Page 6 - portland-tribune

The Portland Tribune Thursday, April 11, 2013 A6 INSIGHT { INSIGHT }
As Nike nears a decision on
where to expand next, at
least its choices reportedly
are limited to two communi-
ties in Oregon. This time, the state
isn’t in danger of watching as another
corporate headquarters jumps across
the border, or across the globe.
Wherever Nike lands, it still will be
an economic force for good in Oregon,
propagating jobs and contributing di-
rectly and indirectly to state revenues
that support schools and other public
services.
Nike’s allegiance to Oregon was se-
cured by an unprecedented special
session of the Legislature that was
called in December specifically to seal
a tax deal for the sportswear company.
Nike officials said they wanted tax sta-
bility and likely were worried that fu-
ture legislatures might raise corporate
taxes, so they persuaded Gov. John
Kitzhaber and others to guarantee
Nike’s current state tax structure. In
return, Nike committed to invest at
least $150 million in an expansion that
would create 500 or more jobs.
Now, Beaverton and Portland are be-
lieved to be competing for this new fa-
cility, and Nike, if it hasn’t made a
choice by the time you read this, is ru-
mored to be very close to one. Politi-
cians fromWashington County and
Portland are downplaying the rivalry
over Nike, noting that Oregon will win
no matter what.
On the whole, we agree with that as-
sessment, even if we admit to some
discomfort with the opaque process
being used to determine when and
where Nike will expand. Nike’s eventu-
al decision will be scrutinized for
whatever property-tax breaks or other
concessions the company receives, but
residents of the metro area also should
keep the larger economic context in
mind.
Nike’s apparent choice is between
land near its Beaverton headquarters,
which is just outside the city limits, or
other sites within the city of Portland.
In both cases, the jurisdictions in-
volved potentially could offer property
tax breaks or subsidies through either
state-approved enterprise zones or
their own urban renewal districts.
Such tax support would temporarily
reduce the property-tax proceeds that
go to local cities and counties. The con-
cessions also would have a slight im-
pact on school funding, but because
school revenue is equalized statewide,
the local effect on schools would be
negligible.
Of larger consequence in any case
will be the ongoing state income taxes
paid by the 500-plus workers who
would be hired by Nike as part of this
expansion. When coupled with the
8,000 jobs already at Nike, these jobs
represent tens of millions of dollars in
revenue for the state each year.
Those jobs, and what they mean for
Oregon, continue to justify the Legisla-
ture’s unusual tax pact with Nike. As it
turns out, the company also was right
to suspect that legislators were about
to hit it with new taxes. One revenue-
generating idea now being considered
in Salem is removal of the cap on mini-
mum taxes for big corporations —
companies just like Nike.
People can argue about the wisdom
of special tax incentives for Nike and
other companies, but here’s the bottom
line: Without the thousands of jobs
that Nike, Intel and other mega-corpo-
rations provide, Oregon’s ability to
fund schools would be greatly reduced,
its workers would be poorer and the
tax burden on each and every family
would be proportionately greater.
This mathematical reality must be
weighed by local and state officials —
and that’s why they are justifiably ea-
ger at times to recruit and retain the
Nikes of the world.
Nike’s math adds up for region, state
Credit unions value people over profits
Credit unions shouldn’t get tax subsidy
TWOVIEWS ● Different financial institutions, different rules
Portland
Tribune
FOUNDER
Dr. Robert B. Pamplin, Jr.
PRESIDENT
J. Mark Garber
MANAGING EDITOR/
WEB EDITOR
Kevin Harden
VICE PRESIDENT
Brian Monihan
CIRCULATION
MANAGER
Kim Stephens
CREATIVE
SERVICES MANAGER
Cheryl DuVal
PUBLISHING SYSTEMS
MANAGER/WEBMASTER
Alvaro Fontán
NEWS WRITERS
Jennifer Anderson,
Peter Korn, Steve Law,
JimRedden
FEATURES WRITERS
Jason Vondersmith,
Anne Marie DiStefano
SPORTS EDITOR
Steve Brandon
SPORTSWRITERS
Kerry Eggers,
Jason Vondersmith,
Stephen Alexander
SUSTAINABLE LIFE
EDITOR
Steve Law
COPY EDITOR
Mikel Kelly
ART DIRECTION
AND DESIGN
Pete Vogel
VISUAL JOURNALIST
AND PHOTO EDITOR
Christopher Onstott
INSIGHT
PAGE EDITOR
Keith Klippstein
PRODUCTION
Michael Beaird, Valerie
Clarke, Chris Fowler,
CONTRIBUTOR
Rob Cullivan
WEB SITE
portlandtribune.com
CIRCULATION
503-546-9810
6605 S.E. Lake Road
Portland, OR 97222
503-226-6397 (NEWS)
The Portland Tribune
is Portland’s independent
newspaper that is trusted
to deliver a compelling,
forward-thinking and
accurate living chronicle
about how our citizens,
government and
businesses live, work
and play. The Portland
Tribune is dedicated
to providing vital
communication and
leadership throughout
our community.
Submissions
The Portland Tribune welcomes essays on topics of public interest. Submissions should be no longer than
600 words and may be edited. Letters should be no longer than 250 words. Both submissions should include your
name, home address and telephone number for verification purposes. Please send submissions via e-mail:
tribletters@portlandtribune.com. You may fax them to 503-546-0727 or send them to “Letters to the Editor,”
Portland Tribune, 6605 S.E. Lake Road, Portland, OR 97222.
Portland Tribune editorial board
■ J. Mark Garber – president, Portland Tribune
and Community Newspapers Inc.
503-546-0714; mgarber@commnewspapers.com
■ Kevin Harden – managing editor, Portland Tribune
503-546-5167; kevinharden@portlandtribune.com
When banking in-
dustry excesses
plunged America
into the first Great
Depression in the 1930s, Presi-
dent Franklin D. Roosevelt
signed the Credit Union Act of
1934. It enabled consumers to
form not-for-profit, cooperative
financial institutions of their
own to focus on the needs of
their families, not the needs of
bank stockholders.
Today, 1.4 million Oregonians
find that option as viable as it
was then. The reason is that
these member-driven, local co-
operatives provide their mem-
bers with real, tangible bene-
fits. Oregon’s credit unions
saved their members $121 mil-
lion last year, in the form of low-
er fees and better interest rates.
Members also value the com-
munity-focused DNA of credit
unions. Every day Oregon’s
credit unions are serving their
communities. They are doing
many great things, such as rais-
ing more than $12 million for
the Doernbecher Children’s
Hospital since 1986, volunteer-
ing at local food banks, teaching
financial education in schools,
and donating materials and la-
bor to build homes for disabled
returning war veterans.
Bankers bristle at the realiza-
tion that a not-for-profit finan-
cial alternative remains an im-
portant buffer for consumers to
the high fees, higher loan rates
and lower return on savings
that are cornerstones of the
banking industry’s for-profit
model.
Unfortunately, while credit
unions continue to focus on
serving their communities, the
Oregon Bankers Association
has joined their national Wall
Street counterparts in trying to
stifle credit unions. This is par-
ticularly difficult to understand,
considering that banks control
more than 90 percent of all as-
sets in this country.
The bank lobby is the man-
behind-the-curtain introducing
legislation to impose additional
taxes and regulatory burdens
on credit unions. They want to
saddle credit unions with regu-
latory burdens such as paper-
work itemizing the very civic
and community investments
that have benefited credit union
members for decades.
Thus, it is not surprising that
a poll, conducted by Voter/Con-
sumer Research in January of
this year, found 90 percent of
Oregonians had a favorable
view of credit unions while
banks had only a 53 percent fa-
vorable rating. Add your
thoughts at: www.saynotobig-
banks.com.
Banks continue to argue that
credit unions are getting “too
big” and are not “mom and pop”
institutions anymore. But it is
the structure, not the size of
credit unions, that makes them
different. Profit-hungry banks
are structured to generate pay-
ments to stockholders. Not-for-
profit credit unions exist for one
purpose: to provide value to
their members.
The Voter/Consumer Re-
search poll found 77 percent of
Oregonians think credit union
growth would make better loan
rates and lower fees available to
even more consumers and busi-
nesses.
The poll also found that 82
percent of Oregonians believed
that credit unions, regardless of
size, should not be taxed more
than they already are, because
their cooperative structure al-
lows them to return tangible
benefits to members.
Today’s consumers demand
more of their financial institu-
tion than just a checking ac-
count, thus requiring top-quali-
ty talent to lead institutions in
today’s complex regulatory en-
vironment.
Bank executives receive com-
pensation in the form of what
many consumers define as ex-
cessive salaries and stock op-
tions in their “for-profit” bank.
To add insult to the consumer
pocketbook, many receive lofty
bonuses despite using taxpayer
dollars to bail them out. Outra-
geous.
Recall that credit unions do
not have stockholders — there-
fore, there are no stock options
to pay. Executive compensation
for credit unions resides in
competitive salaries to ensure
one thing: The executives main-
tain their cooperatives so that
more consumers can benefit in
the years to come. Period.
And, speaking of those bail-
outs, banks were more than
happy to take billions in taxpay-
er-funded bailouts when their
reckless actions plunged our
country into another Great Re-
cession just five years ago. Ore-
gon credit unions don’t need
any handouts — and certainly
should not be handcuffed by the
banks’ political posturing once
again.
I have a bold invitation for
the bank lobby more focused on
crippling credit unions than on
improving their own efficien-
cies and services: convert to a
credit union charter. Why not
give up your stock options and
give back to consumers?
Troy Stang is president and chief
executive officer of the Northwest
Credit Union Association, Beaverton.
C redit unions are a via-
ble component of our
financial system.
They have allowed
people with a common bond —
teachers, building trades, tech-
nology workers — to pool their
collective resources for mutual
benefit.
Dozens of these credit unions
exist in Oregon today, and we
expect they will thrive well into
the future.
The question we have asked
the Legislature to consider is
this: When a credit union be-
comes indistinguishable from a
community bank, what is the
purpose of its tax exemption?
Oregon’s largest credit
unions are growing, consolidat-
ing and offering the same ser-
vices as banks. According to
noted Northwest economist
William Conerly, the top four
Oregon credit unions earned 42
percent of the industry’s collec-
tive profits in 2000. By 2012, the
top four Oregon credit unions
earned 73 percent of the indus-
try’s profits.
Why does this matter? Be-
cause the vast majority of the
credit union industry’s tax sub-
sidy in Oregon is going to some
of the state’s largest and most
profitable financial institutions.
Another way to look at it is
that those same top four Ore-
gon credit unions received 41
percent of the value of the in-
dustry’s tax subsidy in 2000. By
2012, the top four were receiv-
ing 81 percent of the value of
the industry’s tax subsidy.
If the credit union tax subsi-
dy were removed, Conerly con-
cludes that “the bulk of tax rev-
enue would clearly come from a
handful of large credit unions.
A majority of credit unions
would pay no income taxes and
others would pay only a small
portion of the credit union tax
bill.”
Oregon’s largest credit union
is OnPoint. It is the second larg-
est financial institution based
in Oregon. It also is the best ex-
ample of a large, bank-like
credit union.
OnPoint, with $3.2 billion in
assets, was once known as the
Portland Teachers Credit
Union, but now virtually any-
one can become a member.
What’s more, OnPoint paid its
CEO $2.6 million in compensa-
tion in 2011, a raise of $800,000
over the $1.8 million he made in
2010.
What other Oregon “not-for-
profit” is paying that kind of
compensation to its executives?
In defending a credit union ex-
ecutive’s high salary, a credit
union industry spokeswoman
said: “He works in investment
planning with high-wealth indi-
viduals. His compensation is a
function of his sales role.”
At a time when government
is cutting services, why are we
subsidizing banking for high-
wealth individuals?
What do Oregonians get in
exchange for this tax subsidy?
We don’t know because credit
unions aren’t required to dem-
onstrate public benefit or re-
port what they do to serve low-
income Oregonians or reinvest
in Oregon communities. The
credit unions justify their sub-
sidy by noting their popularity
among consumers and high-
lighting their contributions to
various organizations and
sports arenas.
If being liked, providing qual-
ity service and demonstrating
philanthropy are justifications
for a tax exemption, I can tell
you that thousands of Oregon
businesses would line up for
one.
Oregon banks voluntarily
contribute more than $14 mil-
lion per year to Oregon not-for-
profit organizations and they
all receive favorable ratings for
complying with the Community
Reinvestment Act — something
credit unions don’t have to do.
While this is evidence of corpo-
rate social responsibility and a
commitment to communities, it
is not justification for a tax ex-
emption.
Credit unions also have sug-
gested that their tax exemption
is due to their cooperative
structure, noting that their
members are their sharehold-
ers. How is this any different
than the structure of Oregon’s
mutual savings banks? Mutual-
ly owned banks in Oregon, like
First Federal of McMinnville
and Evergreen Federal of
Grants Pass have ownership
structures similar to credit
unions, yet they pay taxes on
their profits.
The fact is that Oregon’s
largest and most aggressive
credit unions offer nearly iden-
tical services as community
banks. Once confined to serv-
ing just their members, many
credit unions can now serve the
general public, accept govern-
ment deposits and make loans
to businesses. Banks frequently
compete against OnPoint and
other credit unions for com-
mercial loan customers. For
smaller banks, competing
against a taxpayer-subsidized
financial institution that is
eight to 10 times larger in size
can be a daunting task. But it
happens every day.
We celebrate growth and
success, and we don’t begrudge
a credit union’s desire to ex-
pand. But, there is a point at
which a credit union no longer
resembles the original intent of
the law. If they’re going to act
like a commercial bank, then
they ought to pay taxes like a
commercial bank.
The credit union associa-
tion’s spokesperson recently
said that “a credit union is as
sophisticated as a bank in
terms of the financial services
it provides.” We agree. It sim-
ply doesn’t make sense for Ore-
gon to subsidize profitable fi-
nancial institutions that act just
like banks.
Linda W. Navarro is president and
chief executive officer of the Oregon
Bankers Association in Salem.
By Troy Stang
By Linda W. Navarro
OUROPINION
Credit unions
and banks are at
loggerheads on
possible changes
in the way both
do business,
according to
representatives
of both
businesses.
TRIBUNE FILE PHOTO:
L.E. BASKOW