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Will this state ever save?

Published: Sunday, April 10, 2011, 6:19 PM     Updated: Monday, April 11, 2011, 3:03 PM
Gov. John Kitzhaber and other leaders line up to praise kicker reform,
but more lawmakers must get strongly behind a robust emergency fund

If legislators do not ask voters to alter Oregon's kicker and pass companion bills to create a strong emergency reserve fund, it won't matter what else they accomplish. This session will be a failure. That's how vital it is that lawmakers address the devastating bust, boom, bust cycle in Oregon's public finance.

I
Burdick.JPGSen. Ginny Burdick
t is incredible that after two recession-driven budget calamities sandwiched around a billion-dollar kicker rebate, Oregon still is stumbling along with a hyper-volatile tax system and a token savings plan that guarantee more of the same.

Where's the urgency? Are we really going to stand pat as a state and relive what we've been through, the early school closures and ill-timed tax and tuition increases, again and again?

Frank MorseSen. Frank Morse
Yes, at a recent hearing Gov. John Kitzhaber, lawmakers of both parties, business and labor leaders all backed a package of bills to create an emergency reserve fund and ask voters to amend the kicker. But away from the microphones and bright lights, there's much less enthusiasm for the politically thankless task of building a rainy day fund.

Sens. Ginny Burdick, D-Portland, and Frank Morse, R-Albany, have spent months trying to craft a plan that can win support inside the Capitol -- and outside, among voters -- for an emergency reserve fund that would build during good economic times and be tapped to shield schools and other essential public services during bad ones.

They are searching for support for four related bills. One would ask voters to establish a reserve fund in the state constitution and direct half of the personal kicker and all of the corporate kicker into the savings account, until it built to 14 percent of the general fund, when the full personal kicker would revert to taxpayers.

A second would establish a mandatory savings mechanism in which some percentage of general fund revenues in good economic years would be directed into the reserve fund. A third would require that corporate kicker revenues in the reserve fund be used solely for higher education. And a fourth would reduce capital gains taxes. These last three bills would only take effect if voters approved kicker reform in the November 2012 election.

It's a complicated and carefully written package meant to offer something politically appealing for everyone. Yet it's still far from clear whether there are the bare minimum 31 votes in the House and 16 in the Senate to move the emergency reserve bills. That's not surprising in a building locked in a debate about whether to hold even $400 million in reserve for an anticipated $15 billion general fund.

Of course, it's hard to save, especially when there are many unmet needs in Oregon. And the kicker is a politically charged issue used as a club by candidates from both parties over the years.

But after all this state has been through, isn't it clear that it can't go on rapidly expanding its budget during good times, then tearing it apart in bad ones?

Maybe it is possible to improve on the bills that Burdick and Morse have drafted. The mandatory savings bill in particular is causing heartburn around the Capitol.

But everyone ought to understand that it will require both kicker reform and mandatory savings to level out public spending and build a strong enough reserve fund. And if these legislators won't do it, the 2012 election should be a search for those who will.

Related topics: kicker, oregon legislature

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barkbeetle April 10, 2011 at 6:38PM

"But after all this state has been through, isn't it clear that it can't go on rapidly expanding its budget during good times, then tearing it apart in bad ones?"
====

It is very clear that the state can't and doesn't "go on rapidly expanding its budget during good times, then tearing it apart in bad ones", because it never does that.

The state has always "rapidly expanded its budget during good times, then expanded it some more during bad times".

Oregon has never spent less in the current two-year budget than in the previous two-year budget. Always expanded the budget, even double-digit % increases, way above inflation rates.

And Oregon could have created a rainy day fund in each of the past twenty years. But politicians would rather spend than save money.

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observerx April 10, 2011 at 8:35PM

Funny that even in "bad times" there was still enough money to give a 5% raise to State employees.

If the State has the money, they'll spend it.


If the State doesn't have the money, they'll still spend it.

The kicker is the only protection against the State spending even more money like a drunken sailor in good times, bloating the State government, and then whining that there is nothing to cut in bad. Look at California, for instance...

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oregongrown April 11, 2011 at 7:07AM

Oregon's Budget since 1957

Year To Year Amount %
_____________________________________
2009 2011 $53,760,031,018 9.38%
2005 2007 $43,220,555,200 11.56%
2003 2005 $38,743,009,114 9.11%
2001 2003 $35,508,990,712 16.57%
1999 2001 $30,462,319,439 11.55%
1997 1999 $27,308,692,023 17.62%
1995 1997 $23,218,655,377 15.85%
1993 1995 $20,042,060,862 12.18%
1991 1993 $17,866,757,268 17.74%
1989 1991 $15,174,994,031 20.72%
1987 1989 $12,570,014,958 4.23%
1985 1987 $12,060,094,718 17.97%
1983 1985 $10,223,173,163 14.34%
1981 1983 $8,940,741,798 -10.88%
1979 1981 $10,031,862,751 35.08%
1977 1979 $7,426,493,362 42.91%
1975 1977 $5,196,769,722 56.72%
1973 1975 $3,315,908,507 22.15%
1971 1973 $2,714,651,811 27.54%
1969 1971 $2,128,527,639 13.49%
1967 1969 $1,875,459,599 32.83%
1965 1967 $1,411,920,395 11.43%
1963 1965 $1,267,100,097 18.66%
1961 1963 $1,067,822,805 12.76%
1959 1961 $946,954,063 31.79%
1957 1959 $718,552,984

The answer to the headline is NO! Oregon will never save. Oregon government will only spend and spend and spend. I see zero evidence since the financial meltdown that they even know it happened. That thousands of us in the private sector are jobless and without a job in the future. That foreclosures are rising and realestate prices declining.

Our government has had decades to create rainy day fund. It has chosen to NEVER DO THAT. At any point in time this could have been accomplished with fiscal restraint and responsibility. That has NEVER happened.

Look at the current budget session; no talk of savings or cutting the voluminous budgets for the hundreds of agencies; but two new spending proposals- illegal immigrants now get in-state tuition, and now full day kindergarten for all. Never mind that we are broke.

Oregon government will never have enough money. They will spend it all and demand more. Look at the numbers that tell the whole story. It's pathetic.

Good luck with the voters on kicker reform. We've had it.

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caeron April 11, 2011 at 2:55PM

Using these figures, I did some calculations of my own.

In 1960 the state has a population of 1.76M, now we have a population of 3.8M or 2.15x increase. A dollar in 1957, inflation adjusted is $7.65 today. So assuming a set spend per citizen, the budget should be about 16.5x what it was in 1957 if it were flat, or about $12B. It is more than 4x that.

I would love to see a real, non-partisan look at why this is the case. What are doing now that we didn't use to do then?

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turbocator April 11, 2011 at 2:42PM

HALF-TRUTHS...

A "step-increase" was given after two years for those who have worked for eight years or less.
Seems fair, since the State of Oregon insists on starting everyone at the bottom of the scale. Where else other than public service would they do that?

Hope those office workers making $1900-$2000 didn't go crazy with that extra $60/month take-hope pay.

Employees with 9 or more years got NOTHING:
There were NO cost-of-living raises.
There were UNPAID furlough days taken.

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fac modo April 11, 2011 at 3:37PM

Stop whiining. Everyone starts at the bottom. You got increases when many of us private side workers took hits. My hit was 30%. Plus, half extended family was out of work. In some cases, for the better part of a year. We are now only just starting to get some of it back. Just be glad you have employment.

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turbocator April 11, 2011 at 3:46PM

Barkbeetle...

Wrong...
"And Oregon could have created a rainy day fund in each of the past twenty years. But politicians would rather spend than save money."

The kicker law which has been in effect for 30 years is exactly why the State of Oregon doesn't have a rainy-day fund. The legislature won't set money aside when things are tight -- and taxpayers demand that they get any surpluses refunded to them.

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barkbeetle April 11, 2011 at 5:26PM

Turbo barks:

Barkbeetle...

Wrong...
"And Oregon could have created a rainy day fund in each of the past twenty years. But politicians would rather spend than save money."

The kicker law which has been in effect for 30 years is exactly why the State of Oregon doesn't have a rainy-day fund. The legislature won't set money aside when things are tight -- and taxpayers demand that they get any surpluses refunded to them.
===

Turbo, you FAILED to prove my statement wrong. Perhaps you should look up the word "could" in the dictionary?

There is nothing cast in law (natural, legal or otherwise) that is preventing the governing classes from creating a rainy-day fund. They "could", just did not. And during the dot-com boom, there was plenty of extra, excessive tax revenues coming in, they "could" have established a healthy rainy-day fund.

But there was no political will for basic common sense budgeting. And too many "good causes" that politicians (of both parties) wanted to spend every last dime on.

My statement still stands:
"And Oregon could have created a rainy day fund in each of the past twenty years. But politicians would rather spend than save money."

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elmexijedi April 10, 2011 at 6:59PM

Wow - Oregonian deleted my comment because I post facts

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caeron April 11, 2011 at 2:45PM

Then perhaps you should quote the facts without the profanity or other objectionable material.

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SP Red Electric April 10, 2011 at 7:25PM

Don't ask me to give up MY kicker, until you can demonstrate that you have saved.

It works precisely in THAT order. Not the other way around. You do not get kicker relief until you save first and can unambiguously demonstrate that the state has saved enough and simply cannot function without additional funds. The Legislature has failed to do so. The Legislature has passed many unfunded mandates, without taking into consideration that these mandates are neither absolutely essential; nor that there are any revenues to support those special interest projects. Therefore, no kicker relief. The kicker stays. Stop spending money you don't have - and start spending the money that you do have wisely.

Here's some suggestions:

1. Eliminate any discussion of new programs, and repeal EVERY new program created in the last four years.

2. Eliminate all special interest tax breaks and credits, such as the "green" credits, movie production tax credits, and so on.

3. Eliminate all unnecessary state boards and commissions. Consolidate those that must exist so that they share and do not duplicate administrative overhead.

4. Demand that when funding is available for new projects, that contractors are held to cost estimates so that we don't have a repeat of OWIN. When a price is quoted, that is the price the state will pay - not one penny more; under the full force of the Attorney General and the state justice system. If it means convicting contractors with fraud against the state, so be it.

5. Rank all state programs for cost-effectiveness and usage among the population. Eliminate the worst performers.

6. Require that for those state programs that provide funding to residents, that the resident must demonstrate:
A. Legal citizenship of the State of Oregon and the United States
B. Drug and Alcohol Free
C. Immediate revocation of any benefits if found committing crimes
D. Must provide the state the right to ensure the above remains true during the period that the resident is receiving benefits.
E. Any benefits are subject to state rules to ensure they are being used properly. No, you cannot buy pop and candy with food stamps.
F. Residents who are not working must demonstrate that they cannot work even part-time by the presence of a disability or some other valid reason. Those who cannot work shall be required to perform volunteer or community service work in lieu of work in order to receive benefits. (One example is that if someone claims they cannot work because of child-care issues, they should either provide child-care to other families who need child-care services, or work/volunteer at a child-care center where they could take their own children as well.)
G. Residents receiving benefits must not become pregnant (females), or get someone pregnant (males).

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whatgoeson April 10, 2011 at 10:24PM

Hey now, you're challenging the Democrat/welfare-industrial complex, there. You speak heresy, Sir!(Ma'am?)

I think the kicker should remain as it is. If, over the past decades, the state hasn't managed to stack up a savings concept equal to the task of covering short-term needs, why do it now? The state budget has ballooned since the 80's, doubling, tripling, even, while our state population hasn't grown all that much.

Government and budget are all in the news, these days, at least our state still makes a good-faith effort to run 'in the black' and refund excess revenues to help prevent their theft and/or abuse.

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caron5948 April 11, 2011 at 6:19AM

....."Don't ask me to give up MY kicker, until you can demonstrate that you have saved.".....

Translated: the personal kicker is forever safe.

SP: while all of your ideas have merit, 6A through G are especially noteworthy and would have wide support from all Oregon taxpayers. Personally, I especially appreciate 6E for it's symbolism more than anything else.

Excellent post, SP.

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dundeesage April 11, 2011 at 6:29AM

He's asking for some terrible quid pro quos here to had over his kicker - makes the blood run cold (in Salem).

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dundeesage April 11, 2011 at 6:22AM

Ruthless! Revoking programs like that - you've demoralized the Legislature - and now they will have to pass some feckless measure to restore their raison d'etre.

If the attacks on Richardson, Buckley, and Devlin are any indication - seeing as how they had the utter gall to suggest keeping @ $440 million in reserve - this savings concept could be difficult. Education, in particular, abhors unspent monies.

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