Oregon’s $62 Million Earmark

When I first heard the news about Oregon’s set-aside of $62 million in COVID relief, it was because Maria Garcia was denied funds.

Maria Garcia, owner of the Revolucion Coffee House in Portland, applied for support. She was denied because her business “does not meet the criteria because 0% of its owners identify as Black.”

She sued for denial of Equal Protection, seeking to enjoin the distribution of monies from the Oregon Cares Fund.

In July the Oregon Legislature Emergency Board allotted $200 million to assist small businesses suffering losses because of the pandemic and government-ordered shutdowns. Of the total, $62 million was set aside for the Oregon Cares Fund, whose website describes it as “a Fund for Black people, Black-owned businesses, and Black community based organizations.” Black families are eligible for up to $3,000 and black-owned businesses for up to $100,000.

Are black people and black-owned businesses at risk due to the pandemic? Of course. And based on disparate outcomes, black people are at greater risk than white people, although the reason why isn’t often mentioned in polite company. To compensate for the disparate outcomes, the Oregon legislature set aside this fund for black, and only black, people and business.

Data and anecdotes around the country suggested that the coronavirus was disproportionately killing Black people. Locally, Black business owners had begun fretting about their livelihoods, as stay-at-home orders and various other measures were put into place. Many did not have valuable houses they could tap for capital, and requests for government assistance had gone nowhere.

There is no information about how valuable Maria Garcia’s house might be, or even whether she had a house. Not everybody has a valuable house to tap for capital, despite their “privilege.”

After convening several virtual meetings, the civic leaders proposed a bold and novel solution that state lawmakers approved in July. The state would earmark $62 million of its $1.4 billion in federal Covid-19 relief money to provide grants to Black residents, business owners and community organizations enduring pandemic-related hardships.

“It was finally being honest: This is who needs this support right now,” said Lew Frederick, a state senator who is Black.

While it might well be true that the pandemic is wreaking havoc with black-owned businesses, it’s also true that the same is happening with white and brown-owned businesses, woman-owned businesses and the businesses of one-legged deaf people. What, then, explains Senator Frederick’s claim to “finally being honest,” that funds should be earmarked only for black people?

Oregon’s long history of anti-Black racism has fueled much of the advocacy for the state’s fund. And while other racial groups have said they supported it, critics have argued that Black people are not the only ones who have faced discrimination in the state.

Some Black residents, who make up about 2 percent of the state’s population, said that argument was a distraction.

The argument is that this earmark is, in effect, a state set-aside of federal funds for the purpose of making reparations for historic discrimination. The circumstances for black people and businesses differ from those of other races and identity groups because of past discrimination, which has prevented black people from amassing generational wealth to weather the storm.

But just as racial exclusion is unlawful and unconstitutional when used to exclude black people, is it any less unlawful when used to exclude all but black people?

Many of today’s economic and health disparities stem from past policies and practices that were explicitly racist, some social scientists say, arguing that measures aimed at particular races were necessary to undo the damage. But courts have set a high bar for allowing the clear use of race in legislation. To get around the legal hurdles, policymakers tend to rely on proxies for race — like ZIP codes and socioeconomic status — when designing measures they hope will benefit marginalized racial groups.

The argument in favor of the fund is that black people suffer from particularized issues, such as lack of home ownership and banking relationships, that enable them to obtain funding, because past efforts to alleviate the disparate outcomes of discrimination have failed to produce parity.

Lawyers defending the Oregon Cares Fund have argued that the state has a duty to ensure that the distribution of Covid-19 relief funds does not perpetuate the disparities Black residents face. That means targeting Black residents for relief because other efforts to address inequality have failed, said Janelle Bynum, a state representative who is Black.

While this argument has surface appeal, is a black only set-aside the only mechanism for ensuring that relief funds do not discriminate against black people?

“Without that intentionality, without them actually caring that the money flows through our communities, they’ll never have to do anything to change the status quo,” she said. “I’m not OK with that.”

Is the proper means of addressing racism against black people to be racist for black people? Does the Fourteenth Amendment permit such unequal protection?

Over the decades, various remedies to address discrimination have been met with legal challenges. Supreme Court rulings have established that race-based policies are constitutional only if they achieve a compelling governmental interest and are narrowly tailored to do so. The court has most notably allowed race to be used as a factor in college admissions to achieve student diversity. But the court in recent decades has also sided against one of the original rationales for affirmative action policies — to undo past discrimination and its lingering effect.

“You have to show that there’s this really close nexus between why you’re using race and the outcome you’re seeking,” said Melissa Murray, a professor of law at New York University. “And I think here it’s going to be a real question as to whether funding just Black businesses through this Cares fund is actually the only way that you could address the problems that Black Oregonians have experienced during this particular period.”

Of course, Prof. Murray’s “really close nexus” fails to distinguish the use of race as an ameliorative factor in the calculus as opposed to the sine qua non, that no one who is not black will be given money by the Oregon Cares Fund. Can a pure race-based analysis ever survive strict scrutiny, even if there is a strong belief that it serves a very good, very trendy, belief that there is good and bad racism, and there is a duty to engage in blatant racism provided it’s the popular type?