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?