Rep. Richardson’s Capitol Update: 1/12/07

Oregon’s 2007 Legislative Session–Let the Spending Begin

A Governor’s recommended budget is like creating a child””it’s kind of fun to conceive, but there’s a tremendous amount of work to do afterwards. Oregon’s “Governor’s Recommended Budget” (GRB) for the next biennium is a record setter. Now the real work begins. The GRB is based on a revenue forecast that is 20% higher than the current budget. What would life be like if you were given an additional 20% of your personal income to spend over the next two years?

Unfortunately, to obtain a 20% increase in revenues the Governor wants the following four additional revenue sources: 1. Raise the Tobacco Tax ($182 million); 2. Create a new tax on auto insurance policies ($25 million); 3. Increase corporate filing fees ($85 million); and 4. Retain the corporate kicker ($275 million). If the Legislature grants the Governor all of these revenue sources the total general funds & lottery revenue pool would be $14.9 Billion of General & Lottery Funds. It is my opinion that increasing State spending to the levels set forth in the GRB is both unwise and unsustainable.

Last November, Oregon’s voters soundly defeated Measure 48. As you will recall, M-48 was the measure that would have imposed a restriction on the growth of State spending to an amount equal to the combined percentage increases in inflation and population growth. Excess revenue would have been sent by the Legislature to a Rainy Day fund. Governor Kulongoski has taken the overwhelming defeat of M-48 as a mandate to invest in Oregon education, services, and infrastructure. Such a large influx of revenue in every quadrant of state spending should help keep the economy booming over the next two years. The important questions remain: What happens to Oregon’s budget after the 2007-09 “Boom-Time Biennium” is over? Can the increased level of spending be sustained?

Consider the following:

1. Oregon Budget History Graph. To get a sense of where Oregon’s spending habits are going, take a look at the ramp up of budgets in the 20 years between Oregon’s $12 Billion “All Funds” budget for 1987-88 and the $49 Billion for 2007-09. Is it realistic to think Oregon can maintain such an escalation in spending? This rate of spending is increasing faster than inflation, population growth, and the household incomes of most Oregonians.

2, Oregon’s Full-Time employee Equivalent (FTE) History. With the high cost of PERS and other benefits, a good indicator of future costs for the state is to look at the increases in FTE’s . (An FTE means one full-time position paid for the entire 24 months of the biennial budget. Thus, one FTE could equal two or more part-time or temporary employees, so long as their total hours equal that of a single full-time employee for a full two years.) The Governor’s budget recommends increasing the number of FTE’s over the next biennium from 47,612 to 50,023.

3. Interest Payments of Oregon’s Debt History. Discussion on Oregon’s revenue and spending habits often fail to include the costs of Oregon’s long-term debt payments. There are two main categories of Oregon long-term debt: Certificates Of Participation (COP’s) and Lottery Bond Debt (Debt intended to be paid by Lottery funds). The attached graph shows the upward trends including the increase in interest payments on COP’s from a little more than $200 million in the current budget to $300 million in the 2007-09 budget, and escalating to $360 million in 2009-2011.

As the session progresses, we will delve deeper into each of the above areas. For the present, we should merely keep in mind the need for long-term spending projections before we commit to expenditures that are unsustainable in future budgets.

Sworn In & Sworn At”¦
Being a Legislator is never dull. On Monday I was sworn in and by Tuesday I was being sworn at. Not quite, but I did receive an email warning me that if I did not oppose an increase in the tobacco tax, I could expect to get my “walking papers.” I answered the constituent’s inquiry as completely as I could, then after a quick check of the Voter’s Registration list, I suggested the person should consider getting registered and becoming a voter.

Gift Restrictions for Legislators
Many of you have read about the new House Rules which includes restrictions on gifts by lobbyists and others having business before the Legislature. I commend the new Speaker of the House, Jeff Merkley, for the time and effort he invested in reforming the House Rules. The House Republican Leadership were consulted by Speaker Merkley on several occasions and the Republican House members were supportive of nearly all of his proposed reforms. The only real objection was the Republicans believed that rather than limiting Gifts to legislators to a $10 limit with certain exceptions, it might be better to simply impose a “No Gifts to Legislators” rule for anyone with business before the Legislature. We made our position known, and our proposed amendment was not accepted. In the end nearly all the Legislators in both parties voted in favor of the gift restrictions and other House rules. The Speaker has now named me to serve on the gift “guidance committee.” Lucky me.

Sincerely,

Dennis Richardson
State Representative

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Posted by at 06:48 | Posted in Measure 37 | 6 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Jerry

    Thanks for your common sense approach. I have lost faith in most of our elected politicians. I hope you will be able to make a difference. The budget the governor has proposed is a complete joke – WAY TOO much money being spent on way too many things that do not directly impact most Oregonians.

    Hopefully you will be able to show others that this is the case. I wish you luck.

    I agree, too, that simply saying no to all gifts would be the best. Same with travel – it should never occur expect at the expense of the person traveling.

  • Good Morning Rep Richardson.. Thank you for accepting the role of an elected leader. Our prayers go out to you and your family.

    !.) No gifts period. Your right.
    2.) Our State Gov. needs to be downsized. 3000 more State employees is crazy. These jobs need to be contracted to the private job sector. This will increase tax revenue.
    3.) Tax tobacco until it disappears. Increase the tax on Liquor only after the State makes the OLCC go away. Sunset law.
    4.) Stop giving illegals Oregon Drivers License. The USA has the correct rules and regulations in place to protect our states, we just need to enforce them.

  • Capt_Anon

    I agree in some, disagree in some.
    1. increase the tax on cigs. i have NO problem with that.
    2. the tax on auto insurance should be get a big no way
    3. I’m neutral on the corporate filing fees. i don’t know enough about them to know if they are appropriate or not.
    4. The corporate kicker should go away. The minimum income tax for a corp is 10 bucks. that’s ridiculous. At a minimum they should be paying what an individual tax payer pays. or SOMETHING higher than 10 bucks.

    it would be interesting to see the trends of the state budget… i.e. what the increase in expenditures went to. it would be good to note either way that in 2005 dollars, the $12 billion would be $20.17 Billion when taking inflation into account. even with that in mind, the doubling of spending is a surprise.

    there should be an increase in spending for the OSP. no question.

  • Jerry

    Capt Anon should know that any taxes “big evil corporations” pay is simply passed on to the consumer, which is us. What you should be asking is why the state needs to increase its budget 4 to 5 times more than the rate of inflation. But, alas, you are too preoccupied with wealth redistribution to even care. More money, more money, more money. It is always the cry of the weak and ineffectual.

    • Captain.anon

      Jerry, you make many assumptions about me that are completely wrong.
      1. I don’t think big corportations are bad
      2. i’m not interested in wealth distribution.

      part of why the state is increasing it’s budget is:
      1. more capital intensive projects such as bridges, roads etc.
      2. expanding the oregon state patrol considerably in order to have 24/7 coverage on our roads, catch up on rape kits at the state forensic lab etc
      3. increase the number of social workers to project our most at risk kids. current social workers have caseloads of over 60 kids. that’s not manageable considering what they are required to do the public scrutiny.

      those items alone, plus increases in education spending easily account for an increase in state spending beyond the rate of inflation. you will also notice i am questioning why the budget has gone up as much as it has. However, i’m not prejudiced to think it is ALL wasteful spending.

  • Greetings Rep. Richardson,

    Geoff Ludt here from rightoregon.org.

    What can I do to help to:
    1. Prevent the theft of the corporate kicker and,
    2. Prevent an increase in corporate filing fees and,
    3. Lower capital gains rates?

    Also, it occured to me the other day that Oregon could probably generate a ton of revenue via license plates bearing political affiliation, just like those cultural trust plates (were supposed to). Could you imagine the sheer volume of folks that’d love having “Progressive” stenciled on their license plate?

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