Request For Proposal: Economic Impact of Moving a State Border

Citizens for Greater Idaho RFP:

Citizens for Greater Idaho is planning to fund a study of the economic impact on stakeholders of a drastic relocation of the Oregon/Idaho border. 

The study will not be a static economic impact study, but rather include economic development aspects and estimates of the impact of changes in demographics. The winning bidder shall issue a conclusive report by November 30, 2021 in preparation for the 2022 sessions of the Idaho and Oregon legislatures.  We received one bid in April but are waiting for you to provide a second proposal. Contact us. 

Objective: To determine the economic costs and benefits to stakeholders of moving the Idaho state line to annex areas of Oregon, Washington, and California shown on the 2021 version of the Greater Idaho map, plus Plumas County and the northwestern quadrant of Sierra County.  We are trying to answer the question of each stakeholder “will this border relocation make my life better or worse financially?” There are three stakeholders considered by this initial study: 1) current citizens of the counties of Oregon that switch states,  2) current residents of the remainder of Oregon, and 3) current citizens of Idaho (in Idaho’s current territory). Although there will be interest in initial costs and benefits, the scope of work for this study is to estimate the steady state financial impact of annexation vs. the status quo (eg. 10 years after the border relocation). An additional question is how would Oregon and Idaho state budgets (per capita) be affected by the relocation 10 years after the border relocation (vs. the status quo). 

The present study shall include the impact of including or not including the counties of California and Washington that are shown on the map.  But the impacts on Californians and Washingtonians can be quantified in a later study. This means that there are three cases compared: A) no border relocation B) phase 1: 18 Oregon counties and 3 partial counties become a part of Idaho C) phase 1 & phase 2: 18/3 Oregon counties, 6 California counties and a partial California county, and 3 Washington counties and 2 partial counties become a part of Idaho.

Deliverable: A detailed report that engenders confidence in the results by: explaining the positive and negative factors, making them easily understandable, and providing enough details to inspire confidence that adequate work that went into the report. Databases will need to be provided as a deliverable for future work. If the databases are not in the form of a spreadsheet, Excel spreadsheets shall be exported where practicable.  Where practicable, calculations shall be transparent and comprehensible for future analysis, revision, and development by third parties.

Considerations: Achieving the objective above requires considering many factors. The work will require estimates based on detailed research of several factors. For example (not an exhaustive list, as you will need to add to it):

  • Assume Idaho approves the Jordan Cove pipeline, and an oil pipeline, and invests in other infrastructure at Coos Bay. Assume the projects are approved.  Will Alberta export LNG and oil from Coos Bay? Assume Coos Bay becomes a port for exporting Montanan and Wyoming coal to Asia. How does this improve the economy of the area, and tax receipts of the state?  Request data from studies done by Pembina on the LNG. 
  • We will provide data from a study on increasing the height of train tunnels into Coos Bay to allow double-stacked train cars.  Incorporate the results of that study, such as how the resultant increase in container traffic at Coos Bay reduces the cost and schedule uncertainty of shipping in the area and how this affects the regional economy, given the dysfunction of Portland’s longshoremen’s union.
  • How does the difference between tax rates and regulatory environment in the two states impact the timber industry, mining, trucking, ranching, farming, etc in the counties that switch states? Obtain insight from timber and mining corporations that have worked in each state. How does the lower minimum wage and right-to-work laws help rural businesses survive and compete? As Idaho requires fewer or simpler professional licenses, what benefit does that have to the economy? Assume that Oregon professional licenses will be accepted by Idaho law to avoid a migration of professional talent from rural Oregon to Oregon.  How much do Idaho companies benefit from the increased size of the jurisdiction of Idaho, which increases the area that can be served with one state license, and without dealing with two regulatory systems?
  • How does the difference in state prosecution of drug addicts and the difference in state benefit programs, (eg. Oregon’s state healthcare program) affect the percentage of drug addicts and state dependents in the counties that switch states? Estimate how many addicts and dependents would move out initially.  Estimate in the longer term how these factors would reduce the annual inflow and increase the annual outflow. Consider the costs of higher drug consumption rates: loss of productivity of consumers of illegal drugs, the financial costs of higher crime rates, and impacts on the productivity and incarceration rates of drug users’ children (in foster care or prisons). 
  • Assume that migration to these counties would be altered as they would become more attractive to conservatives and businessmen, and less attractive to leftists and users of state social safety nets. What is the economic difference between these two kinds of migrants? (Assume that people moving into the departing counties will be like those who currently move into Idaho, and compare to people who currently move to Oregon). How would immigration to the current counties of Idaho be affected when there are more counties of Idaho to choose from for migrants? There would also be an initial migration in and out in the first 24 months in reaction to the border change.  There must be a large number of coastal conservatives in California and Washington who are reluctant to move to current Idaho because of climate, but would move to southern Oregon after the border relocation. Report how  housing prices and land prices would be affected 10 years on.  Describe whether cost of living in these counties would be lower at that time due to the difference in state regulatory environment (including on house construction), minimum wage, right-to-work, and taxes. Red states have lower costs of living according to the BEA.
  • Southern Oregon and northern California have marijuana and hemp farms. Hemp farming, not marijuana farming, became legal in Idaho in April 2021.   Include impact of illegality of marijuana on overall economic impact.  Recognize that legal dispensaries and illegal sellers are both participants in the economy. Quantify the increase in cannabis sales expected in Oregon at the new location of the Oregon/Idaho border.
  • Oregon, Washington, and California are counting on their current population to pay the pensions for state employees that have already been obligated. Departing counties would need to agree on a scheme that would compensate Oregon and California for the loss of their population, by agreeing to pay into the pension fund according to a schedule.  Idaho would need to avoid forcing the new counties to pay for the portion of Idaho state pensions that were already earned before the counties joined Idaho.  Assume that departing counties issue bonds to pay their obligation.
  • Since the per capita debt of the state government of California is $11,680, and of Oregon is $7574, the government of each departing county would take on its per capita share of its state debt as a part of this deal.  However, because they would be as responsible as any other Idahoan for Idaho’s $3133 per capita debt in the future after joining Idaho, Idaho would compensate the government of each county $3133 per capita.  California counties would be left with a debt of $11680 – 3133 = $8547 per capita (Oregon counties $7574 – 3133 = $4441) which could be paid off with the issuance of county bonds, which could be paid off with a temporary county tax. 
  • The border relocation would bring thousands of government jobs to Idaho’s capitol city, and to the locations of Idaho’s public universities and colleges. The state government would gain economies of scale, as the population would increase by 71% to 2.9 million, making it almost half the population of the average US state.  Assume the Idaho public university system would gain Oregon Institute of Technology – Klamath Falls, Eastern Oregon University, and Southern Oregon University.
  • Report how would wages be affected by the changes in the local economy.
  • Make a politically viable assumption about how Idaho acquires southern/eastern Oregon’s share of the government of Oregon’s assets and liabilities, including state land and state facilities such as prisons. Since southern/eastern Oregon is 21% of the population of Oregon, we regard them 21% owners of the state government’s assets and liabilities.  Idaho might want to purchase somewhat more than this share or barter. This will affect annual revenue from parks, etc. Make an assumption about how Oregon PERS would be affected. Some state employees might move to keep their jobs in Oregon/California, others would become employed by Idaho, and maybe some would have to find new employment. Assume seniority is transferred for state employees switching states. Assume that Oregon reduces Oregon National Guard troops to 79% of their current number, and stations them all within the new borders of Oregon.
  • The counties switching states have a disproportionate amount of prisons.  After 10 years, how many of these facilities would be needed by the state and localities of Idaho? Would it make economic sense for the original state to still own or rent some of these facilities to avoid construction costs?  What kind of jobs would people do in prison towns if the prison were closed, or would workers move elsewhere?  The governor announced this year the closure of the state prison at North Bend, Oregon, and has twice tried to close the prison at Lakeview. Assume the prison at Lakeview is closed within 4 years.
  • “per capita” should not include prisoners in counties or states that house prisoners from outside the area (over and above the number of prisoners that originate from the area). This makes prison towns seem poorer than the local free citizens are.  The prisoners are non-locals who are only temporarily housed in random locations. Although the prisoners don’t have an income, they bring a revenue stream to the area.  They are the financial responsibility of the locality that incarcerated them, not the town where the prison is located.
  • How does gaining or losing responsibility for miles of state highways affect Idaho’s budget? Oregon’s budget?  Recognize that the cost of the DMV scales with population, not with miles of roadway.  What is the impact on state budgets of the cost of preventing and fighting forest fires of gaining or losing so much forest?