Kitz & Dems’ priorities are not “for the kids”

Dennis Richardson

by Rep. Dennis Richardson (R-Central Point)

Kitzhaber & Dems are again holding the K-12 school budget hostage

I was first elected to the legislature in 2002, yet I am still surprised by the political “blame game” that occurs at the end of most Legislative Sessions. [To see a brief YouTube on this subject, click here.]

Last week, Oregon Governor John Kitzhaber spoke to the House Republicans and requested an additional $275 million in tax increases. He promised that if Republicans joined the Democrats in voting for tax increases the additional revenue would enable the legislature to help publicly funded K-12 schools, community colleges, universities and youth mental health programs. In other words, “it’s for the kids.”

I reminded the Governor that,

  1. The Democrats control the spending priorities and drafted the State Budget;
  2. There is a $1.91 billion (12%) increase in the 2013-15 Budget over the current one; and
  3. If he’s only asking for less than 2% of the $16.5 billion State Budget, then surely he could find such a small amount in the State Budget “for the kids,” without raising taxes on Oregonians.

I also reminded the Governor that, notwithstanding the $1.9 billion of additional revenue, he and his party are once again holding the K-12 school budget hostage, and acting like a tax increase is required to fund it. It’s an obvious set-up. If the Republicans fail to agree to the proposed tax increases, the Democrats will, once again, play the “blame-game,” and accuse Republicans of neglecting children, hating schools and abandoning seniors. This is a transparent and unfortunate case of playing political games instead of focusing on actually helping the kids and other Oregonians.

So where did the $1.9 billion go that could have funded education first and provided certainty to school districts in March instead of June? It went to myriad programs and agencies that the Democratic leaders apparently consider higher priorities than jobs, education and fixing the Public Employees Retirement System (PERS).

Kitzhaber wants money for ObamaCare – not for schools

One example is the multi-billion dollar Oregon Health Authority (OHA) Budget. The OHA will implement the new federal  “Affordable Care Act” (ObamaCare) in Oregon and provide government paid or subsidized health care to families earning up to 400% of the federal poverty level. (A family of four earning $94,000 will be eligible for subsidized health insurance paid by lower-earning taxpayers.) Expansion of OHA’s health plans is expected to cause a $1 billion funding hole in 2015 State Budget and cost an additional $1.5 billion in 2017. (See Chart Below) In addition, it is expected to raise the cost of individual health policies through the roof—especially for younger adults

In the past, when Democratic leaders played the end-of-session blame game, they deceived many members of organizations like Stand For Children and other voters, but not anymore.

In the past, when the Republicans controlled the House or the Senate, the Democrats’ media machine would convince the media and voters that more money would have been spent for the children, if only the recalcitrant Republicans would have allowed compassionate Democrats to be more generous.  This time the Democrats are in charge and there is no place to hide.

When the drama of this legislative session is over it will be clear, the Democrat leaders controlled everything—the House, the Senate and the Governorship—and they had a 12% increase in revenue to allocate any way they chose in the 2013-15 State Budget.

If passing the K-12 school budget was a priority, the Democrat leaders had plenty of money to do so early in the session and give much-needed certainty to Oregon school districts. The School Budget could have been passed in March, just like we did in 2011 when the Republicans and Democrats shared leadership and I was at the table with the other Co-Chairs.

If lowering PERS rates and paying off the $14 billion PERS liability was a priority for the Democrats, it would have been done months ago. Instead, the Democratic leaders passed Senate Bill 822 without a single Republican vote. As you may recall, SB 822 reduces benefits for those who already have retired and “kicks the can down the road” by failing to make $350 million in payments due in 2013-15.That is like failing to make a huge credit card payment when its due and promising to pay it back with interest later. In short, the plan is to pay lower rates now and higher rates starting in 2015. The cost for avoiding the $350 million in payments will be $500 million in lost investment proceeds and another $500 million in additional interest over the next 22 years. (click here)

Kotek & Courtney bow to public employee union pressure on PERS reform – sell out schools

The Republicans, Stand for Children, the Oregon School Boards Association and the Oregon Business Council for months continued hoping for hearings on various PERS reform ideas. There were 35 PERS reform bills and the Speaker of the House Tina Kotek (D-North/NE Portland) and Senate President Peter Courtney (D-Salem) refused to allow any of them to receive serious consideration. Even now, Republicans are offering alternatives that would substantially reduce the $14 billion PERS liability over time. In fact, they’re willing to compromise on raising more revenue, if it would result in a deal that finally would solve the PERS crisis. As one legislator said it, “we’re even willing to pay the Speaker [with more revenue] to do the right thing and fix PERS.”

Unfortunately, when it comes to PERS, our legislative leaders listen only to the public employee unions (the coalition of the status quo), and not to the cries from school districts that face laying off more teachers to pay the exorbitant Tier 1 PERS rates. In the current biennium (2011-13) PERS employer payments increased by $1.1 billion.

More specifically, in the current biennium school districts have been paying to PERS an average of 19% of payroll. That is an increase from the previous biennium (2009-2011) for schools when the average was 14% and most of the increase is from the outrageous cost of Tier 1 PERS benefits. While I do not fault individual PERS members for taking as much in retirement as PERS will allow, I do fault the legislature, the public employee unions and the Democratic leaders who cower to them for failing to curb those benefits as much as legally possible without violating the PERS contract.

Without fixing PERS, public employers will continue bearing the $1.1 billion in PERS employer cost increases, plus even more in 2013-15. Such skyrocketing PERS increases drain millions from the budgets of our State, our schools, our counties, cities, fire districts and the remainder of the 900 PERS employers in Oregon.

Without fixing PERS, such huge PERS employer payment increases are budget-crushers that will reduce the quality of our children’s education and all other important state and local government services .

In conclusion, as the end of the 2013 legislative session approaches, when you read the political “spin” about how the Republicans supposedly failed to provide enough money for “the kids” and for the mentally ill and for the seniors, remember the $1.9 billion in extra revenue, and those in power who placed a higher priority on expanding ObamaCare than the early funding of our schools. Remember who failed to fix PERS because of pressure from the coalition of the status quo.

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Posted by at 05:00 | Posted in Gov. Kitzhaber, OR 77th Legislative Session, State Budget, State Taxes | 101 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Russ

    If you “fix” PERS how will I get a living wage when I retire???

    • Russ-tled Feathers

      Wail know… you can die-dee-die-die like the rest of the public sector…denied so much as even a drop of COLA.

  • JacklordGod

    The state of affairs is that really no one, Kitzhaber or anyone else in government can run government either for “the kids” specifically or the public generally.

    All of our concerns, all of whatever benefits or improvements government could make even if it were so inclined are secondary to one concern – Funding PERS.

    That’s the fact, and according to numerous court decisions there is no getting out of it.

    That said – What I want to know is why the people who made the shady deals that screwed us over with PERS are not more notorious?

    I mean let’s face it, George Bush got us into a war in Iraq on the basis of making a huge mistake about WMD’s. He will rightly be remembered long after his death for making such a fatefully bad decision.

    So why are those who sold us down the river with the PERS deals that screwed our finances not equally remembered?

    Can anyone really twirl their names off their tongue with the same ease with which they can Bush and Cheney? Because unless you had someone who died in Iraq, you likely are far more affected by the disastrous decision making under those PERS deals than you ever were by the Iraq war.

    • DavidAppell

      Bush’s claims about WMDs were not a “mistake” — they were an outright lie.

      He had plans to invade Iraq soon after he was elected, and long before 9/11.

      • JacklordGod

        Illogical – If Bush knew for a fact Iraq did not have WMD’s then he would have been prepared to plant evidence of them there once we invaded.


      • French Connection

        Qu’ils mangent de la ‘jaune’ brioche.

        • JacklordGod

          Ahhh…La “jaune” brioche infâme. Porquoi Bush ne pas cache en Iraq?

          • FC

            Yellow cake, fact or fiction, monsieur?

    • DavidAppell

      The Oregon state government has a contractual obligation to fund PERS.

      It entered into that contract willingly, just as did the other party. I don’t see the issue, except that whining crybaby taxpayers don’t like the deal their government approved and are determined to whine and stomp their feet until the courts get so sick of them they break the legal contract.

      It would government, not of laws, but of the whiners.

      • JacklordGod

        >The Oregon state government has a contractual obligation to fund PERS.

        I said that in my post quite clearly.

        >It entered into that contract willingly, just as did the other party.

        I said that as well. We got into the PERS deal the same way as we got into Iraq. Both were willing, both were disastrous.

        >. I don’t see the issue except that whining crybaby taxpayers don’t like the deal their government approved

        Of course not, because you don’t pay taxes, leech off of welfare and don’t have kids in school.

        You trying to understand the issue is pretty much like a third grader trying to comprehend a mortgage payment.

  • Bob Clark

    Kitzhaber did the flip flop this session. His original proposal was for more PERS reform as sought by the Oregon School Board Association. But then after spending time on vacation in Nepal during the session, probably hoping the stalemate would change concerning PERS if he just closed his eyes, he threw in the towel when he got back and went the route of panhandler-in-chief or armed-robber-in-chief, asking for more $$$ from anything that moves in Oregon. (This after handing out a favor to Phil Knight and Nike with the granting of tax certainty for Nike and no one else.)
    Such is our grand leadership in Oregon. Kitzhaber sold the old hope line with his Oregon Health PLAN, and now this monster is eating up public resources while mostly just on paper and eventually will hit the fail zone like so many other of his grand plan schemes, such as his education testing program which went down in smoke after his first tenure as governor. Even now you can see the inevitable failure of his grand reformation of Oregon public education, as his Czar Rudy Crew is already looking for another job. Centrally planned governance breeds non-accountability and blame game.

  • DavidAppell

    It’s funny how conservatives mouth family values, until it comes time to actually pay for them.

    Conservatism is about a justification for selfishness — nothing more.

    • JacklordGod

      You are the one asking everyone to pay for your upkeep so you can goof off and write a blog. That’s selfishness David. And that’s you, the embodiment of the word.

  • Pvt Sector Retiree

    Remember former State Rep Bob Tiernan? Instead of applauding him, he was rendered a one digit salute by organized Democrats and public employees: Bottom line – PERS is as you see it today – well deep in the hole.

    IMO, a shaft that ought not been driven so far into taxpayer purses and common sense.

    An interesting white paper:


    If I’m in a bad contract I’m doing everything I legally can to get out of it or modify it so it isn’t so bad.

    Why do people get all bent out of shape over that idea? If you were in a bad car lease that was costing you double what you thought you agreed to, wouldn’t you take it to an attorney and try to see if there was anything you could do? Or would you simply sit back and make those monthly payments out?

    There will be no theft, because all changes will be challenged in court and if the court says the modifications are legal, well, by definition that isn’t “theft” or reneging on anything.

    And if the changes are not lawful, the PERS beneficiaries will be made whole.

    But, here’s what we should do…

    Enact every one of the possible PERS reforms and escrow the savings into a rainy day account (would require agencies to continue to pay their contributions as if no reforms occurred). Don’t use the “savings” for general expenses or plan on these savings long term. We provide for an expedited judicial review, and If the changes stand up to judicial review, we’ve now got a nice rainy day fund balance and we can restructure our tax and spending taking into account these PERS savings going forward. And if some or all reforms are struck down, we haven”t dug ourselves a big hole that has to be made up.

    We don’t see immediate savings. But we don’t build a budget on sand, we find out once and for all what reforms are going to be legal, and we built a nice rainy day fund.

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