The Oregon Biz Report - Business News from Oregon

José Pinomesa, Chairman
Oregon Independent Auto Dealers Association

If you look around you will see Toyota models everywhere and more than likely if it is a late model it is included in the recall.  If it is an older one then it is not included.  If you are the owner of a recalled Toyota then everything is going to be okay.  Don’t get me wrong because brakes that don’t work and accelerating vehicles do not make consumers feel safe.  If you look at the total number of claims you will find that it is a very small percentage of cars (less than 1%) that actually have a claim where something really went wrong.  If you have a Toyota that is included in the recall do not go and sell it for a loss.  If you are looking for a deal then maybe buying a new Toyota or another brand that is competing with Toyota could be a good thing to do right now.

Fasten Your Seatbelts: President Obama Makes Recess Appointments to National Labor Relations Board
By Wayne D. Landsverk, Frank Van Dusen
Miller Nash LLP,
Oregon and Washington Law Firm

On Saturday, March 27, President Obama announced recess appointments for two Democratic nominees to the National Labor Relations Board (“NLRB”), including a controversial union lawyer whose published views on labor law and policy have alarmed many observers. The recess appointments are valid until the end of 2011 or the Senate confirms an individual to the seat in question, whichever comes first. The news was cheered by unions and caused the U.S. Chamber of Commerce to put business on “red alert.”

The recess appointments to the NLRB are Democrats Craig Becker and Mark Pearce. The President did not give a recess appointment to the pending Republican nominee Brian Hayes. The result is that the Obama board now has four members—three Democrats, including current chair Wilma Liebman and one Republican, Peter Schaumber, whose term expires in August 2010. Starting today, and for the foreseeable future, this new NLRB majority can be expected to move forward with a pro?union agenda.

Oregon #9 in Foreclosures but #37 in Home Insurance Costs
By Oregon Tax News,

Oregon ranked as one of the top 10 states with the highest foreclosure rate in the nation according to a recent survey.  Earlier this year, RealtyTrac, the leading online marketplace for foreclosure properties, released its January 2010 U.S. Foreclosure Market Report listing 315,716 default notices, scheduled auctions and bank repossessions on U.S. properties during the month of January alone.  Despite the daunting number, this is actually a decrease of nearly 10 percent from December 2009, but 15 percent above the level reported in January 2009. The report also shows one in every 409 U.S. housing units received a foreclosure filing in January.

Nevada, Arizona, California and Florida are at the top of the foreclosure list.  Despite a year-over-year decrease in foreclosure activity of nearly 18 percent, Nevada’s foreclosure rate remained highest among the states for the 37th straight month. One in every 95 Nevada housing units received a foreclosure filing during January 2010.  This is more than four times the national average.  Oregon is not far behind.

U.S. Chamber Statement on Financial Regulatory Reform
By US Chamber of Commerce

WASHINGTON, D.C.-U.S. Chamber of Commerce Executive Vice President Bruce Josten today responded to remarks by Deputy Treasury Secretary Neal Wolin that politicized the debate on financial regulatory reform and distorted the facts. “The U.S. Chamber is committed to a bipartisan effort to modernize and strengthen our broken regulatory system, restore investor confidence, and get Main Street America back to work,” said Josten. “Despite the political grandstanding and distortion of facts today by Secretary Wolin, the U.S. Chamber of Commerce is in lockstep agreement with the Deputy Secretary on one point:  facts do matter.”

Beware of IRS’ 2010 “Dirty Dozen” Tax Scams
Internal Revenue Service,

WASHINGTON — The Internal Revenue Service today issued its 2010 “dirty dozen” list of tax scams, including schemes involving return preparer fraud, hiding income offshore and phishing. “Taxpayers should be wary of anyone peddling scams that seem too good to be true,” IRS Commissioner Doug Shulman said. “The IRS fights fraud by pursuing taxpayers who hide income abroad and by ensuring taxpayers get competent, ethical service from qualified professionals at home in the U.S.” Tax schemes are illegal and can lead to imprisonment and fines for both scam artists and taxpayers. Taxpayers pulled into these schemes must repay unpaid taxes plus interest and penalties. The IRS pursues and shuts down promoters of these and numerous other scams. The IRS urges taxpayers to avoid these common schemes:

Return Preparer Fraud

Economic Effects of Health Care Reform: Insurance Costs with Pre-existing Conditions
By Bill Conerly,
Conerly Consulting, Businomics,

Today’s topic is health insurance cost impacts due to the access provisions.  The new bill mandates “immediate access to insurance for uninsured individuals with a pre-existing condition,” and eliminates “pre-existing condition exclusions for children.”  (I’m working off a summary, being no more inclined to read the entire document than any of our elected officials are.)

Why do insurance companies exclude pre-existing conditions?  We economists call it “moral hazard.”  If people have a choice about whether they buy insurance or not, then those most likely to buy it are those who are sick or going to be sick.  This self-selection of the sick is mostly avoided through employer-provided health care.  When everyone who works at the ABC company gets health coverage, then there’s less chance that only sick people are buying coverage.  However, notice that I said “mostly avoided,” because today people who have pre-existing conditions, or suspect they are likely to get sick, seek out jobs with good health care coverage.

Native Oregonian Greg Zerzan, former Acting Assistant Secretary of the United States Treasury, wrote an excellent review of the financial reform bill that was featured in teh Wall Street Journal.  Here is his review:

Greg Zerzan– On Monday the Senate Banking Committee passed the “Restoring American Financial Stability Act of 2010″ on a 13-10, party-line vote. The legislation, drafted by committee chairman Chris Dodd, gives the Federal Reserve power to regulate any large company in America. When considered alongside similar legislation that passed the House of Representatives in December, at least part of the intent of the bills’ sponsors becomes clear. The current proposals for “financial” reform are stalking horses allowing government intervention into virtually every facet of the U.S. economy.

The bill that passed the House proposed to create a systemic risk regulator with the power to look into any company in America to determine if it poses a “threat” to the economy. If so, the bill gave the Federal Reserve power to order the company to segregate its financial dealings into a separate business to be regulated as a bank holding company. Remarkably the provision was aimed not just at financial firms like insurers or securities and investment businesses. Under its terms the bill would apply to potentially every large company in America, no matter its primary line of business.

New Obama Health Care Bill Explained 2010
Barran Liebman LLP
Oregon Law Firm,

3/22/2010- In what is being called a landmark move, the House of Representatives voted to pass the Senate’s health care bill along with a budget reconciliation bill containing several important changes on Sunday night. The Senate’s bill will now progress to the President for signature while the Reconciliation Bill will move to the Senate for vote. The Senate has assured the House that it plans to approve this bill, so we expect these bills to be the final word on health care (for the moment at least).

We’ll be conducting a seminar on April 13 to address the specifics of the new health law, but a brief summary of the key issues for employers follows. Each of these points includes the Reconciliation Bill changes, and each relevant effective date is noted in parentheses.

•    Employers will not be required to provide health coverage, but employers with 50 or more full-time employees may be subject to penalty payments if their employees use federal subsidies to buy insurance (2014)

States Consider Holding Tax Returns to Save Money
– New York’s Governor Paterson froze $500 Million in refunds
By Oregon Tax News,

USA Today reported that California, Hawaii, Alabama, North Carolina, Kansas, Idaho and New York are considering delaying issuing refunds because the states did not have the cash on hand to cover the costs.  The delays come as states continue to face deep budget holes.  While some economists say the say the nation as a whole is recovering, a recent report conducted by the National Governors Association said state fiscal conditions continue to worsen, and that state revenues will likely lag one to three years behind a national recovery from recession.

California delayed tax refunds and issued billions of dollars in IOUs to vendors and others who the state owed money because of its massive budget shortfall that exceeded $20 billion last year.

Workplace deaths continued to decline over past decade 2009 figure ties record for lowest in Oregon history
By Oregon Department of Consumer and Business Services

(Chart by Oregon Business Report)

(Salem) – Thirty-one people covered by the Oregon’s workers’ compensation system died on the job during 2009, the Department of Consumer and Business Services (DCBS) announced.

Top 50 list of the Forbes Billionaire list.
Full list here.

1. Carlos Slim Helu & family, Mexico, 53.5 (Net worth)
2. William Gates III, USA, 53
3. Warren Buffett, USA     47
4. Mukesh Ambani, India     29
5. Lakshmi Mittal, India     28.7
6. Lawrence Ellison, USA, 28
7. Bernard Arnault, France  27.5
8. Eike Batista, Brazil     27
9. Amancio Ortega, Spain     25
10. Karl Albrecht, Germany     23.5

- Fewer Workers Say They are Late to Work This Year Than Last Year
- 34% employers have fired employees over late arrivals
By Career Builders,

CHICAGO,  – A tighter job market may be contributing to increased punctuality at work. A new CareerBuilder survey reveals that 16 percent of workers said they arrive late to work at least once a week, down from 20 percent in last year’s survey. One-in-ten (8 percent) said they are late at least twice a week, down from 12 percent last year. This survey was conducted among more than 5,200 workers between November 5 and November 23, 2009.

Matthew D. Lowe
O’Donnell Clark & Crew LLP

During its February, 2010 special session, the Oregon Legislature passed Senate Bill 1045, which bars employers from using information contained in an employee’s credit history in making employment-related decisions about that employee.  If signed into law by the Governor, which is fully expected, Oregon will join only Washington and Hawaii as states that have effectively banned the fairly common employment practice of running credit checks on prospective employees.

Specifically, under the new law, which will become effective July 1, 2010,

Bill Containing Tax Breaks and Other Hiring Incentives Headed to President’s Desk For Signature
Barran Liebman LLP
Oregon Law Firm,

The U.S. Senate passed President Obama’s so-called “jobs bill,” a package of economic incentives designed to spur hiring and job growth in the midst of the economic downturn. Because the House has already passed the bill, it heads to the White House for President Obama’s signature.

The bill provides additional funding for federal highway and mass transit construction, as well as tax deductions for certain kinds of equipment purchases. Most importantly to employers, however, is the bill’s payroll tax exemption. For the remainder of 2010, employers will not have to pay payroll taxes for new employees who, prior to their hiring, had been unemployed for at least 60 days. In addition, for each new employee who remains with the company for a full year, the employer may take a $1,000 tax credit.

Five encouraging signs for Oregon in the past 10 days.
By Oregon Small Business Association

(1) Jobs: The Oregon Employment Department reported this week that the state unemployment rate fell form 11% to 10.5%.  Economist are talking about Oregon passing the turning point in the economy.

(2) Metro Recovery: The Portland Metro Business Index rose 1.8% with great news on housing.   The chart below shows an encouraging upswing from a terrible trek of negative downturns.

(3) Environment: This month Portland was credited as the highest ranking Green City in the nation according to the Green City Index (read article).

(4) Roads: Also this month, it was reported that Oregon highways are in the 10 best in the nation as listed by Reader’s Digest April edition.

(5) Film: The local film industry is teeming with news that local Portland director Gus Van Sant may be tapped for the 4th Twilight movie (read here) which, if filmed again in Oregon, could bring millions in film production revenue to the local economy.

By Nick Beleiciks
Oregon Employment Department

Oregon’s defense industry has historically been a small part of the state’s economy, but that’s starting to change. After years of hardly any growth for the industry, Department of Defense spending in Oregon nearly doubled between 2006 and 2007, and by 2008 spending topped $1.4 billion. That was triple the value of orders Oregon’s defense industry received just five years earlier.

Minnesota, Georgia, and New Jersey Consider Cutting Taxes
By Oregon Tax News,

Despite the current recession and budget deficits facing many states, Minnesota, Georgia, and New Jersey are considering cutting taxes along with statewide budgets.

Minnesota has the third highest corporate income tax in the developed world and an unemployment rate of 7.4% and a $1.2 billion deficit.  Yet, Governor Tim Pawlenty proposed a plan to cut taxes on job providers in an effort to promote the private sector and remove obstacles to business growth.  His plan includes a 20 percent cut in the corporate tax rate, a 20 percent exclusion from taxes for small businesses, a variety of tax credits and incentives for companies to invest in Minnesota small businesses.

Businesses beware: Internet scam trying to sell sales tax certificates, tax ID numbers
By Oregon Department of Revenue

SALEM—If you’re a business owner, an official-looking website selling federal employment identification numbers (FEINs) and sales tax certificates is a scam, the Oregon departments of Revenue and Justice announced.  Because Oregon doesn’t have a sales tax, businesses don’t need a sales tax certificate, even though the website, www.online-tax-id-number.org, says you do.   According to the website, “If you live in Oregon and you sell or ship something to someone else in Oregon, then you must collect and pay sales tax to the State of Oregon.”

“The first problem with this is that Oregon doesn’t have a sales tax,” said Elizabeth Harchenko, Revenue department director. “Retailers don’t need Oregon sales tax certificates. The second problem is that no one has to pay to register as a business with Oregon or with the IRS.”

By James D. Howsley
Miller Nash LLP,
Oregon and Washington Law Firm

At least twice a day over the past six months, various clients, consultants, friends, and even family members have asked me for a prediction about the real estate development market. Every time it is asked, I hear this Shakespeare quote over and over in my head: “The fool doth think he is wise, but the wise man knows himself to be a fool.” So I don’t make gut-level prognostications because without some sort of evidentiary support, that kind of rambling should remain the province of cable-news networks. But for those willing to look at good demographic information, historical trends, and current inventory levels, a window into possible recovery scenarios for housing in the nation and the Northwest emerges.

Les Schwab Tire Centers Agrees To Pay $2,000,000 To Settle Hiring Discrimination Case Involving Females
US Equal Employment Opportunity Commission,

SEATTLE  — The U.S. Equal Employment Opportunity Commission (EEOC) announced today that  it has resolved its gender-based hiring class lawsuit against Les Schwab Tire Centers  of Washington,  et al., and Les Schwab Tire Warehouse, Inc. for $2,000,000 and other corrective  measures.  The EEOC’s  suit (Case No. 06-045-RSM) in U.S. District Court for the Western District of  Washington (Seattle) claimed that Les Schwab had failed to hire qualified women  for Sales & Service (tire changing) jobs at its stores in Washington,  Oregon, California, Idaho, Montana, Nevada and Utah starting in 2004.

“While the parties have engaged  in extensive litigation the past four years, we are pleased to work with Les  Schwab to bring this case to a resolution and to start a new era of  cooperation,” EEOC Regional Attorney William Tamayo said. “This resolution allows Les Schwab and  the women who the EEOC represents to move forward.”