Will the Legislature Raise Your Taxes?


At the conclusion of the second quarter of this year, Oregon’s state economist determined that Oregon has slipped into another recession (two consecutive quarters of decline in the gross domestic product — GDP). That means that the actual recession began for Oregon at the beginning of the year. Despite that fact, Oregon’s unemployment rate remained about even with the national unemployment rate and housing prices remained relatively stable.

But all of that is over now. Oregon’s unemployment rate has soared to 6.5% putting it ahead of the national rate of 6.1% and ahead of its neighboring states with the exception of California (now a third world nation) and Nevada which has watched its predominant building industry collapse. Even Arizona (5.6%) and Colorado (5.4%), both of which have suffered a much more dramatic effect from the housing industry collapse, have substantially better unemployment rates.

Worse yet, according to Oregon’s Employment Department, the year over year losses of employment have occurred in those segments with the traditionally highest paying jobs. Manufacturing lost 10,000 jobs or 4.8%. Construction lost 11,300 jobs or 10.2%, and the usually stable Trade, Transportation, and Utilities sector lost 2,100 jobs or slightly less than 1%. Twenty-three thousand, three hundred good paying jobs are gone.

But fear not, Oregon’s Government sector grew by 9400 or 3.7%. Oregon’s minimum wage sector (Leisure and Hospitality) grew by 3500 jobs or 2.9%.

In November of 2007, Gov. Kulongoski stated that the current tax structure in Oregon would provide “sufficient revenues for the foreseeable future.” What he meant is that, using the straight-line growth rate that the Oregon government types use to project revenues, it appeared that Oregon’s tax coffers would be overflowing. (The methodology never takes into account actual economic conditions but rather uses a ten-year average increase applied to whatever point of revenue collections that currently exist.) However, given that the “storm warnings” were out all over the nation regarding the housing crises, the increasing cost of fuel, and the looming credit crises, Kulongoski’s pronouncement was premature and downright foolish. But then if your measure of “well-being” is how the government is doing as opposed to how its citizens are doing, such naïve conclusions are understandable.

Now, by most estimates, state government is $2 Billion in the hole for the next biennium. That figure is calculated by using the “current service level” methodology which assumes that all of the programs currently provided by the government will continue and their costs will be adjusted for inflation, programmed salary increases and growth in the number of benefit recipients (and corresponding growth in the number of employees need to serve that growth). No new programs are included even though the governor has proposed several.

And last week’s headlines in the Oregonian were less than reassuring that the governor and his Democrat allies in the legislature have yet appreciated the situation. The first shoe was the announcement that state government “needed” another 1,000 employees to staff the new mental health facility being constructed. No explanation was offered as to why replacing one building with another would require an additional 1,000 employees — 1,000 public employee union employees.

And following shortly on the heels of that pronouncement was an article detailing the outlandish payroll increases for Democrat appointees in Kulongoski’s administration (several of whom are former public employee union officials) and the public employee unions. The average increase for executives in the state government was 33% (every state executive office is controlled by Democrats). The average increase for the public employee union members is to be 13-16% (this comes on the heels of two successive raises in the last year — one negotiated and one a gift from Kulongoski). And those raises do not include the handsome and corresponding increases in the cost of healthcare and retirement benefits for those state workers.

Those raises for public employees stand in stark contrast to the average wage increase of 4% for all Oregon workers in 2006 and 2007. (The 4% figure is artificially high because it includes public employees and their dramatic wage increases — the actual figure for non-public employee workers — those who still have jobs – is closer to 3.5%.)

In a recent magnanimous gesture Kulongoski rescinded a 3.2% pay raise for agency directors which represents the cost of living adjustment portion of the massive 33% increase noted above.

However, no such rescission was made for the members of the public employees unions whose massive contributions of dollars and “free” volunteers fuel the campaigns for every statewide Democrat candidate and virtually all of the Democrat legislative races.

And there we have the essence of the whole story. While Oregon’s hardworking employees are limping along with significant job losses and minimal salary increases, the Democrat state government, owned and operated by the public employee unions continue uninterrupted increases in the number of public employees and salary increases at four times those enjoyed in the private sector.

One might conclude that the best employment opportunity in Oregon is to work for state or local government and they would be right. Government employees used to trade job stability for wage inferiority. In Oregon that is no longer the case. Government jobs now pay more than comparable jobs in the private sector and that does not include accounting for superior benefits.

One might argue that government employees also pay taxes, but even at Oregon’s top rate, they only contribute 9% of what they take out. There is a tipping point at which the cost of government will exceed the ability or willingness of citizens to pay. In many sectors, Oregon has already reached that point and the drain of good paying jobs is likely to continue.

But don’t expect state government to recognize the problem that it is creating. Oregon now has a state government that operates for the primary benefit of the public employee unions and they are not likely to cede control anytime in the near future.

So the question of whether the legislature will raise your taxes, joins the litany of the obvious:
ï‚· Is the Pope a Catholic?
ï‚· Does a bear poop in the woods?
ï‚· Will the legislature raise your taxes?

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Posted by at 06:00 | Posted in Measure 37 | 22 Comments |Email This Post Email This Post |Print This Post Print This Post
  • John Fairplay

    But there was a 2-year “pay freeze” in the early part of this decade which cost our high-living government employees a 6 percent pay increase. That’s why we have to make it up now with a 30 percent pay increase. See how the math on that works? Don’t you know that government employees have to get a raise (or two – sometimes three) every year? It’s a law.

  • Crawdude

    We may have to make it up, but it doesn’t mean we have to vote for a tax increase. I doubt one would pass anyhow!

    Time for the legislature to figure out where to cut!

    • David from Eugene

      So which of the programs that you think are important should be cut? How big a cross the board cut could it take and still be functional? I frame the question this way because all the programs and services the state currently provides are important to a constituency that has convinced the Governor and a majority of both legislative houses to create and fund it or is constitutionally mandated.

      I realize that you have a list of programs and services you are opposed to, do not support or do not care about, all of which you believe should be cut, before the programs you support complete with reasons why. But so does every other Oregonian and I suspect that many of the programs you support are on their cut lists just as programs they support are on your list.

      Balancing a budget is making a series of compromises, some of which you will be on the loosing end of? Would you consider paying more taxes to insure the continuance of a program or service you feel is essential? And if not how can you defend it as essential?

      • Crawdude

        It doesn’t matter which ones I’d cut David, it matters which ones the liberal in charge of the state budget have the guts to cut.

        They could just continue to run a deficit like the Fed. government until they owe more than the state is worth. That option hasn’t been tried yet I guess. Like Federal, like state.

        • David from Eugene

          Then it is acceptable to you for the legislature to cut any or all the programs you support as long as your taxes are not raised? Could you provide a list? It would make balancing the budget much easier.

          • Crawdude

            Yes, they are liberals, they are going to cut programs I support…..if they make cuts.
            Eventually, they will drive a wedge between themselves and the majority of the public.

            At that time, fiscally responsible candidiates will be elected and the people will accept the hard choices they have to make E.G. Cuts to massive entitlement / give away programs……PERS being one of the worst offenders

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  • Anonymous

    That’s easy, they will cut on the private sector end, raise taxes for those who pay them and give them, or what is left over, if any, to the people who wouldn’t work if they could. Those who would work will not find jobs because the state has ruined private enterprise, now their only option is the government. Our state government is now a Tasmanian Devil, consuming itself.

    • Crawdude

      They can’t raise taxes without the popular vote of the people in Oregon. Every vote like this in the past 15 years has failed.

      If they are truly short 2 billion, than the government is going to have to figure how to trim the budget big time. Coming hat in hand to the peopleisn’t going to get them very far.

      They need a super majority to stick their snouts in the rainy day fund, I doubt they get one this election considering the way the GOP members have been treated lately.

  • Reper

    Not sure the author is right.

    Times are tough. The bailout hurts everyone. The economy is likely in an unrealized recession.

    The Governor would not raises taxes in this environment.

  • David from Eugene

    A thought regarding the wages of public employees; Are public employees over paid or is it that employees in the private sector are under paid? Given the number of workers in the private sector providing their services at less then cost, I fear it is more a case of the latter then the former.

    • Crawdude

      Interesting way to look at it, I’ll meet you in the middle and say its likely 50/50 between the 2.

  • Jerry

    All I know is if this governor is worth his salt he will raise taxes and raise them big. That will help everyone.

    As noted above, we can not cut any state programs at this vital time in our history. Not a one.

    I am supporting all the taxes I can because I know the rich have too much right now and the poor never have enough. We must equal things out and do it now.

    Otherwise, there will be blood in the streets.

  • Rex

    now that we’re all fired up, let’s do something about it! this site has a forum that welcomes our input…how this mess is affecting us, what with banks closing and loss of jobs…they’ll help our voice be heard in congress and will be an advocate in a place where we can’t always be.
    https://www.friendsoftheuschamber.com/email/wall_street_3.html

  • Rupert in Springfield

    You know, every now and then it seems like government doesn’t follow the law and kind of gets away with it.

    Therein lies the solution to the problem.

    Remember measure 37? Does anyone remember anyone every having a successful claim under it? I think the famous Dorothy English died while the government waited her out. Government simply decided not to follow the law, and wait it out until they could get Measure 37 essentially repealed.

    I suggest that has applicability here.

    Lets face it, there isn’t a single line item in the budget labeled “waste fraud and abuse”. Likewise there isn’t a program out there that doesn’t have a vast constituency out there with an army of dirty mouthed little street urchins to pull on the heart strings of everyone.

    Or is there?

    I propose this, there are about a million and one asininities mandated by the Supreme Court for no good reason other than it simply popped into 5 out of four peoples head. I think the measure 37 approach could be taken here.

    Mandated school for anyone who shows up regardless of immigration status? ……Out the door, we are studying the court ruling, we will get back to you.

    Other weird school stuff like mandated special needs super expensive education for every kid with a hang nail?…….Out the door.

    Bilingual education? US citizens speak english already, so whats the point of this anyway? …..Vaporize this nonsense.

    Weird prison stuff, like prison college, zany lawsuits, don’t like the food complaints, crazy staffing requirements with cozy union contracts…… Get rid of them

    Jail space and prisons have operated under a consent decree since the 70’s here……..throw it out. See ya Mr. consent decree. Bye Bye. Go say hi to Mr. Measure 37 for me.

    Now some might think this is a bit drastic, but it is hardly precedent setting. Government already has zero trust among people and given events like Measure 37 government already is well on record as not exactly law abiding. What would be lost if government would pursue lawlessness in the interest of actually saving the population money instead of costing them money?

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