Issues
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.
Economic Recovery in Oregon
by Larry Huss Wednesday, June 29. 2011
There was an article in last week’s Oregonian citing a report by IHS Global Insight which warned that Oregon must wait until 2013 before returning to pre-recession peak employment. Unfortunately that prediction is just whistling in the dark.
First, it appears that the IHS Global Insight report looks at total jobs rather than only private sector jobs. The reason that is important is that private sector jobs represent increases in real economic growth while growth in government sector jobs represents increases in economic burdens on the economy.
For instance, total private sector employment peaked in December of 2007 at 1,445,100. At that point total (private plus public) employment stood at 1,739,000. At its nadir in December of 2009, private sector employment declined to 1,293,100 – a loss of 152,00 private sector jobs. During that same period of time total employment only dropped by 147,900. In other words while productive private sector jobs were declining, non-productive jobs (government) were increasing.
Despite the fervent belief of Oregon’s Democrats, economic recovery will not occur through a growth in government. But that lesson has yet to settle in with Oregon’s Democrat ruling class. For instance, the modest growth of 1,300 jobs in May was represented by 600 government jobs and only 700 private sector jobs. Even at that, Oregon’s critical growth sector – Construction and Manufacturing – lost 600 and 1000 jobs respectively.
Second, the IHS Global Insight report ignores recent history. During the last recession, Oregon’s private sector lost 64,100 jobs between peak employment in November of 2000 and April of 2003. From that point it took twenty-five months to recover those lost private sector jobs. That represents a recovery run rate of about 2,564 jobs per month. At that rate, recovery of the 152,000 private sector jobs will require fifty-nine months or until near the end of 2014. However, given that the last three months have only produced a growth of 2,700 private sector jobs (900 per month), it is more likely that the recovery period will be much longer – maybe as long as twelve years.
And third, the IHS Global Insight report ignores the fact that Oregon’s population continues to grow. More importantly, the available work force continues to grow. According to the United States Bureau of Labor Statistics, 32,000 new workers entered the job market in Oregon from October of 2009 to October of 2010 – an average of about 2,700 workers per month. That means, in addition to the 2,564 private sector jobs that must be produced to keep pace with the previous recovery period, another 2,700 jobs must be produced each month just to keep pace with the workforce availability increases.
The Portland business community at its annual business summit urged newly elected governor John Kitzhaber to adopt their “aggressive plan” to add 25,000 jobs per year for the next ten years or slightly over 2000 jobs per month. That self-described aggressive plan falls short of absorbing the new job entrants let alone recovering any of the jobs lost during the Kulongoski administration.
And finally, the government class continues to be fixated on Oregon’s jobless claims numbers; viewing any decline in those numbers as a sign of eminent economic recovery. Unfortunately, unemployment numbers simply reflect those receiving benefits, not those actually unemployed (or underemployed). There are a whole variety of reasons that a person who is unemployed may not be receiving benefits. He may have exhausted his benefits; he may have been self-employed and his business went under, or he has simply given up looking. To prove the point, let’s look at May’s unemployment report and the corresponding jobs report. In May, Oregon’s unemployment declined from 9.5% to 9.3% (far in excess of the level promised by President Obama and his Democrat colleagues). In terms of actual claims, that means the numbers dropped from 190,557 receiving benefits in April to 185,540 receiving benefits in May – a decline of 5,017. Yet, there were only 1,300 jobs created during that same period. Thirty-seven hundred claimants disappeared – not because they found employment but for any variety of other reasons they no longer receive benefits.
Democrats like unemployment numbers because they reflect how many people are dependent on government. They eschew private sector employment numbers because they represent real growth and independence.
The legislature is close to ending its session. The best that can be said is that they did not make Oregon materially worse for those who would start, grow or retain a business here. But the legislature did not address the primary barriers to long term economic growth. Just as a reminder, the legislature should reduce the capital gains tax, eliminate the inheritance tax on family owned businesses, roll back the taxes on individuals and businesses found in Measures 66 and 67, and reduce the growing burden of public employee union pension and healthcare benefits so as to redirect those funds to education and improved transportation (not light rail – real improved transportation).
Dealing with those issues would send a strong signal to the national business community that Oregon is serious about economic recovery. Continuing to ignore them while handwringing over where there is enough money to fund a bloated government sends a strong signal that Oregon is intent on business as usual.
Which way do you think Oregon will go?
Source: Economic Recovery in Oregon
Start Focusing on Employment Rather Than Unemployment
by Larry Huss Wednesday, July 20. 2011
Dueling statistics in The Oregonian from former Labor Commissioner Jack Roberts and current GOP Chairman Allen Alley highlight the difference between “boosterism” and “unpleasant reality.” Mr. Roberts cited a first quarter drop in Oregon’s unemployment rate and moderate growth in the states Gross Domestic Product as evidence that Oregon is “leading the way” in economic recovery.
Mr. Alley cites those same statistics over a longer period to demonstrate that Oregon has made only modest gains after a decade of losses and continues to lag both Washington and Oregon – not to mention other major Western States and Texas – in recovery.
So who is right? Neither. I don’t mean that the statistics are wrong. I mean they are looking at the wrong statistics.
While the number of unemployment claims may be of interest to the government class because it represents the number of people currently beholden to the government for their welfare, it fails to provide a true measure of the state’s employment. Mr. Alley correctly points out that the “unemployment” numbers don’t reflect those who have given up looking for a job, those who are working part time because they can’t find a full time job or those who have exhausted their unemployment benefits because they have been out of work for over 99 weeks. Curiously, Oregon state government does not publish actual numbers of unemployed but rather simply the “rate of unemployment.”
The United States Bureau of Labor Statistics, on the other hand, provides the actual number of unemployed receiving benefits and they get that number from the State of Oregon. For instance, in March when Oregon was reporting 9.9% unemployment, that represented 198,377 claimants, in April 9.4% unemployment represented 190,557 claimants and in May 9.3% unemployment represented 185,540 claimants. (The Bureau, as of the writing of this column, has not published the June figures.)
Looking at the unemployment numbers would suggest that between March and April, Oregon added 7,820 jobs and that between April and May another 5,017 were added. But you would be wrong and it is precisely why the unemployment numbers should be ignored when talking about the economic health of the state.
Proof of that fact is found in the “employment” statistics also compiled by Oregon’s Department of Employment. The department’s Oregon Labor Market Information System (OLMIS) provides monthly data on the number of people actually employed in Oregon. So when you look at that data, you see that between March and April a paltry 1,100 jobs were created and between April and May only 700 jobs were created. The most recent numbers indicate that only 800 jobs were created between May and June.
The OLMIS database produces not only the gross number of people employed in Oregon but the number of people by category. It is here that the real picture of Oregon’s economic vitality is told. During the recent recession, Oregon’s private sector lost 152,000 jobs while federal, state and local government employment grew. The sectors hit the hardest were the highest paying jobs – Construction, Manufacturing, and Trade and Transportation. And in the aftermath of the recession, these sectors have recovered the least. For instance, the modest growth of 1,300 jobs in May was represented by 600 government jobs and only 700 private sector jobs. Even at that, Oregon’s critical growth sectors – Construction and Manufacturing – lost 600 and 1000 jobs respectively. The job growth of 800 in June found that minimum wage and seasonal jobs in Leisure and Industry increased by 2,200 while Manufacturing shed another 2,000 jobs and Trade and Transportation lost 1,800 jobs.
The decline of quality jobs in Oregon continues. The increase in those who have given up looking for jobs increases. Meanwhile the focus of state government is on increasing government dependency rather than creating jobs.
Something is terribly wrong in Oregon and Oregon state government under twenty four years of Democrat administrations has failed to find a solution. While Oregon Democrats continue to blame George Bush, the fact of the matter is that other states like Texas, Utah, Arizona, Washington and Colorado are making steady progress while Oregon continues to fall farther behind.
Get over yourselves.
Source: Start Focusing on Employment Rather Than Unemployment
Why is Oregon’s economy continuing to decline?
by In the news Thursday, July 21. 2011
Oregon Transformation
Why is Oregon’s economy continuing to decline relative to other states? According to the 2011 American Legislative Exchange Council‐Laffer State Economic Competitiveness Index report, which forecasts and ranks the 50 states with respect to economic performance and economic outlook, Oregon has been declining in its economic outlook rank since 2008, ranking 35th, 39th, 41st, and now 43rd in 2011.
So what are the reasons behind Oregon’s economic decline?
In an article released by the Wall Street Journal in May, the authors of this state competitiveness index report cited two main policies that are extremely important in determining job creation and potential rise in income levels:
1) States with no income tax outperform high income tax states.
- Oregon is now tied with Hawaii for the highest income tax rate in the nation.
- Since Measures 66/67 have gone into effect in January 2010, Oregon has lost approximately 8,000 high income tax‐filers, resulting in loss of state revenue and countless jobs.
- Oregon ranks 48th for highest corporate income tax rate.
2) States with right‐to‐work laws grow faster than forced unionism.
- Oregon is 1 of 28 states requiring employees of unionized employers to become union members, pay union dues, or face loss of employment.
- According to the article, “between 2000 and 2008, 4.8 million Americans moved from forced‐union states to right‐to‐work states. That’s one person every minute of every day.” With Oregon’s state revenue forecasts continuing to fall short of expectations and our increasing public employee benefit obligations, without policies that promote economic growth, Oregon will continue to rank at the bottom of economic performance nationwide.
Sources:
http://www.alec.org/AM/pdf/tax/11rsps/RSPS_4thEdition1.pdf
Source: Why is Oregon’s economy continuing to decline?
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
Kitzhaber sells out taxpayers to pay off union backers
by In the news Tuesday, July 26. 2011
by Dan Lucas
During last year’s gubernatorial race, the two public employee unions, SEIU and AFSCME, endorsed John Kitzhaber and contributed $750,000 to his campaign.
Unlike the education unions who backed Bill Bradbury in the primary, AFSCME endorsed John Kitzhaber in the primary.
SEIU remained neutral during the primary, but endorsed Kitzhaber during the general election.
As governor, the same John Kitzhaber who was so heavily supported by these public employee unions was then tasked with renegotiating their contracts; an inherent conflict-of-interest. Not surprisingly, the public employee unions made out much better than the taxpayers did.
Unions’ Investment in Kitzhaber Paying Off
Kitzhaber recently renegotiated the contracts for SEIU and AFSCME, and the result was three permanent pay raises for the unions, continued gold-plated health care coverage, and no change to the 6% PERS employee pickup.
The public employee unions’ gold-plated health care coverage includes medical plans with no deductibles, and coverage for dental, vision and life insurance.
The small victories for taxpayers were a continuation of temporary furlough days and the requirement for state public employee union members to start paying up to 5% of their health insurance.
And 5% isn’t very much. 5% is half of what Washington state workers pay, less than a third of what California state workers pay, and one-fifth of what families in the private sector are paying. (see chart)
Even after factoring out the furlough days and 5% health insurance, Kitzhaber’s agreements will still result in a net increase of over 3.5% in pay for the average SEIU & AFSCME worker in the current budget. And pay isn’t the only payroll cost that taxpayers will be bearing. PERS retirement costs are expected to increase by almost 15% in the next four years, and health benefits for state workers are expected to increase by over 25% in the next three years – and 95% of that will be paid for by the state.
Note: unlike SEIU & AFSCME, most teachers and other school employees have already been paying for part of their health insurance and they have plans which include deductibles.
Kitzhaber’s Campaign Promises
During last year’s campaign, Keli Carender wrote that “Bloomberg Business Week reports that Oregon’s Democratic candidate for Governor, John Kitzhaber, is promising to get tough on public employee compensation if he is elected.”
Based on the concern that Kitzhaber was “fully supported by the public employee unions”, Carender also relayed this concern: “How can taxpayers be sure that Kitzhaber won’t betray them in order to satisfy his union base when push comes to shove?” How, indeed?
Recommendations from Governor Kulongoski
Before he left office, Governor Kulongoski issued his Governor’s Reset Cabinet Report on how to provide Oregon’s core services in an increasingly challenging fiscal environment. The report concluded “that the state will face a decade of deficits if it tries to sustain the type and scope of services it now provides. Business-as-usual budgets will no longer suffice.”
The biggest reason for the projected increase in spending was identified as:
“Payroll cost increases, as higher PERS rates take effect, salary freezes and furloughs end, and adjustments are anticipated in pay and health benefits”
In looking at what could be done, the report noted that “Approximately three of every four dollars that the state spends from its general fund ends up in a paycheck and in payments for benefits that accompany a paycheck.”
The report also noted “We found that compensation for state employees is now in alignment with that of comparable jobs in the larger labor market, but future increases in compensation are expected to exceed increases in the private sector.”
The report went on to provide a number of recommendations for controlling payroll costs. One example recommendation for controlling health benefit costs was to “Establish deductibles and co-payments in line with industry standards” for health insurance, and another example recommendation for controlling payroll costs was to reduce the 6% PERS payments to the Individual Account Program to 3% or lesser amounts.
Conclusion
- Over the last 4 years, the private sector has lost 110,000 jobs while the number of state employees has grown by 6,400.
- Oregon’s unemployment rate remains way too high: 9.4%.
- 187,000 Oregonians are still out of work – double the number out of work 4 years ago.
- 780,000 Oregonians are on food stamps. That’s 1 in 5 Oregonians on food stamps.
- Governor Kitzhaber hasn’t followed his predecessor’s recommendations to avoid a decade of deficits.
The governor should have demonstrated to Oregon employers, Oregon investors and Oregon taxpayers that Oregon is serious about controlling state spending and that public employee unions will begin paying their fair share.
Source: Kitzhaber sells out taxpayers to pay off union backers