Issues
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
Thank You!
We would like to take this opportunity to thank everyone for joining our effort to defeating the proposed income tax. We want to thank all of the wonderful volunteers and supporters that made this victory possible. Without you, we could not have achieved this victory.
Lane County, Oregon
Special Election
May 17, 2011
UNOFFICIAL RESULTS
20-182 CITY OF EUGENE
Income tax for schools Vote for 1
Yes . . . . . . . . . . 16,326 37.77
No. . . . . . . . . . . 26,894 62.23
Over Votes . . . . . . . . 0
Under Votes . . . . . . . . 392
http://www.lanecounty.org/Departments/MS/CountyClerk/Elections/Pages/CurrentElectionSZAD.aspx
From the News
KVAL
May 2011 Election: ‘Even in losing, we have won’
By Beth Ford and Lauren Allison KVAL News
EUGENE, Ore. – Crying to the crowd, city measure 20-182 supporter Hillary Johnson said, “Even in losing, we have won.”
Ballot returns had the income tax for schools failing and the capital bond for school infrastructure renewal passing. >>> Election Results
“It’s always a challenge to ask people to tax themselves a little bit more,” Johnson said. Read More >>>
Register Guard
School income tax is soundly defeated
BY EDWARD RUSSO
The Register-Guard
Published: Wednesday, May 18, 2011 05:01AM
Even supporters of Eugene’s income tax for schools were surprised by the size of the defeat.
Eugene voters on Tuesday soundly rejected the tax measure, 64 percent to 36 percent.
“I’m surprised, but the voters have spoken,” Hillary Johnson, chairwoman of Strong Schools Eugene, the tax proponents’ group, said Tuesday night. “The fact of the matter is our schools need help and we need to work on a solution.” Read More >>>
Income tax vote no shock to many
BY MARK BAKER
The Register-Guard
Published: Thursday, May 19, 2011 05:01AM
Disappointment, not surprise.
That was the reaction Wednesday of many supporters of the city income tax for schools that was soundly defeated Tuesday by 62 percent of Eugene voters. Read More >>>
Register Guard Recommends NO for Eugene Income Tax
We are proud to announce that the Register Guard has endorsed our position against the Eugene Income Tax. This adds to already stellar endorsement from the Eugene Area Chamber of Commerce. Read an excerpt below:
EDITORIAL: City tax for schools — no
Income tax plan is imperfect, uncertain and unfair
Published: Sunday, May 1, 2011 07:01AM
Even supporters can see that Measure 20-182 on the May 17 ballot is far from perfect. Yet a city of Eugene income tax is the only available means to soften the effects of budget cuts in the Eugene and Bethel school districts, cuts that will result in layoffs, fewer school days and larger class sizes. The malady is plainly serious — but the cure is harsh. The Register-Guard cannot recommend a yes vote.
ELECTION 2011
The defects in Measure 20-182 are many, starting with the fact that one local government, the city of Eugene, is proposing to use its taxing authority for the benefit of others, the two school districts. The Eugene City Council has attempted to ensure accountability by requiring that the Eugene and Bethel school districts use the income tax revenue for no purposes other than limiting class sizes and restoring school days.
But there’s unavoidably a blurring of responsibilities, and even a potential for conflict. If a school district extends a bus route or buys a textbook, who’s to say that the funds didn’t indirectly come from the income tax? And if a school board believes that its top priority is adding a librarian or a counselor, why should the city be in a position to insist that the money be spent on a teacher instead?
Eugene Chamber of Commerce Opposes Tax
Earlier this week the Eugene Chamber of Commerce issued a press release stating their opposition to the proposed Eugene city income tax. Here is an excerpt from the press release:
“The Eugene Area Chamber has a long history of supporting ballot measures to support schools. But after much discussion and careful consideration, its board voted not to support a proposed ordinance that would implement a local income tax to fill budget gaps in 4J and Bethel School District 52.
“The best way to characterize the Chamber’s position on the proposed local income tax is ‘No, not yet,'” Hauser said. “While we understand the concerns and motivation to find additional funding, there are simply too many unknowns at this time for an income tax to be prudent.”
In addition, that while the proposed local income tax could be modified or repealed at any time, it is not known whether the money collected from the proposed income tax would be enough to plug the expected budget gaps, particularly if $7.2 million of the $24 million expected to be collected would need be used to pay the expenses associated with collecting the taxes themselves.“
Coverage from The Register Guard >>
Tax Proposal Creates a Gap
As recent our recent emails have noted, the new income tax proposal is the wrong solution to help Eugene schools and it’s structure allows the tax to be altered in the future with a vote from the city council. As the Register Guard pointed out by it’s headline in Tuesday’s paper, “If tax passes, schools still face gap”.
This “gap” in budget is created because the schools’ budget is taking in expenses on the assertion this income tax will pass. However the revenue from the tax will not be collected until 2012 leaving the school districts with the issue of paying for their expenses that exceed their current means.
Details About Tax Proposal
As we learned March 17th that the proposed income tax is the wrong solution to help Eugene schools. It would raise taxes on middle class families while Eugene’s unemployment is high and there’s no guarantee the funds will help kids.
Proposed Tax Increase is an Ordinance
To add to this list the proposed income tax is going to be implemented as an ordinance instead of a charter. An ordinance would allow a simple majority of the Eugene City Councilors to change it. This could have several negative implications. One of which is the current tax breakdown could be changed at any time if the revenues are less than expected. Here is a letter to the editor that explains this further from City Councilor Mike Clark.
Citizens Group Announces Campaign to Oppose Unfair Tax Burden on Eugene Working Families
Citizens for Jobs and Schools have announced an effort and fight to organize a united campaign to oppose the proposal by the Eugene City Council to raise income taxes on working families in order to boost the budgets of Eugene schools
Reasons not to support the Income Tax:
1. With record high unemployment and struggling local economy, this is not the time to be asking middle class working families to pay an additional hundreds of dollars in new taxes.
2. If the tax passes, there’s no guarantee the funds will help kids. It’s probable the funds will be used for ballooning and unsustainable benefits and retirement plans for state employees.
3. School administrators and staff should contribute a small portion of their salaries to their benefit packages, creating no need to lay off teachers and add furlough days to save funds.
Please see the tax increase scale below to learn more about how the tax will negatively impact nearly every Eugene resident. A family of five earning a combined income annual income of $70,000 will pay an extra $224 for their tax bill, more than enough for a week’s groceries for the family.