We most solve unsustainable increases to the cost of government

by Rep. Kevin Cameron (R-Salem)

This week we were presented with News that is not NEW. The 4th quarter revenue forecast for the state is similar to what most Oregon families and businesses have been seeing for the past few years: Flat or declining income.

Personal income tax collections are down .5% or $7.5 million since the last forecast. Though employment has increased by 3,351 jobs over the past year, we are not experiencing enough job growth to help the 160,000 Oregonians who are unemployed.

We have about 7 months left in this 2 year budget cycle and because of a large ending fund balance it looks today like we will not see further cuts to services.

The longer term forecast indicates we will see $16.528 billion in revenue for the 2013/2015 biennium begging July 2013, a 10% increase compared to this current biennium.

Most of us would be very pleased to see a 10% increase in our personal income or business revenue over the past two years, but state government continues to face unique challenges that will eat up most, if not all, of that increase in revenue.

This next biennium will see an increase of $1.1 billion in the additional funding out of government payrolls to keep up with the shortfall in retirement accounts, much of that impacting local governments and school districts.

Overall, the PERS system has a shortfall of over $16 billion or $10,000 for every Oregon taxpayer. In our school system, increasing personnel costs amount to $1,000 per student.

Salem Keizer School District will need an additional $17 million for its PERS obligations beginning next July, equivalent to over 170 positions, meaning layoffs and larger classrooms from the current staffing levels. The City of Salem says it will cost $1.1 million to keep a fire station open, but its increase in PERS will be over $5 million.

That’s right. A 10% increase in state revenue and more local layoffs in our schools! And potential fire station closures? We must find solutions to correct the unsustainable increasing cost of the services our citizens deserve. Doing nothing in the 2013 session means that pension costs will consume $1 billion from public-sector budgets. This is not an attack on public servants, but a challenge that will require common sense solutions.

p.s. An article in the Statesman Journal – Employers brace for higher PERS Rates – from earlier this fall talks about this situation in more detail.