Not So Tough Decision for Budget Reductions


Every time one suggests that state government live within its means, the big government proponents respond by asking where would you make the cuts. The proponents (primarily the public employee unions) of Oregon’s massive tax increase (which is being challenged by Measures 66 and 67) will use the same arguments. It’s a trick question for two reasons.

First, these people view “cuts” as anything less than the cost of the current service level increased by inflation and program growth. Thus, if you held government spending to the same as the previous biennium, they would view that as a 12-16% cut. Second, the budget and accounting systems of state government are deliberately Byzantine in order to obscure the actual amounts spent and the purposes for which they are spent. It is virtually impossible for the average citizen to garner enough information to make specific recommendations for reductions in spending.

Cutting budgets while painful should not be difficult. It is a necessary and routine fact of life for businesses and individuals when the economy softens or other setbacks are encountered. Apparently state government is the only entity which chooses to be immune from this reality.

When I was an executive for the telephone company we routinely went through this process — in difficult years we did it quarterly. It didn’t take months to accomplish — usually our responses were due within ten days. Oh yes, we had those executives who would focus their proposed cuts in a fashion that would cause the greatest discomfort to the customers in an attempt to avoid making reductions. However, the senior officers generally responded by informing those executives that if they could not make the reductions without harming customers, then the senior officers would find someone who could. It’s always surprising how creative someone can be when their job, rather than their empire, is at stake.

The combined tax increases under Measure 66 and 67 are about $733 Million. Rejection of those tax increases by voters will require the legislature to reduce the current budget by that amount. Following is a thumbnail sketch about how to accomplish that reduction.

Roughly eighty-five percent of the state general fund and lottery budget is spent on personnel. You cannot achieve budget reductions without reducing the number of personnel. Since the commencement of Gov. Kulongoski’s second term, the number of state government employees has increased by 2400. (In the meantime Oregonians have experienced the loss of approximately 130,000 private sector jobs.)

I am told by legislators that the “rule of thumb” is that $50,000 is the rough equivalent annual salary. Add to that the twenty-four percent surcharge for PERS (eighteen percent required by PERS plus the six- percent contribution by employees that the state has agreed to pay on their behalf) and that figure becomes $62,000. There is another 7.65% for FICA and Medicare which brings the total to $65,825. Add to that the approximately $1200 per month paid for the public employees Cadillac health insurance plan and the total now becomes $80,225. By rolling back the total number of state employees to the January 1, 2008 levels, the state budget can be reduced by $192,540,000. If the current state government administrators are unable or unwilling to make such reductions, then new administrators should be found who can and will.

In 2008, Gov. Kulongoski granted state public employee union members an additional five percent raise — a raise in addition to the bargained for annual raises and step increases. I am told that roughly sixty percent of the state employees are public employee union members. There are currently 77,300 people employed by state government according to the Oregon State Department of Labor. Reducing that number by 2400 employees as suggested above would leave 74,900. Of those, approximately 44,940 are public employee union members and thus were the “beneficiaries” of Kulongoski’s five- percent “gift.” Again, using the $50,000 figure, a roll back of the five- percent “gift” wage increase would reduce the payroll by $ 112,350,000. Add to that the twenty four percent for PERS (see above) and the 7.65% for FICA and Medicare (see above) and the reductions would total $147,908,775. I recognize that collective bargaining agreements prohibit these unilateral wage reductions but if the public employee unions are unwilling to accept them, then reducing their numbers by another 1,850 people will accomplish the same thing.

Those two actions cover about $340.4 Million annually — that is $680 Million for the biennium. Of the $733 million reductions required to meet the repeal of the massive tax increases in Measure 66 and 67, nearly ninety-three percent of it can be achieved by these two simple acts.

But let’s be on the safe side since the assumptions on the number of public employee union members and the average salary may not be exactly accurate. There are other avenues to pursue that can result in significant savings without adversely impacting Oregonians.

Oregon is overrun with illegal immigrants. They impose an enormous burden on the state’s education, healthcare and welfare budgets. By removing the incentives for people to enter the country illegally, you can have a dramatic impact on the budgets without reducing benefits to those that are here legally. Let me repeat that. By removing the incentives for people to enter the country illegally, you can have a dramatic impact on the budgets without reducing benefits to those here legally.

The Federation for American Immigration Reform (FAIR), utilizing a Pew Research study of United State Census Bureau statistics, estimates that there are about 125,000 illegal immigrants in Oregon. FAIR estimates that these illegal immigrants impose a cost of approximately $400 Million annually ($800 million for the biennium).

Arizona has adopted the toughest employer sanctions law in the United States. Employers in Arizona face the loss of their business licenses if they knowingly hire illegal immigrants. The results have been dramatic. Illegal immigrant advocacy groups acknowledge that huge numbers of the illegals have left Arizona and returned to their native lands. In twenty-one school districts in Maricopa County (metro-Phoenix) there has been a reduction of almost 6400 students. David Lane, a Mesa school-board member is quoted in the Arizona Republic as saying with regard to the decline in student population: “It’s not entirely unexpected with this immigration law that came on line January 1. . . I have a sense unless the court intervenes, more will leave at end of the school year.”
And it is a permanent reduction in spending that does not impact other students. A comparable law in Oregon would have similar impacts and those impacts would spread from school attendance, to healthcare provisioning to welfare payments. All permanent reductions without impact to those lawfully entitled to benefits.

So, forget about the doom and gloom that the Democrats, the state’s liberal newspapers and public employee unions forecast should the tax increases fail. There is no need to reduce benefits to the poor, the elderly, or the unemployed. There is no need to reduce funding per child for schools. And there is no need to reduce funding for law enforcement or prisons. There is more than enough by eliminating state government support for illegal immigrants and reducing the number of state employees and eliminating Kulongoski’s gift salary increase to absorb the $733 million reduction. And if Kulongoski and his administration cannot deliver these reductions without reducing benefits to Oregonians then perhaps voters should find some new managers that can.

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Posted by at 06:00 | Posted in Measure 37 | 28 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Jerry

    But these hard-working employees are the glue that holds the state together.
    What will we do without them?
    I suspect not a single person would ever notice.
    Not one.

    • Anonymous

      YEAH, KICK THOSE A**HOLES TO THE CURB! WHO NEEDS ‘EM? NOT US, THAT’S FOR SURE.
      ILLEGAL IMMIGRANTS TOO. JOHN TANTON WAS RIGHT, AND CRONKITE WAS A PANSY WHO
      DIDN’T HAVE THE COURAGE TO SPEAK THE UGLY TRUTH.

  • Rupert in Springfield

    Essentially what is proposed here is what has been proposed lots of times before (last summer by the Republicans for example) – Holding spending to current or near current level thus eliminating budget shortfalls. There have been plenty of proposals of this nature on the table, they are well known and fairly well publicized. The constant drone of those who support Oregon’s war on business that no one is proposing where to make the cuts is really getting a little old. Nevertheless when the tax increase come up for a vote I am quite sure we will hear such chanting again.

    • Steve Plunk

      I’m glad to see others recognize Oregon’s war on business. In my 23 years I’ve never felt so much like a chicken getting plucked. Oregon has turned it’s back on the industry that made us in the first place. The State continues to put it’s faith in business that cannot create the jobs or pull us out of the recession. Thank a liberal Democrat for the mess we are in.

      • Rupert in Springfield

        Well, I guess I am not that shocked about politicians going after business. It’s a way to make people think they are raising taxes on someone else. The thing that really bugs me about it this time around is how many people remain purposefully ignorant when it comes to this concept that a large number of Oregon corporations pay only $10 a year in taxes. Its understandable that the average person does not know how corporate taxation works. However when you explain to them and they still insist corporations need to pay more, even if they are suffering a loss for the year, the greed of these people becomes a little scary. Most businesses are not growing, certainly most family budgets are not. Is government slowing down its growth during a recession really so much to ask that they have to take food off of everyone’s table when its already hard enough as it is?

        • Anonymous

          Spoken like a true elitist.

          • Rupert in Springfield

            Obviously someone who does not know what the word elitist means.

            Please, if you are going to post anonymously at least look up the definitions of the words you are going to use as an insult, there is not thing one in what I said that was at all elitist.

            If you can point it out, then fine. Illuminate us with your brilliance!

          • Anonymous

            Elitism is the belief or attitude that those individuals who are considered members of the elite — a select group of people with outstanding personal abilities, intellect, wealth, specialized training or experience, or other distinctive attributes — are those whose views on a matter are to be taken the most seriously or carry the most weight or those who view their own views as so; whose views and/or actions are most likely to be constructive to society as a whole; or whose extraordinary skills, abilities or wisdom render them especially fit to govern

            At times, elitism is closely related to social class and what sociologists call social stratification. In sociology, anthropology, and various other social sciences, social stratification refers to the hierarchical arrangement of individuals into divisions of power and wealth within a society. The term most commonly relates to the socio-economic concept of class, involving the “classification of persons into groups based on shared socio-economic conditions … a relational set of inequalities with economic, social, political and ideological dimensions.”

            Go to a library, Rupert. Look for a documentary film from 2003 called China Blue. The film examines the relationship between a chinese factory owner (and former police chief) by the name of Mr. Lam (Lifeng Factory, they produce denim products; hence the title). Listen to his complaints of how difficult it is to run a business. Ask yourself if they sound familiar. Then ask yourself if they sound reasonable when considered through the lens of his workers.

            I am not trying to insult you Rupert. What value would insulting you have? I’m just letting you know how at least one other human being on this planet perceives you. If the shoe fits… ya know?

            You don’t have to agree for my observation to be true.

          • Anonymous

            Correction:

            The film examines the relationship between a chinese factory owner (and former police chief) by the name of Mr. Lam (Lifeng Factory, they produce denim products; hence the title) and the migrant workers he employs.

          • Anonymous

            You know what’s really scary, Rupe? Your reductivism. It’s always greed and envy with you. Never once have have I heard/read you mention efficiency or equality. Many of us voters out in the big wide world are educated and experienced business people as well, we are aware of the inverse relationship between the aforementioned terms and are trying to find a balance between the two. That we are not as willing as you to sacrifice one for the other does not, in my opinion, reflect poorly on us.

            Having said that:

            “Is government slowing down its growth during a recession really so much to ask…”

            No, it’s not. Hopefully the Democrats will figure that out soon enough.

            “…that they have to take food off of everyone’s table when its already hard enough as it is?”

            A touch melodramatic, no? Are you going hungry, Rupe?

      • Duck fan

        Why are you always here whining about how tough it is to have a business in Oregon? If it’s so tough, maybe you should move to some place more to your liking. I know quite a few owners of business in Oregon. None of them is such a crybaby as you.

        • Rupert in Springfield

          Face it guy, you hang out, wait for me to post and then insult me.

          Or I guess you insult Larry Huss with the same old tired “former head of US west” routine

          And that’s about all you do here.

          I have never seen you add a comment or rebuttal of any substance beyond low grade insult. All you do is complain, mostly about me, and that’s it.

          Seems to me you are the one whining if all you can do is wait around for me to post and then come up with this third grade boo hoo routine.

          Perhaps you are the one who should take your own advice, If you don’t like it move, don’t read it.

          Maybe try actually posting a thought, an idea, or if you don’t like what I write, a rebuttal.

          In short, try growing up a little, then get back to me with trying to impress me with all your friends in business.

          Until then – talk to the hand.

          • Duck fan

            Rupert — don’t flatter yourself — if you could understand the numbers in the thread, or just look at the screen carefully, you’d know that I was not responding to you, but to Plunk.

            As for me bring up Huss’s association with the phone company, don’t be such a dolt. HE brought up his supposedly great management experience and skill in the article. That is supposed to be beyond comment?

  • Bob Clark

    State workers are currently taking about 6 or so unpaid furlough days per year through June 2011. It helps a little. I don’t think customers are really even noticing any service decrease. I would also recommend looking at slashing energy tax credits from projected levels of $250 million per year. Much of these credits flow to overseas companies in return for exhorbitantly costly energy supplies. I would also find less expensive ways to obtain energy supply for the state than those renewable mandates. Cut taxes, cut the cost of regulation, and hang a new sign out saying Oregon is open for business and not just for collecting moss.

  • John Fairplay

    It is the government employee unions and their leadership who got us into this mess, it is the government employee union members and their leadership who should be punished.

  • Another idea

    Cut the pay! LOTS of people in the private sector have taken pay cuts of 10-25%. Why do we act as if the public employee pay scale is inviolate? (Sure, sure, there are collective bargaining contracts.)

    So what if a strong governor insisted on a 15% pay cut across the board? Let them strike! That saves money too!

  • davidg

    As Larry argues, personnel costs constitute the bulk of the state budget, so we have to deal with that if we are going to talk about cutting the budget. Looking at the $50K figure as the average salary, how does that compare to statewide average salaries in the private sector? I’ll bet it is significantly higher. So salary levels should be looked at.

    But I also think that program cuts can be a significant part of overall fiscal management. Here are a couple of proposals for approaching the issue of budget/program cuts.

    Proposal #1. We all know the legislature wants constant salary increases but is afraid to vote for them. So they created an “independent commission” to set their salaries. Using the political cover of an independent commission’s recommendation to rely on, the legislature gets its regular salary increases. Ok, let’s do the same for budget cuts. During the Clinton administration, the federal government was able to close many unnecessary military bases based upon the recommendation of an independent commission created for that purpose. The Oregon legislature should do the same. Create an independent commission to rank the importance of all state spending. The bottom items on the list get eliminated until enough is saved to balance the budget.

    Proposal #2. Break the entire Oregon state budget down into its 500, or 1000, or even 5000 component parts (spending programs). (We may need an independent commission to identify what those parts are – but that’s ok.) Require each legislator to rank in order of importance to him/her all items on the list. Using a proportional representation system of counting, we could determine the most and least important categories of spending in the budget as determined by the legislators. The bottom items on the list get eliminated until enough is saved to balance the budget.

    Either of these proposals eliminate the “political” problem which is the real stumbling blocks to program cuts.

    I certainly would have my own set of rankings for cutting the state budget, but I am willing to go with whatever rankings the legislators create in order to cut the budget.

  • Jan

    Budget rankings by legislators, has possibilities. To keep lobbyist and special interest out of this plan, all lawmakers should be summoned to Salem, without prior notice to vote a secret ballot on the budget rankings.

    After years of legislative observation we have all seen new lawmakers enter the halls of the statehouse with the best of intentions only to be cornored by thier caucus on one side and the lobbyist on the other. We have lost many good legislators who have resigned, tired of beating their heads against a wall.

    In Oregon, we elect talking heads who end up mere puppets to the lobbyist and special interest. We need a clean slate and an opportunity to reset budgt priorities.

  • Jerry

    I think a lot of people are pretty confused about this whole mess.
    If you want Salem to have more money and more workers just send them some of YOUR money.
    You won’t, of course, because you are too insincere in your thoughts. You just want someone else to pay.
    Meanwhile, the state sinks to the lowest point it can be besides being Michigan.
    Great.

  • Rick Hickey

    Great write up here.

    May I add that if Illegal aliens were really good for the economy, the state with the most-California, would be doing great economically. They are not and that is proof of the huge drain on taxpayers. In fact LA Co. super-Mike Antovich, esitmates illegals suck away over $1 Billion in services just in LA County alone, not including education costs. Hello?!

    May I also add the fact that Arizona, spending an extra $335.00 per each English as a Second Language student, was challeneged by the Bilingual Lobbyists all the way to the US Supreme Court for spending so little via Structured English Immersion. The Supremes after studying report after report (including results in MA. via my friend Dr. Roslie Porter, Phd-Ed.) ruled this spring that Immersion was better and so are the lower costs. Here in Oregon we waste over $3,000.00 extra for each ESL Student with no time limits. So with over 70,000 ESL’s here (a 300% increase in the last 15 years) we are wasting over $210,000,000.00 p/year on a program that has failed over and over here and Nationwide.

    Utilizing SEI would save us all hundred$ of million$ per budget cycle. Can anyone get our State Super of Schools-Susan Castillo, to at least talk to her fellow Latina asst. super in AZ? Or could someone at least challenge her position next year? Susan has not reduced the acheivement gap.

    Illegal alien students are costing us over $13,000.00 p/yr. each and not one Illegal adult is covering close to that expense.

    I tried to help with this via HB3215 in ’07 legislative session and in ’08 with a ballot initiative with Sizemore and even though the Unions spent over $10 Mil. against, it almost passed.

    What else can I do to change this expensive and damaging to kids failed status quo?

  • JAC

    I recall Gov. Ted campaigning years ago (2001-2002) that he knew where to save $$ in the state budget. Is anyone asking him to step up and show us the saved $$ now? Lets hold him and others involved accountable…

    • Anonymous

      ????

      I’m no fan of Kulongoskit, but circumstances have changed a bit since 2001-2002.

  • Julie B

    It is unfair to ask the few of us left with jobs to support programs that aid illegal immigrants.
    If they come here for a better life then let them work to take care of their own families like I do. I did not have 6 lids because I knew I could not give them a good life. I had 2 kids because that is what we can afford.
    STOP ALL SOCIAL PROGRAMS THAT FORCE AMERICAN TAXPAYERS TO TAKE CARE OF SOMEONE ELSES FAMILY!!

    I am not selfish but I made a commitment to take care of my kids!

    • Rupert in Springfield

      >STOP ALL SOCIAL PROGRAMS THAT FORCE AMERICAN TAXPAYERS TO TAKE CARE OF SOMEONE ELSES FAMILY!!

      Madame – To do so would be the death knell of liberalism. Liberals need jobs too.

      >I am not selfish

      I would suggest you pick up the latest New Speak dictionary.

      Thinking you are entitled to keep what you make and distribute what you see fit to charity of your choice is the definition of selfishness in the current political climate.

      Others taking from you to distribute to charities as they see fit is charitable, but only on their part, you still remain selfish.

      In other words, if you earn money, you are always selfish, if you spend others money, you are always charitable.

      Remember:

      Taking care of your family is selfish.

      Taking money from your family to give to others is charity.

      Killing an abortion provider is terrorism

      Running onto an Army base shouting Allahu Akbar and mowing down a bunch of people is not.

  • Duck fan

    Larry Huss knows that realistically, come January there isn’t going to be any anti-immigrant law passed nationally or in Oregon. Nor are the state employee unions going to “give back” their pay. So he is really proposing across the board cuts.

    An honest, if completely unimaginative proposal — what else would we expect from the former head of USWest in Oregon? But to say

    “There is no need to reduce benefits to the poor, the elderly, or the unemployed. There is no need to reduce funding per child for schools. And there is no need to reduce funding for law enforcement or prisons.”

    is simply disinegnuous, at best. The cuts are going to come precisely in those areas.

    If that’s what he wants, he should say so, and the public will have to make up their minds.

    I’ve been inclined to vote against the tax increases, but tawdry stuff like this post makes me reconsider. Maybe higher taxes are better after all.

    • Rupert in Springfield

      >Larry Huss knows that realistically, come January there isn’t going to be any anti-immigrant law passed nationally or in Oregon

      Just a tip, if you want to try and pass as moderate or right, then characterizing being anti illegal alien as “anti immigrant” is a dead give away that you are simply a lefty troller.

      No one I’m aware of on this blog is anti immigrant, the majority of people in the US are anti illegal alien.

      Figured Id give you the low down since you do try the moderate thing later on with you “I’ve been inclined to vote against tax increases” baloney.

      >An honest, if completely unimaginative proposal — what else would we expect from the former head of USWest in Oregon?

      Do we have to do the US West thing every single time? I’m bored of it. In fact I was bored of it by around round four. Could you maybe find another insult, this one is getting stale.

      Just a request. – Thanks.

      >is simply disinegnuous, at best. The cuts are going to come precisely in those areas.

      Why? Because you say so? You have some evidence?

      There have been plenty of budget proposals that show this is not the case at all. We just had one last summer. We have had plenty on this blog. Guess you were at the game.

      >If that’s what he wants, he should say so, and the public will have to make up their minds.

      No, what needs to be said is if you can only debate the points in the article by putting words in Mr. Huss’s mouth that he never said, then you have a pretty flimsy argument.

      >I’ve been inclined to vote against the tax increases, but tawdry stuff like this post makes me reconsider.

      Now that’s some logic, someone who agreed with your political opinion (being against tax increases) wrote an article you felt was poorly written so therefore you will change your political opinion.

      This one is a dead giveaway that you are a lefty troll. Nonsensical logic about changing your political views, coupled with the anti immigrant characterization. I will never understand why in the world the left is in love with this tactic. It fools no one and is something of an indictment of their views.

      Happy trolling Duck Fan – you are fooling no one.

      • Duck fan

        Uh, Rupert, the one quotation actually from Arizona mentions “this immigration law”, I was just parroting this back. But I will happily grant that what we are talking about is anti-illegal immigrant legislation. So you and Larry go ahead and get such legislation passed in Oregon in time for the January budget cuts.

  • Jan

    This Pew Foundation Research article shows the state will have to set the priorities and stop the endless spending and waste or go broke. I don’t think the unions and the public employees truly appreciate the pain ordinary Oregon citizens face each and every day. https://portland.bizjournals.com/portland/stories/2009/11/09/daily34.html

    I think the public is in the mood to let them go broke. The governor hiring 2400 new state workers as private sector workers are losing their jobs, having their hours reduced and having to pay more and more of their health insurance cost does not sit well with the public.

    They won’t listen to our voices, but maybe they will understand our votes.

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