By State Representative Matt Wingard,
Last week, the state economist announced that state revenues for the current budget will be down an additional $257 million, or 2 percent since the June forecast. Overall, General Fund and Lottery Fund resources are down $1.1 billion since the 2009 close of session estimate, which was used to pass the 2009-11 Budget.
Since the end of the 2009 session:
• Personal income tax revenue is down $1.2 billion, or 10.4 percent
• Corporate income tax revenue is up $42.3 million, or 5.1 percent.
Why are corporate tax revenues up? My colleague Rep. Dennis Richardson said it best:
The additional corporate taxes showing up in Oregon’s coffers likely results from increases in taxable revenues resulting from money saved by reductions in workforce, lowering wages and other costs, and retaining capital instead of investing it in rolling stock, business expansion and other tax deductible or depreciable expenditures. In short, businesses may be paying taxes on retained capital that would normally have been spent in tax-deductible ways if the businesses were growing and investing in the future.
Oregon has a jobs problem, not a revenue problem. When people are employed, they earn incomes and pay income taxes; then they spend money with local businesses that in turn hire more workers and pay taxes. Everything we do should be focused seriously on the creation of private sector jobs.
Legislative leaders continue to talk about federal bailouts. These bailouts will do nothing to solve our long-term problem. They merely perpetuate the myth that Oregon can afford its current practices and spending habits.
This situation presents us with an opportunity to think differently and to make bold changes:
• Look at privatization options, which have been successful in other states to the tune of hundreds of millions of dollars in savings.
• Begin to implement performance-based budgeting where each program gets reviewed every four budget cycles for necessity, efficacy and efficiency.
• Establishing an independent audits office – which requires no additional spending – to closely review how (not just how much) agencies are spending.
As the governor wisely, and finally, said – it’s time to “reset” state government. We should start by putting a hold on all spending for new projects and programs established in the last budget.
• This will be painful to those programs.
• But we have added 3,000 state employees to the system in the last few years (which equals $168M worth of payroll costs for the remainder of the biennium).
Here are just a few examples of how we can make tough decisions and start saving money to protect schools days, provide seniors’ their medicine, and avoid letting prisoners out early:
• $71M can be saved by asking state employees to contribute to their health insurance at the same level teachers already do.
• $53M can be saved by having state employees pick-up just 3% of the 6% “employer pickup” (which is supposed to be an employee contribution).
• $82M can be saved by suspending the Business Energy Tax Credit (BETC) which subsidizes solar panels and windmills.