Kitzhaber ignores $650M hole in budget; gives unions 3.5% pay increase

Oregon Transformation Project FlashFact

Recent negotiations between Governor Kitzhaber and two public employee union groups, SEIU and AFSCME, produced a win for union members.  Between permanent pay raises, healthcare benefits including vision, dental and life insurance, and a continuation of the 6% PERS pickup, these union members are receiving a net pay increase of nearly 3.5%.

So who is responsible for paying these increases?  Taxpayers.

Which begs the question: With a $650 million hole in our current 2011-13 state budget, how can we afford such increases?

The current budget was passed with $650 million worth of assumptions; spending cuts and cost savings that have little hope of materializing.  With state revenue likely to fall short of expectations and increasing state liabilities, the hope that we can grow our way out of this budget shortfall and maintain our spending levels is unrealistic.

Translation: The legislature put off making the tough decisions on spending, and now the Governor has put even more responsibility on the backs of taxpayers.

According to an estimate from the American Enterprise Institute, Oregon has a nearly $42 billion unfunded pension liability.

Under this estimate, every employed Oregonian is responsible for $28K towards public employee retirement.

The private sector in Oregon, which makes up about 82% of state employment, has seen a loss of over 110,000 jobs in the last four years.  Private sector employees pay upwards of 30% for healthcare costs, and with the majority of them holding defined-contribution retirement plans, they have experienced significant retirement fund losses due to the stock-market collapse.

How long can the private sector withstand the burden of propping up benefits received by only 18% of the employed population?

Sources:  http://oregoncatalyst.com/10813-kitzhaber-sells-taxpayers-pay-union-backers.htmlhttp://www.qualityinfo.org/olmisj/ArticleReader?itemid=00006781http://www.oregontransformation.com/2011/07/22/co-chairs-corner-5/

 

Post to Twitter Post to Facebook Post to LinkedIn Post to Reddit

Posted by at 05:00 | Posted in Gov. Kitzhaber, Public Employee Unions, State Budget, Uncategorized | 33 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Unionman

    These hard workers are people, too, and need these raises just to stay even with the rampant inflation. Why begrudge them a living wage.
    I am sick of all the union bashing. These are your neighbors with families and problems just like the rest of us.
    And, they work hard, pay their dues, and get their raises.
    Writing an article about it won’t change anything.

  • Unionman

    These hard workers are people, too, and need these raises just to stay even with the rampant inflation. Why begrudge them a living wage.
    I am sick of all the union bashing. These are your neighbors with families and problems just like the rest of us.
    And, they work hard, pay their dues, and get their raises.
    Writing an article about it won’t change anything.

  • Unionman

    These hard workers are people, too, and need these raises just to stay even with the rampant inflation. Why begrudge them a living wage.
    I am sick of all the union bashing. These are your neighbors with families and problems just like the rest of us.
    And, they work hard, pay their dues, and get their raises.
    Writing an article about it won’t change anything.

  • Rupert in Springfield

    One thing you have to admire about the public employee unions is their utter shamelessness. They are out for every dime they can get and are real good at getting it.

    The answer from the witless will be “oh well, guess we just have to raise taxes”.

    This will be followed shortly by the “what me worry” assertion that raising taxes has no effect on the business environment.

    Well, looks like Monaco Coach, just down the road from me has had it. They are packing up and moving their remaining 150 employees to Indiana, in large part because of much lower personal and corporate tax rates.

    Get ready for it, these people are determined to drive us further into the ditch than they already have. If you are a public employee you make out like a bandit, anyone else, you get the shaft. Unbelievable.

    • 3H

      “One thing you have to admire about the public employee unions is their utter shamelessness. They are out for every dime they can get and are real good at getting it.”

      Shamelessness?   Who should they be representing?  Who should they be advocating for?   They got a nearly 3.5% increase over the next two years…  and gave up 10 to 14 furlough days in that same period.  Were they shameless in accepting the furlough days as well?

      • Rupert in Springfield

        Oh Boo Hoo. Furlough days are unique to public employees in name only. Plenty of people have had wage and hour cuts so hard to get all teary eyed over that one.

        However only public employees would treat that as a concession and then demand a raise on top of that.

        In this economy Id call that pretty damn shameless. When you lobby for raising taxes on others so you can get a raise, thats beyond shameless.

        • 3H

          I’m not sure but I think, in the real world, taking unpaid days would be considered a concession. 

          “Oh Boo Hoo. Furlough days are unique to public employees in name only.”

          I’m not sure what you mean by that.  I never claimed that they were unique only to public employees.  Nor have I claimed that other workers haven’t had to make sacrifices.  I wasn’t even asking for your sympathy.

          We weren’t talking about the Union advocating for increased taxes – the central point of this post was the most recent contract agreement.   You claimed that the Unions were shameless – presumably for the deal they made with the state.  Do you think it’s shameless that a union, any union, advocates and works to get the best deal for their employees?    Who should the union be working for if not their members?    

        • 3H

          “However only public employees would treat that as a concession and then demand a raise on top of that.”

          No one else would consider giving up take home pay as a concession?  Only public employees?  Really?  You mean most workers would be “Fantastic!  I get to work 5 less days this year and not get paid for them. SCORE!

          LOL..  those greedy public employees get it all.. not only do they get unpaid days but a pay raise too!   You have a very strange idea of what a concession is.   I seriously doubt that the union went in and said, “We want 20 days unpaid over the next two years”, and could only get 10. 

          Yes, taking unpaid days is a concession Rupert. 

  • Bob Clark

    Private sector workers are very hard workers, too; but don’t have the stability of static government employment.  The latter benefit should mean state workers should make less than their private sector brethren, not the same.  So, this would mean also state workers contributing towards their own retirement benefits and paying a bigger percentage of their healthcare.

    Yes, the new contracts were surrounded by a lot of political and media played theatrics to give the impression state workers were being asked to make some kind of draconian sacrifices;  but in reality, state workers did very well for themselves relative to private sector workers.

    • the real valley person

      Many public employees also do not have the stability of static employment. To start, many are in temporary positions and can be laid off at a moments notice. many others, mostly managers, are not union protected. Even those who are union protected can see their positions cut, and if they lack seniority will be cashiered. 

      The right wing has an unreal image of the life of a public worker, like their unreal image of most things.

  • 3H

    “…these union members are receiving a net pay increase of nearly 3.5%.”

    How interesting that the furlough days didn’t make it into the article.  So, for the next two years, they are not getting a net pay increase even close to 3.5%.   You also didn’t mention that the nearly 3.5% increase is spread out over two years.   You left it open to interpretation, and I think quite a few people might assume that they got the 3.5% all at once.  I don’t think you did that by accident either.

    The current PERS is also a defined benefit program.  It has been since 2003.

    Oh, as for your headline – maybe the Union employees did get a 3.5% pay increase, but that wouldn’t have come from Kitzhaber.  State employees got a 3.5% increase.  But that wouldn’t make for a good scare headline would it?

    Comparing job losses to pay increases is comparing apples to oranges.  I wonder what, if any, was the average pay increase for the private sector, and I wonder what the average pay increase was for comparable jobs.   There was an earlier post where the article cited mentioned that state employee compensation is now inline with the private sector.   Is it a problem if state employees are inline with the private sector?  Or does In The News feel that state employees should take a vow of poverty? 

    Nice hatchet job though. 

  • hbguy

    Not so out of line. Here is average pay (not compensation) increase for various areas of work and verious types of workers
     http://www.shrm.org/hrdisciplines/compensation/Articles/Pages/2011Raises.aspxIt looks like this article just reports pay, and I think its safe to assume that many of these people are getting benefits, the cost of which for sure went up more than 2.8%. So I’d assume that the actual total compensation for public employees, when taking into account pay increase, increase in cost of insurance and increased incentive pay in the private sector are relatively comparable.

    On the other hand …… here’s something for all you government employees to consider.

    The company where I work has a contract with the state to deliver personal services that the public simply can’t do without. The State is telling us that with the state budget, we’ll see no increase for the next bi-ennium. Though we’re expected to do the same amount of work. 

    So that will be 4 years with the same rate. About 70% of our cost is employee compensation. 60% wages and 10% medical benefits. Our 30% nonemployee overhead has in 4 years, gone up 10% by inflation alont, and medical insurance has gone up about 50%. And since Kaiser, and my landlord, phone company and city utility won’t accept a freeze on what I pay them, my employees are going to see a real dollar decrease in their wages. In my case, I’m seeing a reduction in health care coverage and more co-pays for insurance coverage. 

    So on the one side we have the state managers who handle our contract and who want to publicly brag about freezing those contracts while they make sure they use their budgets to assure public employee compensation increases, and the taxpayer who believes freezing out contracts is fair. Everyone thinks freezing our contracts is fair, except the people who work with me.

    If there was a move to privatization in government in order to save money and make service providers more responsive, it’s the first thing that is going. 

    • 3H

      Those managers don’t have a choice in what their employees get paid – in most cases they aren’t on the bargaining team.  They are handed their budget, told you have x number of dollars, and your costs for personnel have gone up.   That means, even if their budget went up, they can’t afford to grant increases to in their contracts. 

      My wife is in the same boat – her agency also contracts with the state and only recently did they get an increase in their contract after the amount being flat for 5 years.   There are lots of underpaid people but I don’t think we get anywhere by trying to drag everyone down to the lowest common denominator.  That would be the Walmart model. 

      • hbguy

        I will disagree with you to some extent. Managers do have some choices. If they are high level managers, they can have some, though admittedly limited, say in compensation. If they are mid level or line managers,  they can chose to lay off employees, cut their hours, or reclassify some jobs. (at least absent some union rules)

        I’m not trying to tear others down.  If you re-read my original post, I don’t think the raise is out of line with private sector in general. It is however out of line with what people who contract for public services are paid. These people are sort of crapped on by both the state management and the taxpayer, and I’d like to remind both groups of that fact. And point out to those of libertarian bent that the last thing you should want is to reduce the ability of the State to contract out for services. And when these contracts are frozen, that’s exactly what happens.

        • 3H

          Fair enough, and I agree.

  • hbguy
  • DMVman

    The real question concerning furlough days is how do the union workers tell the difference??

    • 3H

      They don’t have the public up in their face demanding that they be their personal servant?

      • DMVman

        Wow – it must be tough.

        • 3H

          Having worked with the public in a past life – only the jerks who feel they are owed and make assumptions based on who your employer is.  They seem to think that just because you either belong to a union and are a public employee that you must be lazy.  It’s lazy thinking of course.  But you can’t convince them otherwise.  It would take too much work for them to actually step back and consider that their misconceptions are just that – misconceptions. 

        • 3H

          Having worked with the public in a past life – only the jerks who feel they are owed and make assumptions based on who your employer is.  They seem to think that just because you either belong to a union and are a public employee that you must be lazy.  It’s lazy thinking of course.  But you can’t convince them otherwise.  It would take too much work for them to actually step back and consider that their misconceptions are just that – misconceptions. 

  • Rob DeHarpport

    If we survive Obamanomics until 2012, Oregon will once again be faced with a huge budgetary “hole” due to the anemic GDP rate. Add to that; the train-wreck in the NYSE today and that relationship with the PERS guaranteed 8% return and the subsequent cost to taxpayers to “fund” the whole that will leave in the PERS Unfunded Actuarial Liability. PERS just blew a chance to reset/lower their 8% assumed rate of return- why should they? They have us taxpayers to make everything well & good. The public employee carousel will not end well. Kitzhaber’s “negotiations” (payback) have assured that fact it even more.

    • the real valley person

      Well send a thank you note to the tea party for tanking the markets. They put a gun to the head of the US dollar and spooked everyone to the point of panic. It will take weeks if not months or years to put that Genie back in the bottle. 

      Playing with matches around live ammo is dangerous. These people need to grow up if they are going to share in governing the nation.

      • Leepster55

        what a dipstick……the economy has down a slow burn since the day the messiah was elected by the morons…….we btw basically spent that debt ceiling limit already…..its either going to be hyperinflation or default for the US…..similar to Argentina or Zimbabwe….or the Wiemer Republic….
        thanks to the rats and their minions….

        most of we working stiffs will jump off the grid by then and you govt class statists will have to foot the bill for your idiocy…..actions have consequences…

        maybe none of this is important …..maybe you are too busy going to one of obamas’ $36,000 a plate fundraisers…..he’s had 37 so far….at this time in his presidency, Bush had exactly 7!!!!!

        • the real valley person

          The economy was dropping at a rate of minus 6% when Obama took office. It has been recovering, albeit slowly, since about 6 months after he started on the job. The debt ceiling limit was raised multiple times during Bush’s 2 terms as he doubled the debt after squandering a surplus. The stock market by the way, was lower when Bush left office than when he entered. Quite an accomplishment for a Republican tax cutter.

          You go right ahead and jump, we won’t miss your contributions. And as you do that, jump off the electrical grid as well and maybe you will do some good for the world. Peace be upon you.   

          As for me, I’ll continue running my private sector life and will help pay off Bush’s debt. The $36K a plate fundraiser is a bit stiff for my tax bracket, so I’ll look for more plebian opportunities to pitch in. But I’m glad to hear Obama is being so successful fund raising. I suspect even more will roll in once Bachmann or her equal is nominated to run against him.

          Like you say, actions have consequences….

  • Leepster55

    they make far and away more money and have better benefits than MOST workers in the private sector….I don’t cry for the govt workers….I cry for the thousands and thousands who don’t have jobs, have had hours cut, or health insurance cut or serverly restricted and have NO pensions….

  • Leepster55

    I have family in Oregone who just are begging that I move there….not a chance in hell…..between the state taxes and the property taxes and the gas pump attendents I just as soon stay put….I suppose that they think that the feds are going to bail them out……the federal govt is bankrupt as well….

  • big guy

    Governor Kitzhaber  had no choice but to get the union this raise, after all he owes the office to special interest, they are the ones that paid to get him in office. he’s not Oregon’s Governor, he is the Governor of special interest. and that is the way he will govern, sorry folks that is just the way you voted. they own you and the state of Oregon. 

  • Anonymous

    In reply to Unionman, where do the taxpayers get their money to give and give to the unions, the social security people haven’t had a raise for 2 years, nor have Fed retirees had a raise for 2 years, and we pay 25% for our health care, but you want us on fixed incomes to keep paying and paying, and receiving nothing but grief from the unions and thier toadies.

  • Rebiti

    Kitzhaber is an idiot!!!!  Why did people put him back in office!!!!!!!!!!!!!!!!!

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Catalyst through daily email updates:

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

Twitter Facebook

No Thanks (close this box)