State Treasurer Westlund was wise to say today that it is important to protect the state's credit rating (better than some states). Do the hard stuff first Then if needed tap the Education Stability Fund because it has a mechanism to refill without a vote of the legislature.

Good credit rating helps sell bonds at a good price. Bonds are paying for the Oregon Stimulus Package.

Comerade you have written a most glorious piece that beautifully states the need to take more from the capitalist class.

I also call for more for the people and less for the corporate fascists!

Great Leader will be so proud!

It would be nice if it were as easy as you suggest. First, those "profitable corporations" that are big enough to make a difference are few and far between. Corporate profits are falling; that's one of the factors pushing the stock market down. Dividend and interest income are also falling, which, along with an almost complete absence of capital gains, reduces the "wealthy people's" passive income that you have such disdain for.

This is the flip side of the equally ridiculous idea that we should cut the capital gains tax rate in order to stimulate economic activity. (Who has GAINS right now??)

There is certainly increased need for public services, including college classes to retrain workers, health services, meals for seniors, etc. However, reducing consumer spending or productive capital investment doesn't seem like the right prescription at this time.

Your approach also leads to an interesting ramification down the road: if we increase taxes in a recession/depression, should we cut taxes like mad when the economy recovers (and eliminate the potential for funding the "rainy day" accounts we're about to draw upon)?

Well, I hope the people on this House Revenue Committee (and maybe some here) will be open-minded enough to at least consider some of the findings and recommendations in this very timely PDF

It was refreshing to read some other ideas and proposals besides the usual 'increase taxes on 'the rich' and corporations' mantra I see here ad infinitum.

I found this analysis particularly interesting:

Politicians too often have an incen- tive to shift tax burdens from constituents to disfavored groups, violating the principles of sound tax policy and harming broad-based eco- nomic growth. A broad-based tax increase at least forces a public debate on budgeting pri- orities and is the most likely to be checked by the voters if it is excessive. Tax increases that hit only smaller segments of the population (such as high income earners), or are imposed indirectly (such as on corporations) undermine this democratic check and can result in citi- zens’ demanding more government than they are actually willing to pay for.

The forecast makes clear that the state’s two reserve funds are proving to be too small to fix the problem next biennium. That’s why they should be used this biennium if necessary to prevent cuts once available federal stimulus funds are used. Revenue increases should be the tool for fixing the revenue shortfall next biennium.

And what happens when the revenue increases are rejected by voters AND we've blown all our savings? You tend to write about new taxes as though you don't understand Oregon's anti-tax history. I'm all for new taxes, but in order to be responsible the Governor and our legislature needs to recognize that in Oregon, they don't have the authority to impose new taxes. Our referral laws give that authority to the people, and I'm not convinced that a majority will support such an increase, even the ones you talk about. Look what happened when the 2003 legislature sent a modest increase to the voters to help with that recession? It was trounced.

People need to understand that things just aren't that bad this fiscal year -- at least compared to where they're going to be next year. Save the rainy day funds until 2009-2011. The few hundred million they would inject into the economy before June 30th won't make much of a difference in Oregon's $125 billion economy anyway, compared to spending it after July 1st. But it will make a big difference in avoiding catastrophe in 2009-2011.

The House Revenue Committee should be ashamed for not recognizing and adjusting to the deepening shortfalls much earlier. Many months ago it was more than obvious that gloomy revenue forecasts were on the way. The most sensible and necessary approach to Oregon’s fiscal crisis would have been to lead with anticipation instead of neglecting their responsibility.

The current budget shortfall and the $3 billion revenue shortfall forecast for the next budget cycle makes clear the need for cutting back spending. Starting with those new programs and spending increases that occured in the past two sessions. In order to preserve the most vital goverment services the fringe, lower priority, programs must be slashed.

The core functions of public services that Oregonians rely upon each day cannot be slashed to preserve the rank and file of every feel good program in our mission creep past.

Sal Peralta says: As these companies shed jobs, they tend to become more profitable.

You've got that a little backwards in the current economic environment. Right now, companies are shedding jobs in frantic attempts to remain profitable on drastically reduced revenues and in view of the bleak near-term outlook. Most corporations are in business to make a profit, not just pay taxes. They can't print their own money or borrow from our grandchildren like the federal government.

Only as the economy improves will companies tend to become MORE profitable - and start adding jobs again. Employment is a lagging indicator.

And I'm reading opinions all over the map regarding when the economy will improve - everything from 2H09 to 2012 or 2013.

Richard, so exactly when would/should the Revenue Committee have made these adjustments? Are you claiming that the Legislature should have been called in for a Special Session? Be specific with your timing. What month and year are you suggesting that this should have happened?

"is it time for states to do away with balanced budget requirements? "

Uh, they don't have balanced budgets now, Oregon has a lot more bonds sold than it can pay off with tax revenues for the foreseeable future.

The federal government can run deficits because there is a large and established market for U. S. Government securities. The farther you go down the jurisdictional food chain, the smaller that market becomes. China and Saudi Arabia probably aren't waiting with abated breath for Oregon bonds.

Rural, Are you aware of how well the most recent bond sale went? More individual investors (there is a website which is something like buyoregonbonds.com) and institutional investors wanting to buy them than there were bonds to sell. Has to do with Oregon's credit rating as a state.

I have no doubt that A bond issue can do well, even in times like these. However, image if every state and locality were to have the ability to do deficit spending, and were entering the market with competing products -- often in much larger quantities. (For example, California bringing a $40-$50 billion issue to investors as a means of solving its recent problems, instead of coming up with at least a semi-balanced budget.)

This is a small state with a limited revenue base, especially considering the extent to which we hamstring growth and development. Let's see what Oregon's credit rating looks like in a year or two if the present trends continue before making the argument that the world is drooling over the potential supply of Oregon debt securities.

One of the most effective moves for Oregon to ensure its credit rating would be to eliminate the kicker. Oregon is the most unstable of all states in reliance on the income tax, and then we have the stupidity to do the one thing we can to make the one unreliable source more unstable: eliminate any chance to level out the highs and lows in revenues, by just keeping the low years low and canceling out the high years by law.

Now who would write such a plan like that............

jim says: eliminate any chance to level out the highs and lows in revenues, by just keeping the low years low and canceling out the high years by law.

Now who would write such a plan like that............

eh... maybe the people who actually pay the bill (not just collect benefits and utilize services) and expect their state government to stick to a budget based on its means? Not consistently grow at rates outpacing inflation and population growth (i.e., ~27.5% in the last 4 years alone!)?

Posted by: WunderBlunder | Feb 20, 2009 8:41:29 PM

Great Leader will be so proud!

In fascist movements, it is the YOUTH that lead. Wasn't that actually a line in "Swing Kids", "with National Socialism in Germany today, it is the youth that lead"? They get their lobotomy, implant tuned to rabble radio, and lower back tattoo all at the same time. I've heard, though I wouldn't know personally, that Rush, Shaun, Liz et al. have asked their drones to post key phrases to "leftist, hate America blogs". The comment on one of these threads about it being Twitter for Dummies is pretty much spot on.

Sal- 'Living within its means' means just that - it may mean looking for more cost savings, cutting back benefits/services, and/or doing without some 'nice to have' non-essential things... just like you and I are likely doing right now. (e.g., every day out here in Forest Grove for years now I see a line of 6 to 10 full-size school busses arrive at a school ~25% or less full... perhaps there's a cost savings opportunity there?)

And speaking of health care costs, perhaps its time Oregon state employees started paying some of the cost of their own health care insurance premiums? Now there's an innovative idea... In my job in the private sector, I've only been paying annually increasing shares of my health insurance premiums now for nearly 20 years!

Sal Peralta says: Do you favor eliminating mandatory minimums as a cost-savings measure?

I might for/under some conditions. I would like to see proposals for a range of alternatives in context - not just focus a yes/no answer on one certain thing you don't favor.

Gee whiz... I would certainly HOPE the state could live within the means provided by a ~27.5% funding increase over 4 years. That certainly outpaced the growth of the financial resources I and probably most taxpayers have to draw from during that time. It's not sustainable. Just calling for increased taxes means results in household budgets for Oregon families... and taxpayers are real people too, you know.

Our elected leaders are going to have start educating the public on the need to make some hard choices - not just pander.

In Revenue Committee (carried on Oregon Channel) the discussion was on whether certain tax breaks could/should be maintained. As I recall, one involved health care help and whether it should be restricted to low/moderate income folks or anyone regardless of income level.

Let's have a clear and honest debate about this. I don't think cutting/ending a tax break in dire economic times is "increased taxes means results in household budgets for Oregon families... and taxpayers are real people too, you know."

I also think the budgets of any entity getting funding from the state budget needs to be examined with the proverbial fine tooth comb. That means a discussion of the kicker, a discussion of whether anyone in this state deserves to be paid more than a Gov. who just took a 5% cut in pay, whether calls for furlough days should be for everyone (one day of a school administrator's pay--top level of school district central office to president of a state-funded college is worth sometimes twice or more one day's pay for a unionized employee) as well as more effecient ways of doing all sorts of things.

But what we need is specific discussion of the kind going on in Revenue Committee.

Not "increased taxes means results in household budgets for Oregon families... and taxpayers are real people too, you know."

Public employees do pay taxes on their income, let's make that clear right now.

Look... Sal started the 'real cuts that affect real people' thing - I was just pointing out that increased taxes (read title of this post) would also affect 'real people'...

'Real cuts affecting real people' isn't any more specific than 'increased taxes means cuts in household budgets for Oregon families...' Why all the vitriol about lack of specificity aimed at just my comment?

Personally, I doubt a fine tooth comb through all the myriad budgets is going to yield the savings required. We need to fundamentally look at how much government all Oregonians are really willing to pay for (e.g., via consideration of a small broad-based tax increase) - but nobody will have the stomach for that. Likewise I doubt we'll look at the cost of PERS and other state employee benefits (it still boggles my mind the state is picking up 100% of their health insurance premiums - such a deal!)

But I'm reasonably sure we'll end up just continuing the current program of increasing fees and targeting tax increases on those like Chuck decide have the greatest ability to pay and other disfavored groups.

And I never said public employees don't pay taxes on their income. (Although I believe PERS income is excluded from state income tax)

"Likewise I doubt we'll look at the cost of PERS and other state employee benefits (it still boggles my mind the state is picking up 100% of their health insurance premiums - such a deal!)"

OK, what about legislators? What about school administrators? Or are they management and thus the rules don't apply to them?

Posted by: alcatross | Feb 22, 2009 9:20:56 PM If you are serious about this stuff, contact your legislators, legislators on various committees, leadership offices. Contact information and information on bills and who is on which committees are all available online: http://landru.leg.state.or.us/index.html

Unless, of course, complaining on a blog is all you want to do.

If you don't think legislators have the "stomach" for "how much government all Oregonians are really willing to pay for", you haven't been paying attention to the legislature this session.

But then, the question is whether Oregonians can agree with each other on that question.

Next time you are at a social event, or at work, or at church, or have friends over for a visit, ask them that question, "how much government all Oregonians are really willing to pay for?".

If you find agreement, then communicate with legislators about what you and your friends/people you know find important.

HB 2500 is sometimes called the Transparency Bill--it would create a user friendly website for all Oregonians to know how the state is spending money. Legislators as diverse as Arnie Roblan, Jefferson Smith, and Kim Thatcher support the bill. Do you?