Oregon 2016 Session adjourns

by Sen. Doug Whitsett

The Oregon Legislative Assembly adjourned last Thursday afternoon, ending what was arguably the most destructive month in Oregon legislative history. Some of the most damaging new laws were supposedly aimed at compromising with the provisions of even more destructive initiative petitions.

Public employee unions, environmental advocacy organizations and purveyors of renewable energy represent much of the core of the political support for Oregon majority Democrats. Political divisions, for those support groups, have been actively engaged in signature gathering for several of those initiative petitions.

The organizations are employing a great deal of effort, expense and publicity to ensure their success. Some of those initiative petitions seem likely to appear on the November ballot.

In “response” to the “impending threat” of these initiative petitions, majority Democrats introduced several bills that they claim were aimed at finding common ground to compromise and defuse the threat of the ballot measures. They passed the bills on party-line votes in order to “save the people” from the even more destructive ballot measures.

Senate Bill 1574 was supposedly enacted in order to save us all from the ravages of Initiative Petition 63. In my opinion, the provisions of the new law are significantly worse than the potential ballot measure.

The new law doubles the renewable portfolio standard by eliminating the use of all coal-generated electricity in Oregon. Both Legislative Counsel and the Public Utility Commission (PUC) are on record stating it will not cause the closure of a single coal fired power plant anywhere, and will not measurably reduce global greenhouse gas emissions.

The act contains two provisions that functionally prohibit the formation of a municipal utility district (MUD) or public utility district (PUD) in PacifiCorp’s monopoly protected service area. These poison pills serve to eliminate the financial feasibility for any Klamath County MUD or PUD.

Incredibly, no one has performed a meaningful, in-depth cost analysis for this scheme. The utilities admit the new law will cause at least an average one and one half percent annual rate increase. At minimum, it will result in at a 40 percent increase in power costs to all PacifiCorp customers.

That enormous rate hike will be above and beyond the usual PacifiCorp rate increases allowed by the PUC. PacifiCorp power rates have already nearly doubled since 2005.

The new law was heavily supported and relentlessly lobbied by PacifiCorp and PGE operatives. In fact, it is generally understood that many of the provisions of the bill were largely drafted by the utility companies.

In my opinion, this bill represents crony corporatism at its worst. One and a half million Oregon PacifiCorp and PGE customers, who had no representation in the closed door and confidential negotiations, will be forced to pay the enormous costs while the companies reap immense new profits that are guaranteed under the new law.

SB 1532 was also enacted by the Democrat majority, supposedly to save us from the effects of minimum wage initiatives 57, 58 and 59. The bill has already been signed into law by Governor Kate Brown.

This new law creates three regional minimum wage rates. The new mandated minimum wage will sequentially increase, at different rates, in each region. Compliance with the law, as well as with the plethora of administrative rules it will require, will be nearly as difficult as finding the money to pay the increased wages.

In my opinion, this new law will result in wholesale destruction of Oregon small businesses and kill many private sector jobs that those businesses provide. Klamath and Lake Counties have some of the highest percentages of minimum wage jobs in Oregon. For that reason, the new law is expected to hit rural southern Oregon among the hardest.

Thousands of Oregon community college and university students help pay their college costs by working at university and college provided minimum wage jobs. Much of that student employment is now at significant risk, because no funding is made available for the tens of millions of dollar increase in labor costs directly caused by the new law.

SB 5701 increases Oregon’s current spending by more than $300 million. The preponderance of the increase is due to “collective bargained” increases in public employee pay. Most of the rest of the $300 million will be spent for projects that too often look like ornaments on an election year Christmas tree.

According to the Department of Administrative Services, the average state employee earned more than $89,000 in 2015. The median compensation earned by state employees was more than $85,000.

Last year’s labor contract will increase public employee compensation by at least another 30 percent over the next three and one half years. The new contracts will serve to increase state employee compensation by more than half a billion dollars for the budget period starting July 1, 2017.

Finally, Initiative Petition 28 would levy a two and one half percent tax on Oregon corporations that have more than $25 million in Oregon gross sales. That includes most grocers, convenience stores, clothing retailers, fuel distributors, auto sales and utilities such as PacifiCorp.

Virtually all affected Oregon corporations will pass their increased cost on to their customers and ratepayers. The new levy will function as a two and one half percent sales tax on most services and commodities purchased in Oregon. It is expected to raise at least $2.6 billion in new taxes each year.

Some Democrat legislative leaders have called for a special legislative session to enact a compromise law to save the people from part of the enormous tax increase. One proposal would only raise taxes by about a half billion dollars each year.

Governor Brown seems to believe state government must continue to tax and spend. She appears to be in strong support of the enactment of the new tax by the people.

Perhaps our Governor is aware of the several billion dollar budget shortfalls that yawn, like a fiscal abyss, for the 2017 budgets. The Public Employee Retirement System, Oregon Health Authority, Department of Human Services and Department of Transportation each have impending budget deficits in the hundreds of millions of dollars.

The majority party has summarily vetoed any and all efforts to reduce government spending. Raising taxes continues to be their only viable response to the enormous impending budget deficits.

Senate Republicans were able to delay, and thereby prevent passage, of a number of other really bad bills during the short session. Unfortunately, we no longer had enough bipartisan coalition votes to stem the tide of bad legislation, when the majority Democrats were united in their purpose.

The question that begs an answer: “At what point in time do astute businessmen start to develop their strategies for leaving Oregon?”

Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls