The Other, $3.8 Billion, Shoe Drops
Jeff Alworth
The number is in, and it's a big one: $3.8 billion. It isn't as big as the number some economists feared, but it's still one king hell of deficit:
The quarterly projection by State Economist Tom Potiowsky, which he made at a joint meeting of the Legislature’s revenue committees, is important because it is the forecast on which the next two-year state budget will be based....
The gap between projected income and current services was estimated at $3.3 billion in the previous forecast issued Feb. 20.
Legislative budget analysts have said it would take $16.7 billion to continue programs at the current two-year level, which does not account for mid-cycle hiring of state police troopers and others, phase-in of programs and increased costs such as medical care. But lawmakers already cut more than $300 million from the current budget of $15.1 billion back in March. Other potential cuts were averted through use of federal economic-recovery funds and state funds other than reserves.
Legislative budget writers already were planning for a gap of about $4.4 billion.
Your thoughts?
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connect with blueoregon
1:19 p.m.
May 15, '09
Bye-bye kicker. So long, $10 corporate minimum.
May 15, '09
The answer is obvious ...
A BIG MASSIVE TAX CUT!!!
Oh, and loop off another 60-70 days off the public school year.
And speaking of schools, can all you teachers out there take another pay cut and work more free days? Thanks.
May 15, '09
"The answer is obvious ...
A BIG MASSIVE TAX CUT!!!
Oh, and loop off another 60-70 days off the public school year.
And speaking of schools, can all you teachers out there take another pay cut and work more free days? Thanks."
Scott, I hope you were being sarcastic.
In our district, AFTER the E Board cut school funding, the supt. convinced the school board to raise the salary of 4 administrators to $120,000 or more plus a car allowance (keeping track of mileage is OK for outside sales people but wrong for public administrators?) on a consent calendar vote.
I refuse to listen to anyone saying unionized workers (esp. teachers) should give any more concessions until this practice of high administrator salaries is regulated by the legislature.
Central office school administrators are more important than teachers because....?
May 15, '09
Scott in Damascus: "The answer is obvious ...
A BIG MASSIVE TAX CUT!!!
Oh, and loop off another 60-70 days off the public school year."
Make sure they double up the abstinence classes in the remaining days of the schedule.
May 15, '09
"Central office school administrators are more important than teachers because....?
"....Administrators come first alphabetically. Thank you for your support.
Now gimme those pencil sharpeners. You don't need luxury goods like those when there's perfectly good butter knives in the cafeteria for all your pencil sharpening needs. Go on now!..."
May 15, '09
LT:
Yes
2:32 p.m.
May 15, '09
If only, Carla. Well, corp. minimum maybe.
Campaign for tax fairness is calling for equalizing corporate income taxes with individual. Any prospect of move in that direction? Equalizing property tax rates?
In addition to short-term service / job cut worries, I'm curious about how this may play into the kicker's down-ratchet effects. How-long does the kicker lock in whatever draconian budget-slashing follows, once revenue starts rising again at whatever point the economy starts to turn up?
2:53 p.m.
May 15, '09
Chris:
Yeah, I hear what you're saying. My comment was what I'd like to see, at least for starters.
May 15, '09
I say this quietly and with some reservations, but there seems to be some disconnect with realty over these past 24 hours when (a) last night I received my 401K statement showing losses of 43% or more during 2008 on what I believe was a relatively conservative investment strategy, (b) today Oregon announces a 4 billion dollar budget shortfall, and (c) in today's mail my wife received her PERS Tier I statement for 2008 showing a tidy 8% return. My wife worked her butt off in a professional position at OHSU for a long time before leaving for the private sector, but you have to wonder whether Oregon can afford PERS, either as originally formulated or as it currently exists. Not that she will be voluntarily giving any of the money back!
May 15, '09
Greg D.
You might want to look closer at that PERS statement. While the few employees in the fixed portion of Tier 1 did receive 8% the variable portion lost something like 46%. And since no contributions have gone to a Tier 1 account since around 2003 the wonderful new IAP account lost 27%. I believe if she has been out of PERS covered employment for over six months her Tier 1 account will be converted to the IAP.
May 15, '09
PERS, a defined benefit pension system, is killing the state. Just like defined benefit systems have killed the American auto industry.
Beyond that, our heavy reliance on Income and Capital Gains taxes is ludicrous. We have to get to a sales tax.
Oregon has a huge underground economy. If you don't believe me, go to a home center in Grants Pass or Medford and watch them come in and buy dozens of high intensity halogen lightbulbs paid with hundred dollar bills peeled off thick bankrolls. Everybody knows what those lamps are used for.
Pot growers, meth sellers, people working under the table.... anyone who is not a W2 wage earner is not paying taxes in Oregon.
May 15, '09
The O is reporting the actual deficit number at $3.6 Billion. http://www.oregonlive.com/politics/index.ssf/2009/05/may_forecast_state_short_36_bi.html
I'd say the House Dem proposal to tax household incomes over $250 thousand and higher corporate taxes just took on greater life.
May 15, '09
The O is reporting the actual deficit number at $3.6 Billion. http://www.oregonlive.com/politics/index.ssf/2009/05/may_forecast_state_short_36_bi.html
I'd say the House Dem proposal to tax household incomes over $250 thousand and higher corporate taxes just took on greater life.
May 15, '09
The Tier One people in PERS who get the fixed %, are fewer and fewer, and it hasn't been available for several years now. Even those Tier One people who had the variable can't switch to the fixed. So quit bitching about PIERs, especially you who are lucky enough to get it. The only reason a few still get it is because a court said the state can't break a contract it made.
And for those of you who hate the middle class getting a defined benefit, you seem to have no problem with the wealthy corporations offering their perks and golden parachutes.
Thank God, the American people and the Dem. party has prevailed to save social security from being turned over to the Wall St. robber barons, as was planned by the GOP. It's the only retirement left we can count on. And, right wing attacks and talking points aside, Social Security is quite fixable in the long term and will survive despite how badly the GOP hates it.
May 15, '09
Yesterday the Tigard/Tualatin School District gave pink slips to 20% of all staff, district wide. At the same time the school board gave their Superintendent a bonus. The football coach was not laid off, and sports will go on as per usual. That's the state of priorities in Oregon communities.
May 15, '09
Bill and LT - The answer to school board's giving raises and car allowance perks to administrative staff is easy. it is called RECALL. It is each communities' responsibility to hold their elected officials acccountable for their actions. Raising a big enough stink can get this unbeleiveable action rescinded.
Yes, nobody gets raises in a school system when collective bargaining employees are being asked to give back. I can not believe the Chutzpah of these folks.
Here in Medford, the Medford Urban Renewal Agency (MURA tried to slide a 10% pay increase for the Director past the budget committee and got caught. This raise would have resulted in the person getting a 51% increase in annual pay over the past 5 years. Thank goodness it was caught and should not go into effect.
7:35 p.m.
May 15, '09
We are really counting on the courage of our legislators to make the hard choices and take the tough votes that protect core services and vulnerable people. The political capital that will be expended will be the same whether they create a weak revenue package or a fair, progressive and strong one. Once you get past the third of voters who will not support any additional revenue, you are left with a voting public that can be engaged. Have some faith in Oregon's citizens.
8:18 p.m.
May 15, '09
The Democrats currently have absolute majorities in the House and Senate, the governorship, and the biggest crisis in a generation to provide the reason for bold action on tax code reform. They had better do it.
May 15, '09
Richard and Joe White are evidently off their feed, seeing as they haven't yet posted anything here about how cutting tax rates will yet again magically stimulate investment in "yaughts" and thereby boost state revenue.
9:35 p.m.
May 15, '09
Well, thanks for providing that placeholder, JD: "Picture Your Troll Post Here!" ;->
May 16, '09
OK, to Bill R, I have to call BS. Show me where in the GOP platform nationally or in the state they say they "hate" social security. Show me where anything that could be construed as that is written.
Blanket statements like that add nothing to the discussion but do serve to diminish your credibility substantially.
May 16, '09
Chris Lowe: I do one helluva job of impersonating Jim Kaarlock as well. Soon I will move on to Glenn Beck and his "Visualize One-World Government" feature.
May 17, '09
Chris, Joel: I now contritely take back all of my "Death to Joe Whitey" commentary. It was annoying as all get out to slog past their triviations; but it's awfully ... civil around here now, and now I'm not so sure how I feel about that.
May 17, '09
So what is the great Teddy K's suggestion?
This guy has ahd the better part of two terms and we have a big budget hole after having a huge surplus two years ago - Of course Teddy couldn't keep his hands off and had to blow it all.
So now we have the second highest unemployment in the USA. ABout the best he can do is sy the Repubs are full of baloney when it comes to budgeting?
8:12 a.m.
May 18, '09
Steve: There are reasons I have been less than thrilled with the Governor's leadership but you're off the mark on blaming him for a lack of reserves. For that you will have to thank the Oregon Kicker, which we voters approved in 1980. In 2000, people like then Speaker, Lynn Snodgrass(R), advocated for embedding it into our state constitution and sadly, we did just that. It was the 2007 Legislature that partnered with the business community to retain the corporate kicker and divert it into a Rainy Day Fund. Without that, we would be another $400 million or so in the hole.
8:12 a.m.
May 18, '09
Steve: There are reasons I have been less than thrilled with the Governor's leadership but you're off the mark on blaming him for a lack of reserves. For that you will have to thank the Oregon Kicker, which we voters approved in 1980. In 2000, people like then Speaker, Lynn Snodgrass(R), advocated for embedding it into our state constitution and sadly, we did just that. It was the 2007 Legislature that partnered with the business community to retain the corporate kicker and divert it into a Rainy Day Fund. Without that, we would be another $400 million or so in the hole.
May 18, '09
Hey tax raisers, remember what happened in PDX when the genious of a special "Angel Investor" tax was put through?
The Angel investors left the city.
Money is liquid. Money moves. It won't be so much that big employers lay everyone off, it is more at the margin. Intel and Nike decide that the next project involving the creation of 100 jobs goes to Austin TX instead of Oregon locations.
So yes, go ahead and raise the corporate tax rate. That should really help with Oregon's staggering unemployment rate.
May 18, '09
With the 2nd highest unemployment rate in the country, Oregon's $10 corporate minimum tax doesn't seem to be saving a lot of jobs for Oregonians. So, now we have no jobs, no income tax from the jobs, and no corporate tax revenue.
Can someone explain to me--and admittedly, I'm not that bright so I apologize if you already have and I don't get it--How does the $10 corporate tax minimum benefit the Oregon job market and how would employment in Oregon suffer if the corporations paid more in tax?
May 18, '09
"approved in 1980. In 2000, people like then Speaker, Lynn Snodgrass(R), advocated for embedding it into our state constitution and sadly, we did just that."
Not too bad, we're only reaching back 29 years for justification for Teddy's poor performance 0 you're starting to sound pretty Repub right now.
The thruth is Teddy had one of the biggest budgets and spent enought oeven have Kurt Schrade say in 2007 the budget will never work. In addition, we've never been 2nd highest unemployemnt.
Great job Ted.
10:51 p.m.
May 18, '09
No Steve, I was just trying to explain to you why Oregon doesn't carry reserves. I overestimated your concern.
May 19, '09
There is absolutely no reason why Oregon could have set up a reserve fund a long time ago. I was only pointing out the the Governor realy has no clue on the necessity of any kind of fiscal conservatism - especialy when he has had budget upsides his eniter career. He has never ever made an attempt to cut anything besides schools and police and basic serivces. When it comes to things like bonus raises for managers two years ago, no problem.
If you're going to tell me something that has been in effect for almost 30 years is the reason why, then I have to tell you we have an administration living in denial of reality.
May 19, '09
On the front page of Tuesday's Oregonian (today), there is an article about the proposed budget, and how it will be cut to meet the revenue shortfall.
One thing stood out to me:
Total 2007-2009 spending is listed as $14.4 billion.
The 2009-2011 plan calls for $15.2 billion in spending, a 5.3% increase over 2007-2009.
Further in the article, it is claimed that $17.2 billion is actually needed to continue providing state services at the current level; a $2.8 billion or 19.4% increase over 2007-2009 spending just to maintain current services.
Can anyone explain how state spending needs would increase by almost 20% to maintain current services? Is the recession costing Oregon 20% more? Has anyone seen their income or total expenses increase 20% over the same period?
Can anyone explain why an increase in spending from $14.4 to $15.2 is viewed as a "cut"?
Yes, I know that if you get less than what you say you need, it is sometimes called a cut.
A real cut is when a family's income is actually less this year when compared to the previous year.
May 20, '09
Mike (one of many), the reason the "current services level" budget is going up so fast is because demand for service is growing quickly. For instance, there are far more people who qualify for food stamps and Medicaid and unemployment insurance in the next biennium than in the current one. Voters also passed the new mandatory minimums for property crimes, which is going to cost hundreds of millions more. You also have to factor inflation into the mix, and while it's relatively low now for goods and services, in some areas such as health care it's still pretty high. So in Medicaid, for instance, you not only have an influx of new beneficiaries but the overall costs of providing service has probably grown 8-10%. Finally, you have contractual and non-contractual wage and cost-of-living increases for state employees, and PERS increases as well.
I agree with you that a 19.4% increase seems really high. I would love for someone (Jeff Alworth, Steve Novick, Chuck Sheketoff?) to craft a post dealing with current-service level estimates and what they include, because it is routinely misunderstood by the public.
The misunderstanding gives Republicans the ability to say "See, it's not a cut at all, it's an increase!" which is bullshit. Using your analogy, it would be the same as if the family had a new child, but said "Well, our costs aren't going to increase, we'll just keep the budget exactly the same and be fine." At the same time, it's important that the state not play games with the current service level estimates, because that reduces confidence in government's ability to be honest about its programs and services.
May 20, '09
Miles, I agree with the logic of your first paragraph. I disagree that cost increases are approaching 20% per biennium. The entitlements you mention are worth exploring further. Early in this biennium, Governor Kulongoski announced a pay raise for many state employees, but has since rescinded most of it due to the current economic conditions. More detail here: http://tinyurl.com/ORTKwage
(or here if the link eater is working: http: // tinyurl . com / ORTKwage )
Numbers from more learned sources are necessary to explain further.
It's not that the misunderstanding gives only Republicans the ability to say "...it's not a cut after all", it actually shouts out loud to all Oregonians who are being asked for help.
It's very important that the state not play games and misuse this crisis, if it truly is a crisis. It's not only Republicans that do stupid things sometimes; the Democrats have been known to make a few mistakes as well.
Voter confidence with government is rather low right now. No need to drive it even lower.
May 20, '09
Agreed, Mike. I believe the current service level estimates are put together by the legislative fiscal office in consultation with the state economist, which is probably why I'm initially inclined to believe the estimates are not cooked. But I agree that 20% is very high, and it would be in the state's best interest to explain very clearly what assumptions are in those estimates, because most citizens who see that kind of increase won't believe it.
Jun 4, '09