact on employment and income. In other words, the projects take away more jobs than they create.

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