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Category Archives: public policy

Opening Pandora’s Box

I was reading NPR’s Planet Money blog the other day, when I came across this link to a Third Way brief. The basic argument is that it would be cheap and easy to provide each taxpayer with a detailed receipt of exactly where their taxpayer money goes.

It’s really very easy. The total amount of federal spending is the denominator and the amount of money spent on a particular program is the numerator. The resulting quotient is the percentage of all federal spending that goes to that program.

It is a lovely theory, but as I have argued before, it would not be as easy as it might seem at first blush.  For one, Third Way massively oversimplified the federal budget. This is the taxpayer receipt that Third Way proposed:

And here is the 6ft poster detailing the federal budget that Death and Taxes recently released:

Not quite as neat as the Third Way’s vision, but certainly a lot more accurate.

Have you ever been in a long check-out line in a store when a customer who has just completed a transaction decides to take issue with a receipt? I certainly have.  Sometimes the issue is the result of poor signage or operator error.  But, I have also stood waiting while someone complained that an item he/she purchased was cheaper at another store (this is a true story).  The poor check-out clerk couldn’t do anything, so she called a manager over.  The manager calmly explained (several times) that she had verified that the price for the item was clearly listed on the shelf and she that she would be happy to refund the cost of the item so it could be purchased elsewhere.  The customer didn’t want a refund. She wanted the store to lower the price for her because it was cheaper elsewhere.

I am a strong proponent of government transparency, but context is critical.  Without adequate context I think a taxpayer receipt would grind the federal government to halt (I realize that is only a short distance from where we are now, but I digress).  Suddenly, citizens would have just enough information to make them dangerous. They would haggle over the cost of their share for a specific item.  Or, feel entitled to choose what they will and won’t pay for. I can just hear the complaints now:

“I oppose (insert Program X here), I want my share refunded.” or “I will only pay part of my taxes because I don’t support (Program x).”

“Instead of paying taxes, can I just buy supplies and give them to the government, it would be cheaper that way.”

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…And we’re back!

For reasons that don’t bear further exploration at this juncture, I have had a hard time finishing blog posts for the last 6 months.  I would get myself all riled up about something, start a post, lose my momentum, and that was all she wrote.  But, I am now back to herding all different kinds of cats (even invisible ones).

First some background. A long, long time ago, when CubeSpace was just a baby and before the world’s economy imploded, I initiated a series of conversations with business-people and local governments about addressing the perennial funding issues facing Portland’s microbusinesses.  My take is that as a city that explicitly values local businesses, we should also be willing to put our money where are mouths are.

My thought was that by creating our own revolving loan fund, we could help business-owners who needed short-term operating capital to manage cash-flow issues.  My idea was to create of pool of individual investments ranging from $10,000-$25,000.    I also had a (pipe) dream of securing a public match (via the Oregon Investment Fund or Oregon InC.)  The only questions remaining were where to house the funds and who would manage the loans.

I wasn’t able to answer those last two questions before the economy took its precipitous downturn.  But, I can be patient when I need to be, so I tucked the idea aside and waited.  Good things do happen to those that wait. While my idea was laying dormant, credit unions started taking on business customers.

Fast forward to now.  A few months ago I met a woman named Yolanda Karp who has spent much of her career working in local banks and credit unions.  It didn’t take long before we realized that we shared a vision in common.  She started talking to her colleagues at OnPoint, Unitus and Shorebank and got a very positive response.

Yolanda and I have both been hearing from experienced business-owners that the economy has brought them new challenges (and to be fair, a couple of new resources).     There is an ever-growing population of “Involuntary Entrepreneurs” who have given up looking for work and are trying to hit the ground running with their businesses.   We think it is high time for an environmental scan of Portland’s microbusinesses.

That is where we need your help.  In order to run two focus groups of microentrepreneurs, we need to recruit 30 microbusiness-owners. We are defining microbusiness as businesses with either 5 of fewer employees or annual gross receipts of less than $250,000.  We are hoping for a participant distribution that looks roughly like this:

  • 4 Retail Businesses.
  • 4 Restaurants
  • 2 Food carts
  • 4 Sole Proprietors
  • 6 Professional offices with staff (accountants, lawyers, consultants, etc.)
  • 4 Software Developers
  • 2 Information Systems/Network Administration
  • 2 Financial Services
  • 2 Tourism/Hospitality

We would like a good mix of gender and ethnicity, so please keep that in mind.  We are also hoping to recruit some immigrant business-owners because they represent a significant percentage of Portland’s microbusinesses.

If you or someone you know would like to participate in one of the focus groups, please contact me via email at evaschweber [at] gmail [dot] com, leave a comment on this blog, tweet me @evacatherder or call me at 503-310-4645.

Thanks in advance!

I can see clearly now, can you?

I spent this past weekend at Transparency Camp West, at the Google campus in Mountain View, CA.  I went expecting to be surrounded by my fellow policy wonks, but surprisingly they didn’t make up the bulk of attendees.  Most of the folks in attendance seemed to be developers looking to market their web applications.  There were some marked exceptions, primarily from outside of the US.  I had some fascinating conversations with Ilya Ponomarev, a member of Russia’s State Duma (parliament) and Chair of the Parliament’s High-Tech Development Subcommittee, Daniela Silva, a graduate student from San Paolo, Brazil, Pedro Valente, a Yahoo! employee working out of their Brazilian office and Jonahtan Adir, a senior policy advisor to Israel’s President, to name just a few.

The focus of the weekend was primarily on federal transparency.  My interest is primarily on local and state government.  I am also a serious data junkie, so my ears perked up whenever I overheard a conversation about data.   During one of my many data-centric conversations, one of the tech folks asked me what kind of data I would like to see used in his web application.  My immediate response was budget data.  The techie looked at me blankly and said that budgets only involved entering numbers, and really wasn’t very interesting.  He then asked me again what data would be most useful to me.  Ilya was also part of the conversation and his explanation on the importance of budget data was met with a similar dismissal.  That is when I knew I wasn’t in Kansas anymore.

Budgets are not spreadsheets or columns of numbers.  Budgets are policy documents.  Budgets are where the rubber meets the road; where priorities are put to the test.  Budget Hero is a great exercise in matching your priorities to federal expenditures. A politician may talk a good game, but validation comes only when we get to peek behind the curtain (apparently I am in a Wizard of Oz kind of mood today).

Think of your own personal budget.  There are times when your spending behavior is consonant with your values.  For example, buying locally sourced and organic foods, even if they are a bit more expensive than the produce grown in Chile or Mexico.  From time to time, we all find ourselves facing a disjuncture between our values and our spending behavior.  Usually it is small, like eating junk food when you didn’t have time to make lunch.

Other times the disjuncture has a significant budget impact.  For example, If you had decided to purchase a Suburban because you have a large family and need a lot of space to haul them and their stuff around, then your spending behavior is consonant with your needs. However, if you decide to buy a Prius because of its great fuel efficiency, and instead purchase a Suburban that gets 14 MPG, your spending behavior is not consonant with your values. Neither the Prius nor the Suburban are inherently good or bad.  They each serve their own purpose. The problem only arises when you say one thing and do another.

I wish I could say I only had that conversation with one person who was an anomaly.  Sadly, I cannot.  What I can say is that many of those calling for transparency are doing so without a clear sense of what or why. No one I spoke to could truly articulate what they meant by transparency.  The most common answer can be summed up in the Sunlight Foundation’s mission statement:

The Sunlight Foundation is committed to helping citizens, bloggers and journalists be their own best watchdogs, by improving access to existing information and digitizing new information, and by creating new tools and Web sites to enable all of us to collaborate in fostering greater transparency.

At first glance, the mission sounds like it has meaning.  But when I took the time to parse it, I still wasn’t able to answer the basic question of what or why.  The mission makes no reference to improving transparency in government.  Any connection to government is implicit, forcing people to apply their own interpretation–ensuring a Tower of Babel with no common language.  Nor does the mission statement address the question of why.  The most effective mission statements are written in such a way that all stakeholders will know when the mission has been achieved.  The classic example of a good mission statement is the March of Dimes.  The March of Dimes was created to fight polio, a mission in which they succeeded, having supported the development and distribution of  the polio vaccine.   It seems to me that the transparency conversation can only move forward when we have developed broad consensus on what should be transparent and why.

The following anecdote really captures the problem.  A person at Transparency Camp said he wanted the federal government to give him a receipt like he would get at a hotel or a restaurant.  Further discussion clarified that what he was really asking for was a breakdown of how the hotel determined its price.  He wanted his receipts to include the following:

Hotel room – $100

  • Percentage of front desk staff time required for check in and check out – $xx.00
  • Percentage of cleaning staff time to clean the lobby, lobby furniture, hallways, elevators, public restrooms – $xx.00
  • Percentage cost of cleaning supplies to clean the same – $xx.00
  • Percentage of cleaning staff time to clean the hotel room – $xx.00
  • Percentage cost of cleaning supplies to clean the same – $xx.00
  • Percentage of cost for cleaning cart to carry clean linens and collect dirty ones – $xx.00
  • Percentage of purchase price for little shampoo bottles and soap – $xx.00
  • Percentage of cost to trash hauler for little shampoo bottles, soap and any other trash generated by guest – – $xx.00
  • Percentage of cost for in-room coffeemaker – $xx.00
  • Cost of coffee, tea, sugar, whitener, stir sticks to use with coffeemaker – $xx.00
  • Upfront cost of stocking inventory for minibar – $xx.00
  • Percentage of loss from guests who do not pay for using mini bar items – $xx.00

The list goes on and on, but I am going to stop there because I think I have made my point.

If hotels had to generate receipts like that for every customer, even Motel 6 rooms would cost hundreds and hundreds of dollars.  The amount of staff time that would be required to generate receipts like that is mind-boggling. And it couldn’t just be done once. Supply prices change on a regular basis. Receipts would need to be generated for the precise length of time guests were in their rooms. A guest who checks in at 3pm will use more water and utilities than someone who checks in at 8pm (I really am having way too much fun generating these lists of expenses). We don’t always want a fine, detailed accounting of how our money is spent. Not when fine details are just not worth the cost of generating them.

Public budgets are the same way.  Do we really want to use our tax dollars used to track down every incremental cost included in every expenditure? Public information laws require governments at all levels to disclose their budgets.  For the locals who read this blog, City of Portland, Multnomah County and Metro have budget pages on their websites.  Want to do some additional analysis yourself? Fortunately several jurisdictions (including the federal government) offer easy access to APIs.

I am all in favor of volunteers and voluntarily-funded organizations (aka non-profits) creating applications using the data already available through APIs.  I support anyone’s desire to drill down into the minutiae of budgetary data.  What concerns me is when we criticize government for not doing the fine-grained analysis for us.  I see that as serious misappropriation of tax dollars.

Real Costs and Responsibilities

Every time we have to choose between options, we face a decision-making point between immediate gratification and long-term consequences.  For example, buying the cheaper printer with the more expensive ink cartridges or eating that treat that you know will add bulges to where you want them least.   There is a dedicated part of our brain (the frontal cortex) devoted to making choices and recognizing the consequences of our actions. However, the frontal cortex does not inherently distinguish between short and long-term consequences. That is a learned behavior.

We, as a country, are beginning to factor the impact of our choices on global climate change.  Individuals may choose to walk or bike rather than drive or to bring a reusable bag to the grocery store.  Large organizations, including both businesses and governments, are choosing to purchase energy from renewable sources and purchase products with recycled content.  Analysts are refining methodologies that allow us to quantitatively compare short and longer term costs. These methodologies are variously called Life Cycle Costing or Life Cycle Analysis, but the concept is the same regardless of what it is called. (you can see some of City of Portland’s life cycle costing policies here).

I find it surprising how infrequently these same methodologies are applied to funding the public sector.  As a public budget wonk, I have heard the same conversation repeated every year since I took my first budget and finance class in 1995. The year is important because I have only watched the budget process in a post-Measure 5 Oregon. A typical conversation begins with an explanation of  how funding scheduled preventive maintenance is much more cost-effective than emergency repairs or replacement.  Or that schools need adequate funding that includes education in the arts in order to produce a skilled workforce for the future. The vast majority of politicians understand this argument, and try to sell it to their constituency.  All too often, citizens only consider the short term and complain about wasteful spending.

In Oregon and California, voters have tried to reign in public spending through tax abatement ballot measures.  It took a couple of decades, but now education and public infrastructure are so badly deteriorated that they require impossibly large budgets to correct. California’s Proposition 13, the progenitor of Measures 5, 47 and 50 in Oregon, has placed the 8th largest economy in the world on the verge of bankruptcy, and forced them to pay their creditors with IOU’s.  I am not the only one who has connected the dots, so has Peter Aldous in New Scientist:

…the pernicious effects of Proposition 13, passed in 1978. A populist constitutional amendment that capped property taxes, it has created a hole in state finances that gaped wide this year as recession bit into tax revenues. By limiting local school boards’ ability to raise funds from property taxes, it also turned a public education system that once led the nation into one of the worst in the US.

Just as Proposition 13 destroyed California’s exemplary public K-12 and higher education system, Measure 5 destroyed what was once an excellent public K-12 system in Portland.

We need to take a deep breath and remember that government’s role is one of stewardship.  Government is supposed to function as our frontal cortex and consider the long-term consequences when expending public resources. It is not sound fiscal management to circumvent the process and manage tax policy through citizen initiatives and referenda. Our role as citizens is to actively engage with our government and elect people we trust because we are the primary check on the system.  Those that complain about inept or corrupt politicians should take action with their votes. That is the core of democracy.

We should use California’s fiscal crisis as an object lesson and consider both the long and short term implications of tax reform.  Change won’t happen overnight, but it can happen over time.  Just as we have started down the road to reduce the impact of global climate change, we can apply the same strategies to adequately funding our public infrastructure.

You make me so proud!

Today the Portland Development Commission (PDC) brought their Economic Development Strategy to City Council for approval. That simple sentence does not reflect how important an accomplishment this was. This is the first economic development strategy the City has had for the past 15 years. This is the first time I have seen Council really walk their talk on economic development.

Nor does it fairly represent process that got us to this point. In the initial draft of the strategy, small business didn’t warrant a mention until the very end.  Software development was always an area of focus, but in a “same old story” kind of way.  Because we were invited to the table (ok, we had to ask to be invited, but we did ultimately get an invitation) Portland’s small business community significantly raised our visibility from that initial draft to the version unanimously approved today.  Because small business had a seat at the table, those closest to my heart, namely the open source mobile and startup communities, were given the opportunity to demonstrate our value to the local economy. Ultimately, we made the software development cluster much more inclusive.

So why did I ask for folks to join me at today’s City Council session?  The Mayor and PDC are only two pieces of the puzzle. As someone pointed out to me after sitting through hours (I kid you not, this was a loooong meeting) of invited testimony, no one spoke on behalf of the software cluster (one of only 4 clusters focused on in the strategy).  So our community, and more importantly, our economic contribution to Portland, remains invisible to most of the people in that room.

Even though we offered no testimony, we had the largest representation from any industry. City Council and their staff knew most of the folks in that room today (myself included) because we are the ones who show up at every one of these meetings.  We are all pretty clear on what perspective each of us represents and  know what is going to be said before any of us open our mouths. Actions speak louder than words. The open source, mobile and startup (seriously, we need a better moniker) representatives who came to today’s meeting sent a very clear message. We are here and we are ready to take our seat at the table.

The hard work still lies ahead of us.  A strategy is no more than a stack of paper.  Implementation, funding and metrics are where the rubber really hits the road.  So even though we might still have to ask for a seat at the table, I feel confident that our request will be granted.

Sorry that you missed today’s fun?  You can watch PDC’s video summary here, or the hours of testimony here.

Visibility Matters

One of the many reasons I love Portland so much is the accessibility of our City government.  Over the past decade or so, with very few exceptions, I have been able to meet with City Commissioners to discuss issues of public policy.  And when I talk about accessibility, I am talking about me as an interested citizen, not me as a representative of an influential organization. Whether or not I was able to sway anyone with my arguments, I always felt heard, and that is what matters the most, at least from my perspective.

I say this because I watched the evolution of the Portland Development Commission’s (PDC) Economic Development Strategy over the past few months. I have read the drafts, attended presentations to a range of business groups, from  the Economic Development Cabinet, the Small Business Advisory Council to Greenlight Greater Portland.  I have both seen and heard how the voices of small business and the open source tech community changed the strategy for the better.  You can read more about the small business and tech community’s participation in the process here, and here.  You can also read what Rick Turoczy had to say on Silicon Florist here and here.

Here is what the mayor had to say about the importance of this plan:

This strategy, if approved by Council, will be the city’s first adopted economic development strategy in 15 years, and will serve as the blueprint to guide the city and region out of the most significant economic decline in over sixty years.  The plan strategically focuses on maximizing the competitive environment for businesses, spurring innovation and enhancing the vitality of our small business community.

It is now our turn to publicly support both Mayor Adams’ and PDC’s efforts by showing our support for the final plan.  On Wednesday, July 8th, I invite you to join me at 3:15 in Council Chambers on the second floor of City Hall (1221 SW 4th ave, Portland, OR 97204) to demonstrate our support for the plan.

Planning on being there? Please R.S.V.P here or contact Clay Neal (clay.neal@ci.portland.or.us) or 503.823.4128.

I know this may be pushing some of you out of your comfort zone.  It is important enough to me and Portland’s small business community that I will do what I can to support those who want to show their support.  I will be waiting outside the 4th street entrance to City Hall starting at 2:45 on Wednesday.  Anyone is welcome to meet me there and we can walk in as a group at about 3:05.

Not able to make the meeting, but still want to show your support for the strategy?  You can submit written testimony by sending an email to kmoore-love@ci.portland.or.us. She is the Council Clerk and will distribute your testimony to all of City Council and make it part of the official record.

I look forward to seeing you on Wednesday.

It’s Either This or Rockband

We all deal with stress in our own ways.  Some people jog, some people play games, some people watch movies and then there is me.  I am managing my stress level by reading about public policy.  If you think about it, reading public policy to relax makes a certain amount of sense.  You start with a problem, outline the issues that led to the aforementioned problem and then identify solutions for the problem.  If the problem statement is well defined, causality is well substantiated and the solutions are at least theoretically achievable, it makes me happy.  This is usually a quiet and content kind of happiness because I can take comfort in the knowledge that at least somebody gets it.

If the problem statement is poorly defined, the arguments are weak, causality and correlation are referenced interchangeably and the solutions are ridiculous, then I get to annoy those around me (a trick I learned from David).  I stomp around angrily and people stupid enough to ask me what’s wrong get an earful. Someone who partially hears the discussion and asks what we are discussing gives me the opportunity get to rant to a second person. By then the first person has had time to process my rants and we all get into a heated discussion (I have found this last point to be true whether or not everyone in the conversation agrees).  Rinse and repeat until I have achieved full catharsis and can go back to what I was doing originally.

Either way, I win.

Anyway, I was poking around my RSS feeds this morning and I ran across a link to this article listing 2009’s best cities.  There are seemingly endless sets of “best cities” lists and I generally ignore them.  What caught my eye in this article was the criteria used: both the overall number of jobs and the likelihood that those jobs would be retained in a soft economy. At the Mayor’s Economic Recovery Cabinet meeting last week, it was very interesting to hear which industries were bouncing back and which were stagnant or losing additional jobs.  I wanted to see how Oregon would fare using the same criteria.

I poked around on Google Scholar and found this great publication, Working in Oregon, that contained analysis by both public and private sector economists. It offers some useful context for many of the perennial complaints about our commercial competitiveness and projected job growth.

  • Oregon’s wages are low, on average. Oregon’s wages are lower than the national average, but typical of similar-sized economies on the West Coast.
  • Wage gains since 2002 have generally equaled or exceeded CPI. The economic boom benefited workers at all income levels. The median wages across all earning quintiles (from the lowest-earning 1/5 to the highest earning 1/5) rose more rapidly than inflation in each year from 2002-2005.
  • Oregon has a moderately diversified economy. Oregon ranks in the middle of all states in a measure of the diversity of the US economy.
  • Oregon’s employment is concentrated in a few sectors as compared to the national economy. We have above-average employment in greenhouse and nursery production (there is a reason we are known as the Grass Capital of the World), logging and forestry, fruit and vegetable preserving , wood and paper product manufacturing and electronic component manufacturing. We have below average employment in petroleum and coal mining, textile and apparel manufacturing, chemical and pharmaceutical manufacturing, spectator sports organizations (also not news, Oregonians seem to prefer playing sports to watching them), and amusement parks and arcades.
  • There are two categories of jobs that will be becoming available by 2016. Replacement job openings (those created by retiring boomers, or by others who have left the workforce) are almost twice the number of jobs created through growth.  The authors estimate that approximately 250,000 growth jobs will be created in Oregon between 2006 and 2016. They expect approximately 450,000 replacement jobs in that same time period.
  • Job training is critical for filling both replacement and growth jobs. Employment projections were developed for 700 occupations, only 40 of which are going to be employing fewer people in 2016.  Six-hundred ninety five on those occupations will need newly trained workers to fill replacement jobs in the next 10 years.
  • Only 1/4 of Oregon’s projected 700,000 job openings (both replacement & growth) will require post secondary-education. Job applicants for half of those jobs will need a post-secondary education is they want to be a competitive candidate for the job.
  • Formal education is not all job applicants need to be competitive. Employers are attributing a labor shortage to employees who lack the most basic skills: coming to work on time, a willingness to work hard, a willingness to learn, basic communication and teamwork skills.  I see this as one of the easier education deficits to address.  These basic “life skills” can be easily integrated into middle and high school curriculum.
  • Focusing resources on high-demand, high-wage jobs targets less than 40% of projected job openings between now and 2016. Should we be re-examining our job training and education programs to make sure that they really meet the need out there?

For the record, I did end up playing RockBand as well.

Wonk meets Geeks

This week, as part  of his “100 businesses in 100 days” effort, Mayor Sam Adams wandered into the Wonderful World of Geeks when he met with Portland’s open source tech community to discuss his economic development strategy.  A diverse group of folks, including:  Rick Turoczy, Raven Zachary, Audrey Eschright, Scott Kveton, J-P Voillique, David Kominsky, myself, the Mayor and Skip Newberry (from the mayor’s office) gathered to discuss ways to support the ongoing economic development of Portland’s open source community and what can the City to do help meet those needs.

We began with a discussion of the strengths of Portland’s open source tech community.  Portland is incredibly fortunate in having community leaders who have done very well in creating a vast array of peer teaching/mentoring opportunities.  User groups, code sprints and events such as BarCamp provide opportunities for people to meet, share and develop ideas.  The type of opportunities that one normally only finds in the context of a large university setting.  What we lack are mentorship opportunities or the matchmaking necessary to bring together great coders with great businesspeople.  The most effective solution to the mentorship issue must come from within the community itself.  Better communication and collaboration is all that is needed to address that issue.

The communication and collaboration question naturally led to the mayor asking how to find the tech community.  The group responded with a resounding “Twitter,” all in unison. Sam acknowledged that Twitter was a great conversation medium, but too transitory. What he really needed in order to adequately understand, and therefore advocate for, Portland’s open source tech community is a census. The group readily offered their respective networks to start building a census of Portland’s tech community.

The mayor also asked what distinguished Portland’s community from other cities.  We came up with the following responses:

Telecommuting – We have all read about Portland’s “Brain Gain.” People move here from all over the world because of our high quality of life. What we rarely read about are the many new transplants who arrive with jobs. Portland is filled with people who work for companies based all over the world.  Anecdotally, we all knew several people who fit into this category. How many are there and where are their companies located? That’s what we need the census to find out.

Affordable domestic coders – It remains true that the hourly rate of overseas coders is significantly lower than even entry-level coders in the US. However, time zone, inter-cultural communication and code maintenance issues can make overseas coders more expensive in the long run.  Portland’s relatively low cost of living and highly skilled coders have made us an increasingly cost-effective alternative.

Geo-mapping/geo-location – Portland has more than its fair share of geo-location enthusiasts, as was evidenced by the success of the first WhereCamp event last year. This is a field with a huge amount of growth potential and Portland has an opportunity to make a name for itself here.

Mobile applications development – The hugely popular Obama Iphone application came out of Portland and that is only the tip of the iceberg. Portland has set the bar high for innovation in mobile application development, a field that remains in its infancy.  With its low barrier to entry, mobile application development is looking like another niche that Portland is looking to dominate.

So what can the mayor of Portland do to help support the open source community?

1. Advocate for open source solutions for government software – Governments have huge software needs, and proprietary software solutions require a significant up-front investment and updates are often delayed by other priorities.  Open source software has a much lower barrier to entry, and much of the cost can be split with other jurisdictions.  But, government bureaucracies, by their nature, are cautious and slow to accept change.  A champion, especially one in a highly influential position, can expedite the rate of change. Having the mayor champion open source software, especially in these challenging economic times, can make Portland a leader in the field.

2. Advocate for a variety of funding options – Many of us have grown tired of hearing about how Portland does not produce companies that interest VC funders.  If you want an earful on this subject, just go ask Rick Turoczy. However, what we also lack is access to the kind of startup capital that small businesses that want to remain small businesses need. Those companies where the founder(s) would like to make a living for themselves and their employees, but not make 30% on the original investment. This is another place where some targeted advocacy by our mayor could make a big difference.

In the end, everyone was pleased with the meeting.  The open source community representatives felt that both Sam and Skip understood the value that they bring to Portland and were eager to help where they could.  Skip commented that this had been one of the most productive of Sam’s business visits.  I attribute the meeting’s success to the attendees’ ability to articulate both their needs and what they had to offer.  There had been no pre-meeting prep or preliminary discussions.  Portland has a very self-aware and reflective open source community and that serves us very well.

Catching up

When I started this blog I set a goal of blogging at least once a week.  Obviously I have not met that goal.  But I have some good excuses and the intention of getting back on the weekly blogging wagon.

Here is a quick summary update of what I have been up to in the past month, sorted by degree of time suckage:

1. BarCamp – This is the 3rd year that we hosted BarCamp Portland and it is huge amount of work that culminates in a huge amount of fun.  BarCamp has nothing to do with alcohol (at least not directly) nor lawyers (once again, at least not directly).  It is an unconference, so there is no way to know what topics are going to come up for discussion.

2. Economic Recovery -In my ongoing efforts to help the Powers-that-Be understand small business’ role in the economy, I created this schematic, which I shared with Erin Flynn,  Portland Development Commission’s (PDC) Economic Development Director.   In that same conversation it became obvious that Ms. Flynn was not as familiar with the economic growth in Portland’s open source tech community as she would like.

Those of you who know me know that I rarely, if ever, sing the praises of PDC. But, I also believe in giving credit where credit is due.  To Erin Flynn’s credit, shortly after Andy Frazier (my Small Business Development Workgroup Co-Chair) and I met with her on a beautiful, warm Friday afternoon, she took action on our conversation.  The mayor has scheduled a meeting with several of Portland’s open source/high tech representatives to get their perspective on PDC’s Economic Development plan.  In other words, the precise voices that had been left out of the conversation.

3.  This past Saturday CubeSpace hosted Town Hall with State Senators Diane Rosenbaum and Ginny Burdick. Senator Ginny Burdick chairs and Diane Rosenbaum sits on the Senate’s Finance & Revenue Committee. I asked why state investment funds for high tech entrepreneurship are all targeted at companies looking for VC money.  I suggested that perhaps a revolving loan fund would better serve small tech companies whose focus is employment rather than selling for a huge profit. Increasing resources for startups not looking for VC money intrigued them. I have no idea whether this conversation will bear any fruit, regardless, I was pleased with their positive reception.

Not that things will be calming down any time soon, but I will try to get back on a more regular blogging schedule.

Think Globally, Act Locally

While he was still President-Elect, Barak Obama made it abundantly clear that he wanted no earmarks to be part of the economic stimulus package.  While often perceived as a synonym to “Pork-Barrel spending,” earmarks can serve a useful role.  They are a way that congress can designate funding for specific work.  They are also a way for the congress to negotiate compromises, which, when done within reason, are actually a useful tool to move decisions forward.

But, there is also a reason that earmarks have earned a bad name.  As I mentioned in a previous blog post, TARP, the previous stimulus package, was earmarked for banks, despite the fact that banks were clear, in a very public way, that they had no intention of using it as directed.  Negotiating earmarks can also slow congressional decision-making to a halt.  The funding pie is never big enough, so not only are people scrambling for a slice, but arguing like little children over whose piece is bigger.

Both the House and Senate are getting very close to agreeing on a stimulus package that President Obama can sign.  Everyone involved seems to recognize the urgency of the situation and the need to get money flowing back into the economy.  At this point in time, it is looking like both the House and Senate will sign on to the idea of having the jurisdictions that receive the money decide how they will spend it. But not without some parameters from congress.  In HB1, the House economic stimulus bill that is currently being debated, there are dates by which the money needs to be released by the federal government (30 days for formula funding, 90 days for competitive funding and 120 days for funding for new programs).  In addition, the funds are released conditionally on a “use it or lose it” basis.  So if 50-75% of funds are not used by the recipient jurisdictions within a pre-determined time-frame, the money goes back into the pool to be redistributed.

What happens next?  Well, according to Sarah Binder of the Brookings Institution:

When this bill passes, a Niagara Falls of money will flow out of Washington and into the accounts of state highway commissioners, governors and legislatures, local school boards, county executives — even mayors

Then local jurisdictions, rather than national legislators, can decide how to best allocate the money to revivify their local economies.

I find the resistance to shifting the decision making to the local level very interesting.  From my perspective, localizing the spending decisions promotes greater local accountability because the locus of control is so much more accessible.  When funding decisions are made in Washington DC and they are poorly suited for a state, a county,  a city or a school district, it is way too easy to blame “those folks in Washington.”  The machinations of elected officials in our national capital are mocked as often, if not more so, than they are taken seriously.

However, having lived in two large east coast cities (New York and Philadelphia), a small Californian city (Santa Cruz), as well as our lovely medium-sized city of Portland, I have observed that ordinary people (as opposed to policy wonks like me) actually track funding decisions being made on the local level.  When city or county governments are debating whether to pave roads or increase park maintenance or whether to close a community center–citizens pay attention.  They pay attention because the decisions being made will impact their day-to-day existence.  They pay attention because the money being debated is at a scale that is comprehensible (thousands and tens of millions, rather than billions and trillions).  And they pay attention because it is much easier to write letters, call or testify to a legislative body that is driving distance of one’s home.

The opposition I have heard thus far to localizing the decision-making is centered around local jurisdictions’ inability to make sound funding decisions.  That will certainly be true in some cases.  But, what will also be true is that decisions will be made that align much more effectively with the needs of the local economy than any decisions that could be made at the federal level. My question is whether the stimulus funding that is being allocated by local jurisdictions will be spent more effectively than the TARP funding allocated by congress.

The good news is that we are likely to be able to answer that question within the next couple of years.  U.S. Rep. David Obey (D-WI), the chairman of the House Appropriations Committee explains it this way:

We have more oversight built into this package than any package in the history of man. If money is spent badly, we want to know about it so we can hold accountable the people who made that choice.

I am looking forward to this grand experiment in local control.  I not only strongly believe that it is the right decision for this time and this place, but I am also optimistic that we, as nation, will learn a lot about how to most effectively spend our public dollars.