Dealing With the Looming Budget Crisis Straight Up

A recent article in the Oregonian characterized Democrats John Kitzhaber and Bill Bradbury as favoring tax increases. Kitzhaber leans towards implementation of a sales tax despite its rejection at least nine times by Oregonians. Bradbury has embraced the New Left double-speak of reducing “tax expenditures” — code for eliminating items that are deductible for computing state and federal taxes. The term “tax expenditure” implies that everything you earn belongs to the government and anything it allows you to keep is an expenditure by the government. In either instance the net result is to increase taxes in a state that already ranks near the top in government expenditures per capita. (It is pointless to argue about tax rates because what is taxed and how it is taxed varies so much from state to state. The only true picture of the burden imposed by government is to look at the amount it extracts per capita and even that can be distorted when you include states with high natural resource production such as Alaska and Wyoming.)

It’s not surprising that a party entirely beholden to the financial resources of the public employees unions would advocate additional tax increases as their primary response to a looming deficit in state finances —after all they have to keep the union coffers full. Less is known, however about what the Republican candidates will do. Both Allen Alley and Chris Dudley favor a reduction in the capital gains tax to stimulate economic growth and both acknowledge that government has grown too large and spending must be controlled but neither confronts the issue straight up.

Oregon’s budget crisis is the elephant in the room. You just can’t ignore it and unless a straightforward approach is taken there will be little reason to vote Republican. If you want to energize voters to seek an alternative to twenty-four years of Democrat rule, you need to follow the example of newly elected New Jersey Governor Chris Christy.

You must identify the size of the problem and its major parts with specificity. A recent article in the Oregonian by Harry Esteve noted:

“Oregon, like other states, is facing the end of one-time stimulus spending and snail-paced economic growth. State economists and budget analysts project a $2.5 billion shortfall for the 2011-13 budget and a $1.7 billion hole in 2013-15.

“Without federal help, that would mean more tough choices lie ahead for Oregonians about raising taxes again or cutting state spending.”

That defines the size of the problem, now the cause.

In Oregon’s case it is the growth in government employees, growth in salaries beyond their private industry counterparts, and growth in already generous benefits (healthcare and retirement). It is also growth in expenditures on persons illegally in the United States — education expenditures, welfare expenditures, healthcare expenditures and justice system expenditures.

What it is not is expenditures for Oregon’s poor, unemployed or disadvantaged — and that is important to note because the Democrats routinely play upon the plight of those as justification for unchecked spending. A realistic solution to Oregon’s budget crises can be had without adversely impacting the delivery of services to those most in need.

You must identify the source of the problem. In Oregon’s case it is the public employee unions who own the Democrat party lock, stock and barrel. In a recent article Washington Examiner columnist Michael Barone provided a succinct description of the dangers of public employee unionism:

“Public-sector unionism is a very different animal from private-sector unionism. It is not adversarial but collusive. Public-sector unions strive to elect their management, which in turn can extract money from taxpayers to increase wages and benefits — and can promise pensions future taxpayers will have to fund.” [Emphasis supplied]

That is it pure and simple. In states like California, New York, New Jersey and a host of others including Oregon, the public employee unions spend the monies extracted from mandatory dues to elect the very persons with whom they will bargain. The net effect is that the elected politicians no longer represent the interests of the citizens/taxpayers of the state, but rather the interests of those who have funded their elections — the public employee unions. Where then is the balance, the tension between labor and management? It doesn’t exist. It doesn’t exist in terms of the loyalty of the politicians to the citizens/taxpayers because it was the unions, not the citizens/taxpayers, who paid for their campaigns. It doesn’t exist in terms of the natural reservations about spending one’s own money because it is the citizens/taxpayers monies that are spent. And it doesn’t exist in terms of the resistance to raising money because it is extracted unwillingly from citizens by virtue of mandatory taxes.

Until Republicans are willing to openly declare and discuss the causes of Oregon’s budget and political crises, voters will remain justifiably ignorant and will continue to default to the Democrat party who promises everything and delivers little.

And finally, you must provide a workable solution. In this instance the two problems have different solutions.

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.

Following are recommendations for making the reductions:

1. Freeze hiring and eliminate all authorized but unfilled positions with the exception of uniformed officers in the State Patrol.
2. Roll back employment levels to those in place at the bottom of the last recession (August of 2003). That would eliminate approximately 6500 positions. (The state ran just fine back then and I doubt that anyone can identify any improvements in the delivery of services since then.)
3. Eliminate the six- percent contribution to PERS that the state is making for employees — they were supposed to be making it themselves. (That includes the six- percent that taxpayers are making for Gov. Kulongoski.)
4. Cap the state’s contribution to state employees healthcare plans at the average level contributed by Oregon’s private industry. The employees, like their counterparts in private industry, can contribute the remainder.
5. Impose a five percent across the board salary decrease to eliminate the voluntary five percent increase granted by Kulongoski as a favor to his public employee unions supporters.
6. Freeze each category of salaries until they are equalized with their private industry equivalents.
7. If these initiatives prove to be insufficient, begin across the board personnel reductions with the exception of uniformed officers in the State Patrol.
8. Eliminate educational, healthcare and welfare benefits to those not in Oregon legally and tie that to meaningful fines and license revocations for those business knowingly hiring illegals. If you remove the incentives for people to immigrate illegally, they will not.
9. In the implementation of these solutions, no benefits to Oregonians (with the exception of those here illegally) should be disturbed.

If the public employee unions balk at revising their agreements to accommodate these changes then begin eliminating positions until you reach the dollar equivalent. If the unions strike, fire those who refuse to return to work. Oregon has lost approximately 160,000 private sector jobs since the beginning of this recession. Another 40,000 people have joined the employment eligible ranks. There is probably not a better time in terms of replacement availability to correct this problem and it only requires a little courage to act.

While these actions may appear to be draconian, they are, in fact, reasonable solutions to an unreasonable problem. I remember the president of Pacific Northwest Bell once telling a senior manager,

“Your negligence does not create a crisis for me. I look forward to reviewing your solution to the problem you created.”

This is a problem created by overreaching by the public employee unions and complicity by successive Democrat administrations. The burden of the solution should fall solely on those causing the problem.