True grift: Oregon’s Gov. Kate Brown rewards another politician with a cushy pension-enhancing appointment

Gov. Kate Brown Brown has found a nice new lucrative home for State Sen. Ginny Burdick (D-Portland).

State Sen. Ginny Burdick (D-Portland)

Last week Brown nominated Burdick, who has no particular power and conservation expertise, for a seat on the Pacific Northwest Electric Power and Conservation Planning Council. The Council is a federally funded panel that provides policy and planning leadership on regional power, fish and wildlife issues.

If Burdick, 73, is approved by the Senate Rules Committee for a three-year term on the Council, beginning Nov. 1, 2021, not only will she make $120,000 a year, but she’ll likely end up with a much fatter PERS pension payout than her 25 years of legislative service alone would have provided.

That’s because lifetime retirement benefits under PERS are designed to provide approximately 45 percent of a state employee’s final average salary at retirement. Final average salary is generally the average of the highest three consecutive years or 1/3 of total salary in the last 36 months of employment.

As a legislator, Burdick has an annual salary of just $31,200 plus $149 each day of the legislative session to pay for meals and lodging.  After three years on the Council, Burdick’s pension will be calculated using her new substantially higher salary, potentially rewarding her with hundreds of thousands of extra dollars over here lifetime. This when PERS is already overwhelmed with billions in unfunded liabilities.

To say it’s all a scam is being too charitable.

Brown played the same game in 2017 when she put then Sen. Richard Devlin (D-Tualatin) and Sen. Ted Ferrioli (R-John Day) on the Council.

In March, Gov. Brown nominated Pendleton resident Chuck Sams, interim Executive Director of the Confederated Tribes of the Umatilla Indian Reservation, to replace Fererioli on the Council.  If approved, Burdick will replace Devlin.

Welcome to the trough, Sen. Burdick.

After adjournment, the deluge

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I guess it wasn’t enough for Democrats to allow people in the country illegally to get Oregon driver’s licenses, ignoring voters who soundly rejected the practice in 2014. Oregon’s Democrat-controlled 2019 Legislature also voted to bury Oregonians in a deluge of tax increases.

“Only time will tell whether there will be political consequences for Oregon Democrats who enacted this tax hike, Patrick Gleason, Vice President of State Affairs at Americans for Tax Reform, wrote in Forbes. “What is certain is that Oregon lawmakers are making their state a less attractive place to do business, create jobs, invest, and raise a family, and they are doing so at a time when other states are implementing reforms to make their tax and regulatory climates more welcoming.”

 At the top of the 2019 Legislature’s tax list is the gross receipts tax on sales inside the state’s borders that exceed $1 million, whether or not the business makes a profit. The tax, equivalent to a sales tax, is expected to raise $2 billion per biennium. The legislative revenue office says the tax will hit about 40,000 businesses. This less than three years after almost 60% of Oregon voters rejected Measure 97, a ballot measure that would have imposed a state gross receipts tax. 

Adding insult to injury, the Democrats passed SB 116 setting a particularly inconvenient election date if a tax repeal petition now seeking signatures qualifies for the ballot. Rather than having the vote take place during the general election in 2020, when there’s likely to be high interest and participation, the bill provides for a special election on January 21, 2020.

I guess they figured picking Christmas or New Year’s Day for the vote would be too obvious an attempt at manipulation.

Paid Family Leave legislation (HB 2005-B) is going to cost you, too. A 1% payroll tax will fund a paid family leave insurance program (FAMLI) to be administered by the Oregon Employment Department.  The tax will come on top of the business sales tax.

A Revenue Impact statement projected that employers will pay $542.3 million and employees $1,029.6 in 2021-2023. In 2023-2025, employers will pay $ 775.0 million and employees $1,471.5 million.

Then there’s the maneuvering with the kicker.  The collective “kicker” tax rebate Oregonians will likely receive when they file in 2020 is going to be $108 million smaller, thanks to HB 2975, a bill Gov. Kate Brown signed into law in April.

 And don’t forget SB 861, which provides for paying the postage for election ballots. It will cost taxpayers an estimated $1.7 million per election. Gov. Brown pushed for the law, figuring it would increase voter turnout. In a rather bizarre statement, given the widespread availability of stamps, Brown testified that low-income and younger residents don’t always have access to postage stamps.

There’s also HB 2449-B, a 50-cent increase in the emergency communications tax on our phones, which will bring the total to $1.25 per month.

Oregon’s minimum wage law is increasing employer costs, too.

According to the Office of Economic Analysis Department of Administrative Services, the law will result in a slowdown in job growth. “While the impact is small when compared to the size of the Oregon economy, it does result in approximately 40,000 fewer jobs in 2025 than would have been the case absent the legislation,” the office has reported.  “Our office is not predicting outright job losses due to the higher minimum wage; however, we are expecting future growth to be slower as a result.”

And next year, Oregon voters will get a chance to vote on an increase in yet another Oregon tax, this one on tobacco. If approved, the cigarette tax would increase by $2 a pack and E-cigarettes and cigars would be taxed at 65% of their wholesale price.

Whew, what a torrent!

As the humorist Gerald Barzan observed, “Taxation with representation ain’t so hot either.”

 

 

 

 

 

 

 

Just Say No! Stop Gov. Brown from helping former legislators cash in on PERS

GovBrownFastOne

What, me try to pull a fast one?

Oregon’s Senate Rules Committee needs to straighten up and fly right when it considers proposed appointments by Gov. Kate Brown one week from today.

Brown has nominated Sen. Richard Devlin (D-Tualatin) and Sen. Ted Ferrioli (R-John Day) to the Northwest Power & Conservation Council, a federally funded panel that provides policy and planning leadership on regional power, fish and wildlife issues.

The Senate Rules Committee is scheduled to consider the nominations on Nov. 13. It should just say no.

If the two men, neither of whom have power and conservation expertise, are approved for the Council positions, not only will they each make $120,000 a year, but they’ll likely end up exploiting PERS for big payouts. That’s because their pensions will be calculated using their new high salaries, potentially rewarding them with hundreds of thousands of extra dollars. This when PERS is already overwhelmed with billions of dollars in unfunded liabilities.

I remember when smug Enron executives tried to intimidate Oregon Public Utility Commissioners in an effort to secure approval for Enron’s takeover of PGE. Commissioner Joan H. Smith blasted the Enron people at a hearing for assuming Oregonians were simple-minded country bumpkins . “Do you think we all just fell off a turnip truck,” she said.

Gov. Brown must think the members of the Senate Rules Committee just did.

Members of the Senate Interim Committee on Rules and Executive Appointments


Chair Senate Majority Leader Ginny Burdick
Vice-Chair Senate Republican Leader Ted Ferrioli
Member Senator Lee Beyer
Member Senator Brian Boquist
Member Senator Arnie Roblan

 

Medicaid: the beast that’s devouring Oregon’s budget

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An increasing number of Oregonians and their elected representatives appear to believe that affordable medical care is a right.

But fewer Oregonians seem to worry about paying for it.

Take Medicaid.

Like “The Eggplant That Ate Chicago,” Medicaid is gnawing away at Oregon’s budget.

Medicaid was created as a Federal-State funded program by President Lyndon B. Johnson in 1965 as part of his “Great Society” initiative. It was originally intended to be a fairly limited government program to subsidize health care for the poor.

But like so many initially modest government programs, Medicaid has metastasized into what one commentator has called “a budget-gobbling fiscal disaster.” Medicaid is now the third largest domestic program in the federal budget after Medicare and Social Security and, as Pew Charitable Trusts noted in a recent report, Medicaid is now most states’ biggest expense after K-12 education.

Spiraling enrollment is the major reason for the cost jumps.

In the beginning, federal and state Medicaid money allowed states to provide medical care only for single parents and children on welfare. Over time the universe of people eligible for benefits grew to include two-parent families, children with speech and development impediments, people who could be cared for at home rather than in an institution, children up to age 5, 8 and then 18, individuals with mental retardation, pregnant women and so on.

Just since 2000, the number of enrollees nationally has more than doubled, going from 34.5 million to 73.5 million. And because Medicaid is an entitlement program, states have to provide required benefits to eligible enrollees, with the state paying part of the cost. In other words, as more people join the program, it costs more.

Medicaid went into effect on July 1, 1966. Just a few million people enrolled the first year and about $850 million of public money was spent on the program, partly because only 28 states implemented it immediately.

Oregon introduced Medicaid in July 1967. By the end of that year, 37 other states had also implemented their Medicaid programs. In 1982, Arizona became the last state in the nation to implement a Medicaid program.

That same year, the first hints of federal cost concerns surfaced when Congress passed legislation limiting Medicaid eligibility to the “medically needy” whose income was at most 133 1/3 percent of the AFDC income eligibility level in a state. But the program’s explosive growth continued.

By 1973, national enrollment had reached 17 million and total Medicaid spending $9.4 billion. By 2013, Medicaid enrollment was 52.3 million and spending totaled $460 billion. In 2016, Medicaid enrollment reached 72.2 million and Medicaid spending totaled $553.5 billion.

The Centers for Medicare and Medicaid Services’ Office of the Actuary projects national enrollment will reach 77.5 million in 2024.

According to the National Association of State Budget Officers, the run-up in Medicaid costs meant that Medicaid spending accounted for 28.2 percent of total state spending in fiscal 2015, the single largest component of total state expenditures, and 19.7 percent of general fund expenditures. The Association projected that in fiscal 2016, Medicaid spending will come out at 29 percent of total state spending and 20.3 percent of general fund expenditures.

Oregon’s Medicaid spending has also seen explosive budget-busting growth, posing fiscal challenges for the entire government.

The Patient Protection and Affordable Care Act (ACA) called for states to expand Medicaid to low income adults and provides federal funds to cover 100 percent of the costs of the newly eligible people from 2014 through 2016. The federal matching rate was then set to decrease over the next four years to 90 percent in 2020.

When Oregon made the well-intended but ill-conceived commitment to expanding Medicaid under Obamacare, a report commissioned by the state estimated that the Medicaid expansion would cost the state $217 million in the 2017-2019 biennium, the first full two-year budget cycle in which the state would begin shouldering some of the costs. The Oregon Health Authority later revised that to $369 million, about 70 percent more.

In June of this year, the Legislature sent to Gov. Kate Brown a plan to raise $550 million in health care taxes to fund Oregon’s Medicaid program in the 2017-2019 biennium.

The Legislature even went so far as to extend Medicaid to children brought to the United States illegally. Coverage will begin in January 2018, with total enrollment of about 15,000 anticipated.

The Oregon Health Authority has calculated that the fiscal impact of this expansion will be about $36 million during the 2017-19 biennium. Under federal law, illegal immigrants can only receive Medicaid for emergency conditions, including pregnancy-related costs. To get around that, Oregon will pay 100 percent of Medicaid costs for illegal immigrants.

Some people breathed a sigh of relief at the enactment of the Medicaid package, but the solution is temporary and elected officials know it. Escalating costs are only going to get worse, partly because of the scheduled decrease in the percentage of the bill to be covered by the federal government.

Newly eligible Medicaid beneficiaries were fully financed by the federal government for 2014 through 2016, but the federal share will decline until the federal government funds just 90 percent of the costs and the states pick up 10 percent starting in 2020.

That’s going to have a bad enough impact on the state budget, but what happens after that could be even worse. Oregon’s expansion of Medicaid eligibility was considered a no-brainer by supporters because of the 90 percent commitment, but government can be fickle. From a fiscal perspective, it is unrealistic to expect the federal government to continue to pay 90 percent.

Congress could change the state/federal shares at its discretion, a possibility John Kasich, Ohio’s Republican governor, raised on July 19. “…states cannot expect the federal government to continue paying 90 percent of Medicaid expansion costs given our nation’s historic debt; they must accept a gradual return to traditional cost-sharing levels,” Kasich wrote in a New York Times opinion piece.

The federal government has historically provided states with Medicaid funding on a sliding scale based on their per capita income, with more affluent states getting a 50 percent match and poorer states getting up to 83 percent.

If efforts to constrain burdensome Medicaid costs are made again, you can be sure they will be met with overwrought cries of despair. There will also be new accusations like the claim by Sen. Elizabeth Warren (D-MA) that the House GOP’s plan to repeal and replace parts of the Affordable Care Act “…will devastate Americans’ healthcare. Families will go bankrupt. People will die.”

But not tackling the escalating costs of Medicaid will be medical malpractice.

So hold on to your hats, folks. This isn’t over.

medicaidtable

Gov. Brown’s Hiring Freeze: Too Little, Too Late

brownhandsraised

Finally.

More than two months after Senate Republican Leader Ted Ferrioli of John Day called for a hiring freeze in Oregon’s public sector, Democratic Gov. Kate Brown has signed an executive order imposing a hiring freeze.

But it will only last until June 30 of this year. Too little. Too late.

In deciding on a hiring freeze, Brown’s no bold innovator. She’s following what more responsible states and businesses have done before.

Gov. Asa Hutchinson of Arkansas, in an effort to strengthen state finances, imposed a state hiring freeze last year that whittled 1,161 employees from the payroll.

Nebraska Gov. Pete Ricketts, whose state missed revenue forecasts last fiscal year and is forecasting a miss again because of declines in farm income, also put on a hiring freeze for state employees. “As Nebraskans, we don’t spend money we don’t have,” Ricketts said.

Businessess pull back when they face financial challenges, too.

Macy’s, faced with unfavorable earnings, decided to shut down 68 stores and cut more than 10,000 jobs.

In December 2011, then Gov. John Kitzhaber, who was also facing budget troubles, ordered a hiring freeze. But when Gov. Brown released her recommended budget for 2017-19, she chose not to do the same.

In fact, with Oregon facing a $1.6 billion budget shortfall in the 2017-19 biennium, buried in the Governor’s initial budget was a proposal to actually increase the state government workforce from 38,737 in 2015-17 to 39,412 in 2017-19. That’s an increase of 675 full-time equivalent employees.

“Using the cost information from the Legislative Fiscal Office, this 1.7 percent increase would cost the state more than $120 million in compensation costs for the 2017-19 biennium,” according to Facing Reality, a Cascade Policy Institute report.

“A prudent step of a hiring freeze would free up resources and ward off some of the pressure to increase taxes, fees, and charges,” the report said.

An ever-expanding state is not sustainable without ever-increasing taxation.   If Oregon is to responsibly manage its finances, an across-the-board rigorously enforced hiring freeze, with stringent requirements for exceptions and restrictions on hiring contractors, should be imposed for the entire next biennium.

Surely the governor and Legislature, with a state workforce that’s already at 38,737, can find ways to meet the state’s needs by adjusting the workload and assignments of that workforce.

Take a leap folks. Do the right thing.

 

 

Now more than ever, Oregon needs a hiring freeze

budget1

 

Senate Republican Leader Ted Ferrioli, of John Day, has called for a hiring freeze in Oregon’s public sector, saying it will ignite economic growth.

“A hiring freeze in the public sector will ignite growth in the private sector that has been suffering under the rapid growth of government,” said Ferrioli. “We should not be artificially growing government at the cost of the Oregon worker and their loved ones. Grandpa always said when you find yourself in a hole, quit digging.”

The State of Oregon Employment Department data shows that government has had an explosive growth in jobs that has not been matched by growth in the private sector, which is the engine of the economy.

Additionally, the Taxpayer Association says that Oregon out-spends 39 other states and that our state budget grows twice as fast as population and inflation rates combined. State employees make almost double what average working Oregonians make, earning on average $89,000 compared to $45,893.

Whats worse, 35 years of double-digit growth has produced big scandals and billions in preventable mistakes.

“We must end the era of government gone wild.”

Ferrioli has it right.

Most states, when they confront financial hard times, put a hold on hiring.

Gov. Asa Hutchinson of Arkansas, in an effort to strengthen state finances, imposed a state hiring freeze last year that whittled 1,161 employees from the payroll.

Nebraska Gov. Pete Ricketts, whose state missed revenue forecasts last fiscal year and is forecasting a miss again because of declines in farm income, also put on a hiring freeze for state employees. “As Nebraskans, we don’t spend money we don’t have,” Ricketts said.

 Businessess pull back when they face financial challenges, too.

Macy’s, faced with unfavorable earnings, decided to shut down 68 stores and cut more than 10,000 jobs.

Dow Jones & Co., like many news organizations that have been letting people go in the face of declining revenue, is planning to lay off dozens of reporters and editors at the Wall Street Journal because of persistent drops in print advertising income. The news and information business of News Corp, which publishes the Wall Street Journal and other newspapers, reported a 7% decline in revenue in the 4th quarter of 2016.

In December 2011, then Gov. John Kitzhaber, who was also facing budget troubles, ordered a hiring freeze. But when Gov. Brown released her recommended budget for 2017-19, she chose not to do the same.

In fact, with Oregon facing a $1.7 billion budget shortfall in the 2017-19 biennium, buried in the Governor’s Budget is a proposal to actually increase the state government workforce from 38,737 in 2015-17 to 39,412 in 2017-19. That’s an increase of 675 full-time equivalent employees.

“Using the cost information from the Legislative Fiscal Office, this 1.7 percent increase would cost the state more than $120 million in compensation costs for the 2017-19 biennium,” according to Facing Reality, a Cascade Policy Institute report offering alternative budget proposals. “A prudent step of a hiring freeze would free up resources and ward off some of the pressure to increase taxes, fees, and charges,” the report said.

An ever-expanding state is not sustainable without ever-increasing taxation.   If Oregon is to responsibly manage its finances, an across-the-board rigorously enforced hiring freeze, with stringent requirements for exceptions and restrictions on hiring contractors, should be instituted NOW.

Then the size of the state workforce should be held down by careful pruning of ineffective and bloated programs and the hiring freeze should be continued in the 2017-2019 budget, which would encourage state agencies to optimize the staff they have.

Surely the governor and Legislature, with a state workforce of 38,737, can find ways to meet the state’s needs by adjusting the workload and assignments of that workforce.

In the end, the state and taxpayers will be better off for it.

 

 

 

 

 

 

 

 

 

 

Lies, damn lies and statistics: SEIU’s campaign for Measure 97

lyingcartoon

“Those who lie, twist life so that it looks tasty to the lazy, brilliant to the ignorant, and powerful to the weak,” said José N. Harris, an American author.

Based on pro-Measure 97 arguments being put out there by the Service Employees International Union (SEIU), the union knows all about twisting life.

A flyer just mailed to Oregon households by SEIU says 0.25% of Oregon’s 400,000 businesses would pay more under measure 97. Not so fast.

An analysis by the Oregon Legislative Revenue Office on the potential impacts of Measure 97 (when it was still referred to as Initiative Petition 28) made clear that the actual number of businesses that will pay the new taxes is unknown and trying to pin down an exact number is “particularly risky”. That’s because it’s not known how many businesses will take steps to reduce or eliminate the increased tax triggered by the measure.

Potential tax avoidance strategies, according to the Legislative Revenue Office, include:

o Shifting from a C-Corporation to an S-Corporation or non-corporation status.

o Spinning off subsidiaries into separate businesses to reduce Oregon sales below $25 million on the combined state corporate tax return.

o Using mergers and acquisitions or other methods to adjust where the plurality of services are performed under the cost of performance apportionment methodology.

o Vertically integrating with intermediate suppliers in order to reduce taxable transactions.

o Converting to a benefit company, which would not be subject to the new tax.

The risk of setting a firm number for tax revenue under Measure 97 is heightened further by the fact the direct effect of the measure would be “…so heavily concentrated on a relatively few large corporations, thereby giving them a powerful incentive to develop tax planning strategies,” the Revenue Office concluded.

To the extent businesses do take steps to minimize or avoid the new tax, the predicted revenue may not flow into the state’s coffers, forcing more tough choices.

The SEIU is also guilty of peddling dishonest information when it says in its flyer” “Fact: funding can only be spent to improve education, health care and senior services.” SEIU knows full well that Measure 97 would not limit how the resulting tax revenue could be spent by the legislature.

Measure 97’s spending requirements are meaningless Legislative Counsel Dexter Johnson said in an Aug. 1 letter to Rep. John Davis, R-Wilsonville, a member of the House Committee on Revenue.

If Measure 97 is approved by voters, the Legislature can appropriate its revenues “in any way it chooses,” Johnson said. Not only are Legislators “not bound by the spending requirements” of Measure 97, they can “simply ignore” them,” Johnson added.

And even if Gov. Kate Brown has said, “…I will make sure the funds the measure yields go ­toward schools, health care and seniors, as the voters expect,” she is not bound to that commitment, nor are future governors or legislators.

In its purposeful deceit, the SEIU is revealing its true opinion of Oregonians. As John-Paul Sartre said, “the worst part about being lied to is knowing you weren’t worth the truth.”