Issues
Voters Want State Government Reform
Polling in 10 states shows that Americans want politicians to cut spending and reduce public employee benefits before they raise taxes.
Americans believe that bold action to restrict spending is necessary to stabilize the finances of state government.
Last month, in a wide-ranging national survey of 1,000 randomly selected, registered voters, and in 10 polls in individual states each with 400 respondents, my polling company found that voters strongly favor measures to pare the compensation of current and future public employees. They strongly oppose higher taxes.
Specifically, over three-quarters (78%) say their state faced a budget crisis this year, and 68% say that the crisis was resolved with spending cuts. Overwhelmingly they blame politicians for creating and exacerbating the problems: 48% say “elected state officials made careless and self-serving decisions,” while only 6% say “state governments did not tax enough.”
The top priorities for resolving current fiscal issues are to cut government spending (47%) and to ask for greater sacrifice from current public employees, by having them contribute more towards their benefits (31%). By almost two-to-one, they think that current public employees should have to contribute more toward their pension benefits because of budget problems.
Kitzhaber ignores $650M hole in budget; gives unions 3.5% pay increase
by In the news Thursday, August 4. 2011
Oregon Transformation Project – FlashFact
Recent negotiations between Governor Kitzhaber and two public employee union groups, SEIU and AFSCME, produced a win for union members. Between permanent pay raises, healthcare benefits including vision, dental and life insurance, and a continuation of the 6% PERS pickup, these union members are receiving a net pay increase of nearly 3.5%.
So who is responsible for paying these increases? Taxpayers.
Which begs the question: With a $650 million hole in our current 2011-13 state budget, how can we afford such increases?
The current budget was passed with $650 million worth of assumptions; spending cuts and cost savings that have little hope of materializing. With state revenue likely to fall short of expectations and increasing state liabilities, the hope that we can grow our way out of this budget shortfall and maintain our spending levels is unrealistic.
Translation: The legislature put off making the tough decisions on spending, and now the Governor has put even more responsibility on the backs of taxpayers.
According to an estimate from the American Enterprise Institute, Oregon has a nearly $42 billion unfunded pension liability.
Under this estimate, every employed Oregonian is responsible for $28K towards public employee retirement.
The private sector in Oregon, which makes up about 82% of state employment, has seen a loss of over 110,000 jobs in the last four years. Private sector employees pay upwards of 30% for healthcare costs, and with the majority of them holding defined-contribution retirement plans, they have experienced significant retirement fund losses due to the stock-market collapse.
How long can the private sector withstand the burden of propping up benefits received by only 18% of the employed population?
Sources: http://oregoncatalyst.com/10813-kitzhaber-sells-taxpayers-pay-union-backers.html, http://www.qualityinfo.org/olmisj/ArticleReader?itemid=00006781, http://www.oregontransformation.com/2011/07/22/co-chairs-corner-5/
Source: Kitzhaber ignores $650M hole in budget; gives unions 3.5% pay increase
Taxing “evil corporations” 100% would only pay 2 months of deficit
by In the news Thursday, July 28. 2011
by Robert Canfield
Spending, not corporate jets, causing US debt problems
President Obama and the Democrats in Congress continue to insist that U.S. corporations need to “pay their fair share” in order to resolve our national debt problems. They want more revenue, a.k.a more TAXES, from those “evil corporations”. And that leads us to the big question: Is our national debt a spending problem or a revenue problem?
Democrats want U.S. companies to pay their “fair share” to close the deficit gap. Ok! Let’s give it the old Democrat try. Let’s really STICK IT to those evil corporations and their Lear jets, tax breaks for the rich, etc. Are you ready? Here we go!
Let’s target the largest U.S. corporations, those with annual gross revenues of over $40 billion per year. There are over 60 of these giant corporations in the U.S. Let’s not beat around the Bush. Let’s go all the way. Let’s tax their annual net profits at 100%. That’s the kind of fair share that any Democrat would be happy with. How much would a 100% tax on the annual net profit of these largest companies raise? A whopping $204.8 BILLION dollars!!!
Wow, you’re thinking. $204.8 billion additional corporate tax dollars every year would shoot down those corporate Lear jets and those tax breaks for the rich! It seems like those new corporate tax dollars would make a big dent in our national debt! That’s what I’d call a fair share, wouldn’t you?
There’s just one little problem. Currently, U.S. Government spending outpaces revenues by $118 BILLION per month. That’s right. The U.S. spends $1.4 TRILLION per year more than it receives in revenue. Even if Congress taxed 100% of the annual net profits of every U.S. company with over $40 billion in annual gross revenue, it would pay for less than TWO MONTHS of our monthly deficit of $118 billion per month. Think about that.
Clearly, we have a spending problem. Obama and the Democrats are barking up the wrong tree. There will never be enough additional “fair share” tax revenue to solve our national debt problems.
Robert Canfield is a communications consultant and former Troutdale City Councilor and budget committee member.
(Sources: http://en.wikipedia.org/wiki/List_of_companies_by_revenue,http://money.cnn.com/magazines/fortune/global500/2010/full_list/,http://money.cnn.com/2011/05/16/news/economy/debt_ceiling_deadline/index.htm )
Source: Taxing “evil corporations” 100% would only pay 2 months of deficit
No PERS Member Left Behind
by Larry Huss Wednesday, August 17. 2011
Daniel Re is an attorney in Bend who has undertaken a one-man fight to restore sanity to Oregon Public Employees Retirement System (PERS). He has begun a series of lawsuits to demonstrate that the current state of PERS affairs are a direct result of politicians and judges who are direct and substantial beneficiaries of the system that they created, regularly enhance and protect against taxpayers.
Periodically, I turn this column over to Mr. Re for his well researched and documented reports. The following report is stunning in its clarity and its demonstration of a system that is corrupt from top to bottom:
“On August 2, 2011, the Oregon Department of Education issued a news release with the headline “Student Achievement Increases but Fewer Oregon Schools Meet Federal Standards Under New Adequate Yearly Progress Targets”. Those targets were formerly part of the law known as No Child Left Behind. The latest tests fell far below the target, only 54% (645 of 1200) of Oregon schools met the standards, compared to 71% in 2009-10. Those statistics, however, do not tell the real story. The fact that more than half of Oregon’s school met the standards is actually a remarkable achievement because in the 1970’s the Oregon legislature adopted another plan that has been given the state’s top financial priority. That plan, No PERS Member Left Behind, always gets funded first. In financially difficult times, money that could have been used to educate Oregon’s children must instead go to PERS.
“Governor Kitzhaber’s 2011 – 2013 proposed budget shows the consequences of No PERS Member Left Behind. That budget included $7.5 billion for PERS. That represented a $1 billion increase from the prior biennium. That extra billion was needed to make up for the PERS stock market losses in 2008. That same proposed budget allocated $5.5 billion for the K–12 education, approximately the same amount as the prior biennium. The Superintendent of Public Instruction stated that the $5.5 billion was $1 billion less than what was required to maintain the instruction Oregon’s children had received during 2009-2011. Unfortunately, there was nothing the Governor could do about that. No PERS Member Left Behind mandated that $1 billion go to PERS and that meant it was not be used for K-12.
“The objective of No PERS Member Left Behind is simple. It guarantees PERS members that they will receive their retirement benefits, no matter what. If governmental agencies are forced to cannibalize themselves in order to make their PERS payments then that is what they must do. No PERS Member Left Behind made PERS payments their primary function. Providing the services that those agencies were originally created to provide became a secondary function. At the end of 2010, the PERS fund held approximately $56 billion. If every last cent of the $56 billion is lost through bad investments or any other reason, No PERS Member Left Behind requires the people of Oregon to repay it, with interest.
“The No PERS Member Left Behind program was created by Oregon legislators who joined PERS after they were permitted to do so by an Attorney General opinion in 1971. These are a few of the actions taken by those PERS legislators that made No PERS Member Left Behind the successful program that it is today:
“1. In 1975 the PERS legislators gave anyone who had ever served in the legislature the right to retroactively join PERS and then they kept that retroactive right open for the next sixteen years.
“2. In 1979 they created the PERS pickup which allowed PERS members to require non-PERS members to pay their employee PERS contributions for them. Originally, the pickup was intended to last for just two years but by 1981 those PERS legislators enjoyed having other people pay their PERS contributions for them so much that they made it permanent. PERS estimates that during the 2011–2013 biennium, the pickup will cost $874 million.
“3. In 1983, 84 of the 90 legislators were PERS members and they forced Oregon’s judges to become PERS members and they gave the judges a larger PERS Pick Up benefit than any other PERS members. The pickup amount for judges was 7% of salary, while other PERS members received a 6% pickup. In 1994 the people of Oregon passed Ballot Measure 8 which eliminated the PERS pickup. In 1996, the PERS judges on the Oregon Supreme Court decided that the elimination of the PERS pickup was unconstitutional, by a 4 to 3 vote. Since January 1, 1995, the effective date of Ballot Measure 8, billions of dollars have been used to pay pickup contributions rather than to provide services to all Oregonians.
“4. In 1989 they increased the sanctions against public employers who do not pay their PERS assessments on time. This law, the keystone of the No PERS Member Left Behind program, clearly established PERS funding as Oregon highest financial priority.
“No PERS Member Left Behind was created by PERS legislators who have financially benefitted from it. It is a major reason why all Oregon schools have cut school days and have fewer teachers. Multnomah County School District No. 1J’s 2011/12 Budget Overview, page 83, shows that the district will pay PERS almost $5 million more than it did for the 2010/11 school year. In order to pay that extra $5 million, the district must make additional service reductions.
“Oregon’s schools did the best they could during the 2010-11 school year to prepare Oregon’s children for the new Adequate Yearly Progress Targets. While those results were lower than hoped for it is doubtful that anyone could have done better when faced with the insurmountable obstacle of No PERS Member Left Behind. And besides, that’s not the primary objectives of the schools anyway. During 2010-11, the schools fully paid their PERS assessments so it was a good year, a very good year. Oregon’s children and, therefore, its future may have been shortchanged, but no PERS member was left behind.
“Daniel C. Re”
For those wishing to learn more about the work of Dan Re, you can visit his website at Inrethepeople.com/.
Source: No PERS Member Left Behind
Which Oregon School District Teaches No Students?
by Steve Buckstein Monday, August 1. 2011
Oregon’s major teachers union, The Oregon Education Association (OEA), is seen by many observers as the big loser coming out of the recent legislative session in Salem. Why? Because it failed to convince enough legislators to stop some modest school choice bills from passing. It also couldn’t stop Governor John Kitzhaber, whom it endorsed and financially supported, from agreeing to sign these bills as part of a larger education reform package.
The highest profile bill in question was House Bill 2301, known as the virtual public charter school bill. The union has been trying to shut down online public charter schools ever since they started making inroads several years ago. This year it had hoped to cripple these schools, which it sees as competition to the brick-and-mortar schools in which its members teach. Instead, the legislature agreed to let these online schools expand from teaching about one percent of the state’s K-12 students now up to at least three percent of students in any and all school districts around the state.
In 2005 the union backed a bill to create a state-run competitor to these innovative online schools. Known as the Oregon Virtual School District, it has since been funded to the tune of more than seven million dollars. Legislators appropriated the funds with the intention that the district would “provide online courses.” But as Nigel Jaquiss reported in his recent Willamette Week exposé, “…after six years and the appropriation of $7.1 million, including another $1.5 million lawmakers just approved for the current biennium, the Oregon Virtual School District has yet to provide a single ‘course.’”*
This revelation calls into question which online schools are real and which may appear to be real, but are not. Schools like Oregon Connections Academy and Oregon Virtual Academy are real schools with hundreds of real teachers educating thousands of real students across the state.
The state-run Oregon Virtual School District, on the other hand, is truly a virtual district in the not real sense of the term. It has no teachers and no students. The only real part is that it has spent millions of real taxpayer dollars. And for what? It has a nice website and offers some helpful content and tools for teachers. But that’s about it. Somewhere along the line, its mission morphed from providing real online courses to hosting some “academic materials vetted by the Education Department and training for teachers.”
The Oregon Department of Education manager who oversees the Virtual District says that it is not an alternative to online charter school offerings. “We are not set up to compete with them from a financial point of view,” he says.* Real online charter schools, paying real teachers to teach real students, receive on average less than 5,700 public dollars a year for each enrolled student.** A simple calculation tells us that the $7 million allocated to the Virtual District so far could have been used to teach at least 1,200 students for one school year, or 200 students over the six years it has received state funding. But, again, so far the district has taught zero real students.
The teachers union keeps calling for more accountability from Oregon’s real online public charter schools, the ones with real teachers educating real students. It seems far past time for state legislators and taxpayers to call for accountability on the part of the Oregon Virtual School District. What have we gotten for $7 million in this “district”? If the answer is “not much,” then we should close it down and refocus our energy and resources on real schools with real students.
Oregon’s online public charter schools are not virtual; they are real schools where real learning occurs. Just because their teachers may not wear the union label shouldn’t give OEA the right to stop them from competing with the brick-and-mortar schools its members occupy.
Parents and students hold real online public charter schools accountable every day as they freely enroll and disenroll. More school choice will give more parents and students that power over brick-and-mortar schools as well. If OEA wants to keep students in classes taught by its members, it should figure out how to do that without holding the kids hostage. All students and their families deserve the right to choose where they get their education. Anything less is a disservice to them and to the taxpayers.
* “Virtual Combat: Oregon’s teachers union hates online charter schools. But its alternative has little to show for millions of taxpayer dollars,” Nigel Jaquiss, Willamette Week, July 20, 2011, http://www.wweek.com/portland/article-17755-virtual_combat.html.
** “Unintended Consequences: an analysis of charter school funding in Oregon”, Vanessa Wilkins, Northwest Center for Educational Options, April 21, 2010http://www.nwceo.org/pdf/NWCEO_Charter_School_Funding_Study_May_2010.pdf.
The average Oregon public charter school received slightly over $5,700 per student in 2008/2009 according to the Oregon Department of Education Financial Database, depending on the district that charters them. Current online charter schools are chartered in districts that pay less than this amount; but if the Oregon Virtual School District were to accept students statewide, it likely would receive closer to the average charter payment per student. Note that the $5,700 average per student charter school funding is approximately half the total public funding of brick-and-mortar public schools in Oregon.
Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.
Source: Which Oregon School District Teaches No Students?
Oregon loses $35 million a year to college student failure, says American Institutes for Research
Published: Monday, August 22, 2011, 5:25 PM Updated: Monday, August 22, 2011, 6:08 PM
A new report today says the cost of college students who don’t make it to graduation in Oregon is about $35 million a year in lost income and taxes.
About 40 percent of students who enter Oregon’s colleges and universities drop out before earning a degree, and that failure costs the state about $35 million in lost income and taxes, according to a report released today by the American Institutes for Research.
Nationally, the institutes calculated that 493,000 students who started college in 2002 but failed to graduate within six years cost the nation about $3.8 billion in lost income, $566 million in lost federal taxes and $164 million in lost state taxes.
Read More From The Oregonian >>>
Representative Richardson: Session ends. Good and bad.
by In the news Friday, July 1. 2011
2011 Legislative Session Adjourns– Sine Die
By State Representative Dennis Richardson
The 2011 Oregon Legislative Session ended, and the House Co-Governance Model negotiated by the House Republicans and Democrats worked remarkably well.
Under Oregon’s 2011 House Co-Governance Model, the 30/30 Republican / Democrat split resulted in equal power sharing in all House capacities including Co-Speakers of the House, Co-Chairs of Ways & Means and all other House committees. In addition to having Co-Chairs, every committee had an equal number of Republican and Democrat members.
All proposed legislation was assigned to a committee by mutual consent of the Co-Speakers, Bruce Hanna (R-Roseburg) and Arnie Roblan (D-Coos Bay). If the Co-Speakers could not agree on which committee to assign a bill, it was automatically assigned to the Rules Committee.
Once assigned to a committee, no bill could receive a public hearing or a work session unless it was approved by both Co-Chairs of that committee. Since Committee Co-Chairs knew that they might eventually want a public hearing on a bill for one of their own members, most Co-Chairs were quick to allow a public hearing when requested by the other Co-Chairs.
Public hearings alone did not result in a bill becoming law. After a Public Hearing was held, a Committee Work Session was needed for a bill to receive a committee’s vote. During a Work Session, if a majority of committee members voted in favor of a bill, it would either be moved to the Ways & Means Committee for financial considerations or it would move directly to the House floor for debate and a vote by the members of the House of Representatives. Once a bill received a majority vote in the House, it was then transferred to the Senate and the committee process would begin again. Several good House bills languished and died in Senate committees.
In the House, Work Sessions on bills were not allowed unless both committee Co-Chairs agreed that the bill under consideration should go forward and possibly become Oregon law. Thus, Oregon’s Co-Governance Model gave each of the committee Co-Chairs “the power of NO.” As a result of this “power of NO,” most bad bills died in committee.
Some Democrats were of the opinion that tax increases were needed in these times of reduced revenue streams. The Republican Co-Chairs did not agree and the “power of NO” enabled them to ensure many proposed tax increase bills died in committee.
On a more positive note, common ground was found and mutual agreement was apparent in many instances. Committee Co-Chairs often agreed on bipartisan legislation that was enacted for the best interests of Oregon citizens. Thus, much was accomplished in the various House Committees and many important bills were passed by House committees.
As discussed in a previous newsletter, a key issue of contention was whether or not to approve the bonding for the Oregon Sustainability Center (OSC). All of the Legislative Leadership except for Co-Speaker Hanna and myself favored authorizing $37.5 million in long-term bonds for the OSC project. Co-Speaker Hanna and I asked for a presentation on the status of the project and confirmed that inadequate financial and project documentation existed to justify investing millions of dollars at this time. The OSC project was not approved at this time and the bonds required for its construction will not be authorized unless and until detailed questions about the Oregon Sustainability Center’s financial sustainability are answered.
Hopefully, the links above give sufficient information on the bad bills that failed and the good bills that passed during the 2011 legislative session. Oregon citizens can be proud of the professional manner in which both the Republicans and Democrat legislators conducted themselves during this year’s legislative session.
As the House Republican Co-Chair of the Ways & Means Committee I worked hard to promote sound economic principles while compromising again and again in order to reach agreement with the House and Senate Democrat Co-Chairs. A realistic revenue number was used as the starting point for our budget negotiations. A compromise figure of $460 million was left in the “Ending Balance” to provide a cushion in case Oregon’s upcoming economic forecasts are lower than expected.
Looking back on this session, it is worth noting that the first major budget passed was $5.7 billion for K-12 schools. For the first time in more than a decade, the K-12 Budget was passed in April, which enabled school districts to plan accordingly for the next school year. Usually the K-12 budget is held back and used as an end-of-session political pawn.
Now, after moving to Salem nearly six months ago and driving nearly four hours each way to get home for the past 25 week-ends, this legislative session has finally concluded.
Under the circumstances, the session went as well as could be expected. The Co-Governance Model was a success. The budget has been balanced and the work of the Legislature has been completed. It has been an honor to represent you, wherever you live in Oregon, as a State Legislator and one of the Co-Chairs of Ways and Means.
Sincerely,
Dennis Richardson
State Representative
Oregon Transformation: In addition to his service in the Legislature, Dennis Richardson is the Co-Chair of Oregon Transformation, which brings to Oregon citizens information and opportunities to bring about lasting budget and regulatory reforms that will ensure a robust and growing private sector. To find out more, visit the website: www.oregontransformation.com.
Stay informed about Oregon Legislature: To keep up on what is going on at the Oregon Capitol and in District 4, please subscribe to my newsletters by email and YouTube, like my Facebook page, and follow me on Twitter for regular updates.
Source: Representative Richardson: Session ends. Good and bad.
Unfunded Liabilities: Oregon’s Hidden Debt
by Cascade Policy Institute Thursday, July 14. 2011
By Michael Bastasch
Congress is still debating raising the federal debt ceiling. This would allow the U.S. government to continue to borrow and to add to the already staggering $14.3 trillion in debt. However, the feds aren’t the only ones with debt problems. State and local debt is rising, including $3.1 trillion in unfunded liabilities.
Oregon’s debt is piling up as the state government continues to make future promises it won’t be able to fulfill. A study by the National Center for Policy Analysis found that Oregon’s unfunded pension liabilities totaled $47.5 billion, and its unfunded Other Post-Employment Benefits (OPEB) liabilities (mostly for retiree health insurance) were $765 million, totaling about 30% of Oregon’s GDP in 2008.
The real situation is much worse because the study failed to recognize the vastly unfunded OPEB liabilities of other Oregon government entities. A report by Oregon Capitol News showed that the largest 100 government entities in Oregon had $2.8 billion in unfunded OPEB liabilities. Including unfunded liabilities from all 1,700 government entities no doubt would reveal a much grimmer picture.
Future taxation will be determined by what government spends now and has promised to spend down the road. Taxes must increase if government debt isn’t decreased. All levels of government must reduce the debt burden on citizens to avoid severe fiscal distress and high taxes down the road.
Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.
Source: Unfunded Liabilities: Oregon’s Hidden Debt
US debt has almost doubled under Obama
by In the news Thursday, June 23. 2011
by NW Spotlight
“Our debt is now bigger than China’s entire economy.”
A government report released yesterday revealed the national debt has shot up from 40% of the economy at the end of 2008 to 70% at the end of this year. The report, the Congressional Budget Office’s (CBO) 2011 Long-Term Budget Outlook, also noted that this kind of spending growth will cause the federal debt to grow to unsustainable levels.
Under the more optimistic CBO scenario, the federal debt held by the public (does not include debt held by the federal government itself) would grow from 69% of the economy this year to 84% in just under 25 years. Under their more realistic scenario, the debt would exceed the size of the entire economy within 10 years, and would come close to doubling the economy in less than 25 years.
The options outlined by the CBO are: “increase revenues substantially as a percentage of GDP, decrease spending significantly from projected levels, or adopt some combination of those two approaches.”
On the heels of the CBO’s budget report, Stuart Varney of the Fox Business Network, reported that “Our debt is now bigger than China’s entire economy.”
Democrats controlled both houses of Congress from 2008-2010, as well as the White House. They still control the US Senate and the White House, and the Republicans now control the House of Representatives. Democrats took control of both houses of Congress in 2006, two years before the end of George Bush’s second term.
The current US debt is $9.7 trillion. That doesn’t include debt held by the federal government itself, which is another $4.6 trillion, bringing the total public debt to $14.3 trillion. The current US economy (GDP) is $14.8 trillion.
When President Obama took office on Jan 20, 2009, the US debt was $6.3 trillion; debt held by the federal government itself was $4.3 trillion, bringing the total public debt at the time to $10.6 trillion. The total US economy (GDP) in mid-2008 was $13.9 trillion.
Additional Resources:
US Treasury TreasuryDirect – The Debt to the Penny and who Holds It
Source: US debt has almost doubled under Obama
State Budget vs. Union Benefits
by Cascade Policy Institute Thursday, June 30. 2011
By Christopher Robinson
Mediation continues in Salem between two major labor unions and Governor John Kitzhaber’s team over public employee benefits. The governor is seeking concessions from SEIU and AFSCME regarding the Public Employees Retirement System (PERS) and the state employees’ health insurance plan.
PERS members pay 6% of their salary towards retirement. Currently, the state pays for this mandate as part of a previous deal. The state also pays 100% of employees’ health insurance premiums.
It’s no secret that Oregon is facing budget shortfalls, including financing for public employee benefits. Attempts at legislative reform have largely failed. State negotiators initially aimed to end the 6% pick-up and to require that employees pay 5% of insurance premiums. They have since dropped the pick-up demand.
Union supporters argue state employees have already made concessions by forgoing certain wage increases in favor of hardier retirement benefits. However, this still does not account for free health insurance premiums or the wealth of other benefits union membership provides. SEIU Local 503 members are eligible to receive, among other things, free life insurance and legal compensation. AFSCME members get heating oil and rental car discounts.
The worst case scenario of not being able to fund state employee benefits is bankruptcy. Making a few concessions wouldn’t be a bad idea, and Oregon taxpayers likely would agree.
Christopher Robinson is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.
Source: State Budget vs. Union Benefits