MEASURES 66 AND 67: The Californiazation of Oregon’s Economy

In a recent column, Washington Post columnist, David Ignatius wrote:

“The U.S. economy survived the traumas of 2009, thanks to good policy and good luck. What worries me, looking ahead, is what might be called the “Californiazation” of America — the growing tendency of our political system to make promises in social spending programs that it isn’t prepared to pay for with tax increases.”

Ignatius sought to cast the blame evenly on Democrats and Republicans by suggesting:

“The political forces that generate deficits are just too strong: a Democratic Party in hock to public-employee unions and a Republican Party in love with tax cuts.”

While that conclusion may be true in other places, it is certainly not true in Oregon. Oregon politics is dominated by the public employee unions and while it has had one record breaking spending increase after another, it has not had a tax cut in over twenty years. (The last tax limitation was Measure 5 which represented a tax shift rather than a tax cut.)

More importantly, the massive tax increase sought by the public employee unions under Measures 66 and 67 have nothing to do with funding “social spending programs” or even “educational improvement programs.” The total $733 Million dollar tax increase will be used to fund the additional 2400 public employees hired by Gov. Kulongoski and the gratuitous five percent pay increase over and above the regular salary increases authorized by Kulongoski during his second term in office.

While over 130,000 Oregonians have lost their jobs in the last two years, Gov. Kulongoski, with the approval of the Democrat dominated legislature, has hired 2,400 additional state employees. Almost all of those employees have become members of Oregon’s powerful public employee unions by virtue of collective bargaining agreements executed by Kulongoski that requires employees to be members of the unions or to pay the dues required of union members. The cost of those additional dues paying public employee unions members is $192.5 Million annually or $385Million for the biennium — half of the total proposed tax increase.

And while Oregonians in the private sector were losing jobs, losing hours and absorbing pay decreases, Kulongoski granted the public employee unions a five percent pay increase over and above the bargained for increase and the step increase (the one you get for just showing up for the job each year). Three salary increases in a year. Those salary increases added another $296 Million dollars for the biennium. That brings the total to $681 Million.

Last fall the Public Employee Retirement System board announced that it would increase the amount of mandatory employer (state agencies) contributions to 18 percent. That 18 percent does not include the six percent employee contribution that the state now makes on behalf of members of the public employee unions to Oregon’s gold-platted retirement program from state employees. The cost of that increase is difficult to calculate because it is an average amount that varies slightly from agency to agency and from state to local government. Suffice it to say, the legislature in the closing days of the last session increased funding to state agencies by $35 Million to account for a portion of that increase.

The totality of the $733 Million proposed tax increase is thus due to increased hiring and enhanced benefits to the members of the public employee unions. And, by the way, those additional benefits to the public employees weren’t free to them. Union dues are based on a percentage of the employee’s wages. As wages were increased, so were the union dues. And while 2400 jobs were added the accompanying increase in union dues for new members was similarly increased.

Oregon’s public employee unions extract about $60 Million dollars in mandatory dues each biennium. There are virtually no organizing efforts – membership is mandatory as a condition of employment — and no difficulties in contract negotiation — they bargain with the people whose campaigns they funded. Virtually all of the $60 Million is available each biennium for political activities — direct political contributions which must be reported and organizing, recruitment and “political education” all of which goes unreported. No private sector entity, or even group of entities can match the political war chest of the public employee unions on a sustained basis.

And that political war chest is collected and remitted by state and local government and the school districts under collective bargaining agreements — an effortless and mandatory fund raising at taxpayer expense.
While the surrounding states are beginning to recover from job losses as evidence by November employment reports (Arizona 15,000, Colorado 5,700, Utah 5,000, even lowly Nevada 1,400) Oregon continued its unrelenting job loss. Additional taxes on those who create jobs — private sector employers — will ensure that Oregon joblessness will continue well into the new decade.

The public employee unions are in full control of Oregon state government and they are extracting their “tribute” from you, the taxpayers. This time it is an additional $733 Million and, sad to say, that isn’t enough to sustain spending at the levels imposed by Oregon’s Democrats who are wholly beholden to the public employee unions. If you like the tax increases in Measure 66 and 67, you will love the additional tax increases that the next legislature will impose.