Oregon’s Death Spiral

Tuesday’s newspapers carried a stunning story regarding Oregon’s future. The Oregonian referenced a recent speech by Governor-elect John Kitzhaber to the Oregon Business Summit:

“Oregon is headed for a fiscal catastrophe unless its leaders make dramatic changes in the way the government spends its money and delivers services, business leaders told state officials Monday.

“Gov. –elect John Kitzhaber agreed and said he is willing to work with the business community on specific actions to boost the state economy and make state programs more efficient.

“’On its current course, Oregon is literally on a death spiral,’ Kitzhaber told about 1,000 business, political and community leaders at the annual Oregon Business Summit.”

The stunning part of this story is not that Oregon is in a death spiral but the utter lack of accountability for the fact that Oregon is in a death spiral.

John Kitzhaber, during his previous two terms as Governor, together with Govs. Ted Kulongoski and Barbara Roberts, were the chief architects of the tax and spend spree that Oregon has experienced for the last two decades and yet not one critical question has been asked by the Oregonian of either Kitzhaber or Kulongoski regarding the state of the state or the effects of their administrations.

And while speakers at the Oregon Business Summit were routinely morose about the state of Oregon’s economy and its outlook for business growth, not one critical question was asked about the Portland business community’s culpability in Oregon’s decline. For years the Oregon Business Council – populated by Portland business leaders – has sponsored the Oregon Business Summit for the sole purpose of endorsing whatever programs the sitting governor has proposed. Under Kitzhaber it was protecting salmon and increasing funding (without accountability) for public schools. Under Kulongoski it has been “green growth” with high subsidies for uneconomical alternative energy producers and increased regulatory burdens for business under the guise of “sustainable” business practices.

Not once has the Oregon Business Council demanded that a sitting Democrat governor undertake a comparative competitive analysis of Oregon vis-à-vis other states in an effort to grow business. During my tenure on the Oregon Business Council my questions about a business agenda were routinely rebuffed by other noting that Oregon’s “quality of life” was sufficient to attract business. When I suggested that “quality of life” usually begins with a job, I was told that Oregon doesn’t want just any job, only high paying jobs populated by well-educated people. (I assumed they went back to smoking dope after I left the room.)

For two decades, Oregon’s Democrat politicians have treated business like an ugly stepchild whose sole duty is to shut up and pay. There has been no restraint in spending, no restraint in taxing, and no restraint in increasing regulatory burdens – and, frankly, no protest from Portland’s business community. There has been no recognition of job creation – except the demands of Oregon’s public employee unions to increase the number of public employees.

Even at the Oregon Business Summit the need for job growth has been underwhelmed. The Oregonian reported:

“A plan circulated at the conference calls for creating 25,000 jobs a year for the next 10 years, and for raising per capita incomes above the national average by 2020. To get there, the plan says, the state must do better by schools and universities. It also must offer a more industry-friendly environment, including providing land for business growth and cutting capital gains taxes that put a damper on growth.”

According to the Bureau of Labor Statistics, Oregon’s workforce grew by 32,600 between October of 2009 and October of 2010. The paltry job growth of 25,000 won’t even keep pace with the growth of the workforce let alone make inroads into the 160,000 jobs lost since the beginning or Oregon’s most recent recession.

I’m not sure whether John Kitzhaber actually recognizes the gravity of Oregon’s economic situation or whether he is simply paying lip service. I know that his predecessor, Gov. Kulongoski, to this day remains clueless. How someone can watch the state’s general fund budget projections go from a $2 Billion deficit to $3.5 Billion and then in one month add to that burden another 1,100 public employees at a cost of $250 million each biennium while making speeches about the need for fiscal restraint is simply beyond me.

I suspect that Kitzhaber is only marginally more economically literate than Kulongoski and that while he can look earnest and give a good speech, when it comes to action there will be precious little spending cuts, no performance accountability and another round of tax increases proposed.

Until Oregon’s politicians get serious about cutting 10,000 public employee jobs, freezing wages (including step increases), forcing public employees to pay for a portion of their healthcare insurance and eliminating the “defined benefits” retirement plan (PERS), Oregon state government’s fiscal decline will continue unabated. Until Oregon’s politicians get serious about a tax structure that discourages the attraction, growth and retention of business, Oregon’s economic decline will continue. Until Oregon’s politicians begin to care more about people and less about spotted owls, salmon and public employee unions, Oregon will continue to trail the nation in terms of unemployment and income per capita. Until Oregon’s politicians begin to demand accountability along with expenditures, Oregonians will see the continuing decline of school performance and increase in wasted boondoggles similar to the Oregon Wireless Interoperability Network (OWIN) and Portland’s famed water bureau billing system.

As Pacific Power Chairman Pat Reiten noted:

“’It’s painful to say this, but Oregon isn’t so special a place any more,’ Reiten said. ‘It’s in decline. It’s below average.’”

For over two decades, Oregon’s politicians have demonstrated their inability to lead Oregon to a better tomorrow. It’s time for the business community to step forward to lead that change. If they don’t, they can meet again at the end of Kitzhaber’s term and collectively wring their hands about what might have been.

  • Roger Sanders

    Oregon will NEVER allow the unions to not be in charge. They own this state and the state government. Nothing will ever change. Nobody cares. Sadly, it is way too late to announce any warning calls.
    Kitz is a joke and everyone knows it.
    He had his chance and did nothing but make things worse.
    Now he can do it all over again.
    Great news.

    • conservatively speaking

      Quite correct attending the unionized influence and affluence.

      As for Kitzhaber ‘bungeeing’ the state economic downfall – past experience portends it’s bound to be a SNAP.

  • Steve Plunk

    A balance needed to be struck between progressive interests and the commercial interests years ago. Instead we have seen a steady movement toward progressive ideas. Ideas and policies that handicap business and workers from productivity and the ability to complete. It was obvious years ago when the state would not champion the industry that Oregon was built on but chose to turn it’s back on it. Putting their faith in first in high tech then tourism and now green jobs they have promised but failed to deliver to the people of Oregon.

    The private sector creates wealth while the government consumes wealth. The private sector creates jobs while the government destroys them. The governor elect may talk about creating jobs but those of us in the reality based world know he can’t. What he should be talking about is reducing taxes, the regulatory burden, and shrinking the state government. Those are things he can do.

    The death spiral he speaks of is his own doing. Taking responsibility would be a show of good faith.

    • Anonymous

      Dream on about the defunct timber industry. Those of us with a future have moved for example into high tech where the pay is good. Most of the wealth being created in this state is in the Portland area and parts of the Valley. The biggest growth industry seems to be the nominally public universities. Losers like you are stuck in your sputtering industries. I see the gas tax is going up soon — we’ll still be way lower than California and even Washington. I’ll bet you’ll be complaining for years. But I’ll bet you’ll be complaining for years.

      • Rupert in Springfield

        >The biggest growth industry seems to be the nominally public universities.

        Not really sure what the point is bragging about the biggest growth industry, according to you, when that industry has to be subsidized.

        Do you understand why an economy cannot be built on industry that relies on subsidy for its existence?

        • Anonymous

          What a dumb statement. Most of the money does not come from state subsidy. Look at UO, 7% of the budget is from the state. They are drawing in out of state students in droves. They make a surplus on it. Money coming into Oregon. Look at the new buildings on Franklin Boulevard, the basketball arena. Phil Knight sure knows where to put his money.

          Don’t like the meager state subsidy? Get rid of it! UO would be better off being private.

          Go ahead, do something in the private economy. Wave your magic wand! But acknowledge success where there is success.

      • Steve Plunk

        Calling me names sort of explains where your intellect begins and ends. Posting anonymously confirms your cowardice. Repeating yourself makes me question your sanity.

        I’m not living in the past but merely learning lessons from it. Industrial bases must be defended as they are a source of wealth creation and they also support other businesses.

        The gas tax and weight mile tax are going up alright. Of course every sane economist will tell you raising taxes during a recession with high unemployment is a mistake.

        Start posting with your real name and I’ll take you more seriously. Until that time you will continue to be nothing more than a progressive troll with nothing of value to contribute.

  • Bob Clark

    There’s a lot to be discouraged about. As a citizen you get involved giving public testimony, for instance, and it is almost futile to change the minds of politicians whose advancement depends on spending ever larger amounts of public monies or whose campaigns were funded largely by public employee union dollars.

    I think though the current Oregon state budget deficit can be closed by eliminating BETC, discontinuing subsidies to the city of Portland for its rail transport buildout, and getting state employees to pay something towards their healthcare and retirement benefits.

    There’s also a geograhical element to changing the political paradigm in Oregon, and that is fostering Washington county’s private sector. Multnomah county the home of Goldschimdt’s political mafia is in large part responsible for much of the government morass weighing on Oregon’s languishing economic performance. The election of Tom Hughes to Metro presidency might start a shift towards fostering more land availability in Washington county for economic development. Then there is also private sector people like Phil Knight who are bold enough to help fund more business friendly politics, and is also encouraging taking the University of Oregon private.

    Change is probably going to be slow, but maybe it starts with the New Year. The change may be sped by the GOP’s taking of the U.S House. If we can get the federal government out of the business of bailing out state governments and also enticing them into expensive, money losing boondoggles like Portland (milwaukee) light rail, then there’s more hope of economic reality forcing state governance to be more friendly towards private sector.

  • Dr. No Way

    In light of all of this, I suggest that Oregon change its name from the Beaver State to the Screw You State. This would more accurately reflect the attitude of the so-called leaders who have been running the state into the ground for decades.
    You own property? Screw You.
    You own a business? Screw You.
    You’re tired of paying more taxes so we can give useless public employees more pay raises? Screw You.
    You don’t work for the state? Screw You.

  • Anonymous

    Posters1, 2 and 4 are Exhibit A for why the conservatives in this state can’t get anywhere.

    • Rupert in Springfield

      Well, you did just lose your super majority in Salem.

      The arrogant attitude of statists like you is Exhibit A for that one.

    • Anonymous

      That doesn’t mean losers like you are getting anywhere.

      • Rupert in Springfield

        Eliminating your super majority is getting somewhere. you can face that or not, but being in denial about it probably doesn’t cement your status as arbiter of who is a loser.

  • Dr. No Way

    How many public employees does it take to screw in a lightbulb?
    Two thousand. Now shut up and give us more money!

    • Rupert in Springfield

      >How many public employees does it take to screw in a lightbulb?

      Not a damn thing gets screwed up around here until we talk about a raise!

      • valley p

        How many catalyst conservatives does it take to screw in a light bulb?

        None. If the market is there, the dead light bulb will come back to life and generate all the light we need.

        • Steve Plunk

          Ha ha. valley p that was pathetic by any objective measure. Sometimes it’s best to just keep quiet.

          • valley p

            Yes…I agree with that advice. And sometimes jokes apparently fly over one’s head. Do I actually need to explain it to you?

          • John Fairplay

            If you have to _explain_ a “joke” to anyone, it wasn’t funny.

          • valley p

            An alternative explanation is that is may be funny to those who get it, but not funny to those who don’t. Yet once explained, they might chuckle a bit. Another explanation is that some people have trouble laughing at characteristics they themselves hold. They get a little sensitive. Speaking from experience, I have told that knock-knock joke to people who laughed at it (all liberals I admit). That is an indication that liberals at least, find it amusing. That you and Steve do not is fine with me. Can’t please everybody.

            I’ll try a different one.

            A priest, a Rabbi, and an Imam walk into a bar. The bartender says, “What is this, some kind of joke?”

            Get it? Some kind of joke? Come on now. THAT is FUNNY!

          • Founding Fathers

            He who laughs last, is slow on the uptake.

  • Rupert in Springfield

    >But acknowledge success where there is success.

    Um, yep, thats all well and good but somewhat irrelevant since I didn’t address that.

    I did not argue that UO or any other Oregon university was not attracting students of philanthropists like Phil Knight to donate buildings. How that popped into your head is anyone’s guess.

    My statement was that building an economy on something that could not exist without subsidy, state or otherwise, is not very good economic policy.

    If you care to address that, fine. If not I’m afraid an inability to stay on topic and do little but go on an insult rant doesn’t exactly impress me with you economic assessments.

  • Anonymous

    No offense intended but what is promoted here, ranting radical right wing parroting, or thinking problem solving conservative ideas? Oregon is just a very small player in a global economy that is limping. Oregon is not unique, and the causes of economic problems are not local. Income is down so tax revenue is down. Individual public employees are every bit as human as anyone else. If they have money and spend it in my store I appreciate it. Remedy to the present budget requires figuring out where to roll back spending (not just individual wages or senior citizen pensions that support our local economies), and to ID low priority services to suspend or eliminate. To just blab on and on about who to blame is a narrow, divisive, waste of time and energy. Only saying it is the other side, or to blame specific individuals demonstrates a lack of understanding, or worse, an attempt to take advantage of serious issues for personal gain. I enjoy reading this blog but it has yet to earn my respect. IMO this site could gain functional influence if the spin, rants, and name calling were minimized a bit.

    • Edjohnston2003

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