Is Kulongoski Up to the Tasks Ahead?


There is a recession coming and one must ask whether Gov. Ted Kulongoski’s administration is up to the task of managing the state during the looming economic downturn?

Not according to the Pew Center on the States, a part of the prestigious Pew Research Center. Only nine states fared worse than Oregon in a study of government management practices. Only eight states fared worse in money management and infrastructure.

The importance of good stewardship is never more than during a crisis. And there is little question that Oregon is about to enter another economic crisis. While one cannot say that we are in a recession until there are two consecutive quarters of a declining Gross Domestic Product (GDP); it simply means that you have to be in an economic downturn for six months before it is “officially” declared a recession.
No less a sage than Warren Buffet, chairman of Berkshire Hathaway and the “sage of Omaha,” noted in a recent interview with CNBC that while the country has not met the technical definition it most certainly is in an “essential recession.” Buffet notes that between the billions of home equity lost by consumers due to the housing industry collapse and the decline in retail sales by his own companies, “. . . by any common sense definition, we are in a recession.”

Add to that the recent reports from the U.S. Department of Commerce that showed that for the last quarter of 2007, the Gross Domestic Product grew at an anemic 0.6 per cent (compared to 4.9 for the preceding quarter). The GDP measures the value of all goods and services produced in the country. It cannot measure the lost equity value of homes not on the market and thus the impact on most consumers for whom their largest single asset is their home.

Even Oregon’s own tax revenue forecast (although currently being ignored by Kulongoski and his colleagues in the legislature) points toward another fiscal crisis for the state. The most recent tax revenue forecast by the Legislative Revenue Office (LRO) indicated that there would be $180 million less in tax revenues than projected for the biennium. Oregon’s most recent experience with the economic downturn of 2001 teaches us that this first forecast of declining tax revenues is like an iceberg — we only see about ten percent of the eventual problem.

For those with short memories, during the 2001 recession, the legislature was forced to meet in five special sessions to try to deal with the declining tax revenues (a forecast that got progressively worse each time that it was made). During that time Republicans held a majority in both houses but, because of a couple of pro-tax, big spenders in their ranks, were unable to deliver the necessary budget cuts to match the declining revenues. Even if they had, Gov. Kitzhaber had threatened a veto, preferring instead massive tax increases in a period of declining economic activity. The net result was that Oregonians were forced to reject two significant tax increases at the polls in less than eight months. In doing so, the governor and legislature were forced to implement across the board decreases — the least responsible method of fiscal management available.

Nothing has changed in state government since the 2001 recession for the better. In fact, if anything, things have gotten worse. And the problem with studies such as the Pew study is that it cannot look behind the scenes to understand the politics that are most likely to influence decision making in this administration.

Prior to the last recession Oregon had experienced a sustained period of robust economic growth fueled primarily by the growth in manufacturing jobs associated with the high tech industry. It had become accustomed to robust growth in tax revenues and thus routinely adopted double-digit growth budgets that exceeded inflation, population growth and even total personal income growth. That undisciplined growth in spending led to the crisis experienced by the last administration.

But as Oregon enters this recession, it finds that it has barely staggered out of the last recession with only a brief two years of any economic growth. Oregon’s unemployment rate continues to outpace the national average. Manufacturing jobs are on the decline and the only real growth in employment is found in the service industry (cooks, waiters, maids, gardeners, etc.) and the government.

And worse yet, the management team gathered by Kulongoski for his second term appears to not only be incapable of understanding sound management practices but even the fundamentals of what drives an economy. One might even describe that management team as the antithesis of good management during an economic crisis. The top three spots in the Kulongoski administration are held by former union officials. Eighty percent of state general fund budget is dedicated to the payment of salaries and benefits for public employees. Effective management of an economic downturn will require a reduction in expenditures that, by definition, means a reduction in employment. Oregonians have already seen Kulongoski’s penchant for raising taxes in good economic times (over $800 million in the last session). It would be hard to imagine that Kulongoski will have either the advice or the stomach to implement expenditure reductions (employee reductions) given his dependency on the public employee unions.

Yes, the Pew Center on the States put Oregon in the bottom third of the states for sound management practices, but given the politics of the Kulongoski administration it may deserve to be much lower.

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Posted by at 06:00 | Posted in Measure 37 | 18 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Jerry

    No, he is not. This guy would have a hard time turning a profit if he ran a McDonalds.

  • John Fairplay

    Look, it’s pretty hard to have any sympathy for Oregon – its government or its voters. The voters saw the miserable job state government did in preparing for and then managing through the 9/11 recession – they borrowed money to pay operating expenses, for God’s sake! – and they still kept electing the same morons to high office. Now the Legislature and the Governor are making the exact same mistakes they made in the 90s – completely unsustainable spending growth on programs that hurt Oregon’s economic competitiveness and no effort to cut spending and save money for when the next downturn hits. The Governor complains about how volatile the state’s tax system is, then takes the exact actions to exacerbate the weaknesses of that system and nothing to take advantage of its strengths. AND A MAJORITY OF PEOPLE ACTUALLY VOTED TO RE-ELECT THIS CLOWN!!!

    I mean, really.

    • A. E. Doan

      John. You are RIGHT ON with “we” got what we deserve in re-electing Ted K. —You can thank the Public Employees\Teachers unions for that.
      Who do you think has the Governors ear, the UNIONS he represents in the public sector. Or the MASS’ of working individuals in the private sector?
      ..NO one I kNOW voted for that clown ..EVER

    • Rupert in Springfield

      I really take objection to this. The voters of Oregon re-elected Kulingoski et. al. because they were right on the issue. Right on what matters to Oregonians and had appropriate stewardship over government in those matters.

      Oregonians care about things that actually impact citizens lives. Not greed, money, fiscal matters.

      Oregonians care about the crucial issues, the real issues.

      Diversity.

      Sustainability.

      Equality.

      Fairness.

      Taking care of the poor, the disenfranchised, women.

      Outreach

      Recycling

      Bikes

      Global Warming

      The Environment

      That’s why Kulingoski got re-elected. He was right on those issues, important issues, crucial issues.

      • Jerry

        Your little list here never mentions men. Don’t they need care, too??

  • eagle eye

    A lot not to like about Ted K — but why is it the voters trust the Democrats more than the Republicans to run things?

    And didn’t the Democrats at least get some kind of reserve fund going, at last?

    And don’t forget the kicker when talking about government irresponsibility in preparing for hard times.

    Of course, that was the doing of the voters at least as much as anyone working in the government.

    • dian

      A lot not to like about Ted K — but why is it the voters trust the Democrats more than the Republicans to run things?

      My opinion:

      I don’t believe voters trusted him, I think it was a knee jerk reaction to President Bush.

      I think the unions are the ones that pushed it through, not Oregonians. At least in my area, which is small he, Ted, was resoundingly defeated because of his policies

      • eagle eye

        Then do you think that Ron Saxton will be running again, if he lost only because of President Bush?

        • dian

          I don’t know, I think probably not.
          Now ask me something I know the answer to

  • Friends of Meatpuppet

    Can anybody dispute the fact that the majority of voters work for or depend on the government and do not want to bite the hand that feeds it?

    Don’t blame sleepy ted for what is going wrong with Oregon, he is a nice fellow I am sure. After all he is only following orders right? He is no more in charge of anything than a (puppet)

    The special interests and elite rule the Oregon government and will not allow for any free thinking person to be (in charge).

    Why even have a governor? He never does anything that the special interest groups and elite can’t do right?

    Up for the challenge? There is no challenge in a lazi fair system.

    • dean

      Meat…I doubt the majority of voters either work for or directly depend on government for all or most of their income, if that is what you mean. I would guess it is in the neighborhood of 33%. Now if we mean “depend” on government, as in schools, roads, initial creation of the internet, police, fire, parks, food safety inspection, cargo inspection, national defense, agricultural irrigation systems, and so forth…then the figure is probably 100%.

      And yes…we should not bite the hand that does all this for us (at cost). At least not too hard.

      • Anonymous

        National statistics show over 52%

  • Sh. Halo

    How could Oregon be entering into a recession, when there is still money coming in the door? Spend away Ted. Spend away.

    • eagle eye

      Right. And don’t forget the kicker!

      • Anonymous

        wANT. WANT. WANT. SPEND. SPEND. SPEND. X ammount of dollars in the “budget” ..ever notice how they always have “reserve” funds for “special” interest. OR when they need to lay off public employees?..but WE can not afford, lets say, JAIL BEDS, (Not enought mony to pay correctional officers (107 empty beds in Lane Co. –Eugene.–Got to release those criminals, not enough room …Its, your fault..we don’t have enough FUNDS) But they got 12 count them 12 sheriff “patrol” officer and vehicles who ‘s primary function is to ENFORCE TRAFFIC VIOLATIONS. Call a cop in Lane Co. for burglery, home invasion, assult, etc.etc.–and there ALL busy. No manpower –We’ll send you a form, fill it out.. OH, by the way, if you live in a RURAL area, were gonn’a need MORE mony to provide services to you..–
        As with most people, I have a BUDGET. What I want is overshadowed by WHAT I NEED.

        • eagle eye

          I don’t know what your post has to do with the kicker.

          But hate to tell you, Lane County is in trouble because of the coming withdrawal of federal funds, and because the property tax limitations have squeezed the county budget. We are a bunch of slobs here, we can’t even keep a county government going.

          Your last sentence makes no sense in the context of your bawling about Lane County. “As with most people, I have a BUDGET. What I want is overshadowed by WHAT I NEED.” Right. And Lane County has a budget too. And it’s not enough to provide for all the wants of the crybabies who think government should be free.

  • Anonymous

    WE ain’t the slobs who can’t keep the GOVERNMENT going. And apparently, you didn’t get the rant-n-rave about wants and needs. Govennment WANTS it all, even in a time of shrinking dollars and employment. When ANY financial measure (like aditional gas tax in Eugene) comes up, I vote NO. They can’t manage the funds they have NOW. ….OH, and that kicker money “from” the STATE. They’ll be more than happy to take yours back. Just dedicate it to “General Fund”

    • eagle eye

      Thanks for the tip. But no, I’m saving my kicker refund for a rainy day, since nobody else seems up to it.

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