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Oregon Trucking Associations, Inc.
Oregon Truck Dispatch
Bob Russell
OTA Vice President/
Government Affairs
T
he 800-pound gorilla in the room is always
the state budget. The party in control
(Democrats) gets to determine spending
priorities and hand out “gifts” for legislators to
take home to their districts. The total or all funds
budget for the 2015/2017 biennium is about $71
million, however, the legislature has no control
over most of this amount as it includes federal
funds and other funds like the State Highway fund.
The general fund budget, which includes lottery
and income tax revenues for 2015/2017, is $18.9
billion. This is the amount that the legislature
actually has control over. So, whenever you see the
word ‘budget’ in the media or elsewhere, think
$18.9 billion.
Based on this week’s revenue forecast, Oregon has
$1.4 billion in additional revenues available for the
2017/2019 biennium than we did during the
current budget cycle. That is a 7% increase. Sounds
pretty good, huh? So why is it that the politicians
keep saying that we have a $1.8 billion shortfall
bringing the total amount of increased revenues
needed to balance the budget to a whopping 17%?
The two big drivers behind this inflated number are
PERS and Obamacare. I don’t think I need to tell you
much about PERS. It is simply an out of control
retirement system for older government employees.
The Tier One employees are the baby boomers, most
of whom worked for the State during the 1980’s and
early 90’s. These folks are retiring now, and it is up to
current participating government agencies to pay for
their retirement. Current employees have a
retirement system that is much like a 401k and will
not burden the budgets nearly so much when the
current employees are eligible for retirement.
Obamacare is another issue altogether. When the
federal government implemented it, they provided
the states with huge subsidies to pay for providing
health insurance to the uninsured. Over time these
subsidies will be reduced, requiring the states to
backfill the lost funds from their general fund coffers.
The first major reduction in federal subsidies for
Obamacare comes during our next budget cycle.
There are also a few other factors that increase the
need for additional funds in the next budget. One is
that the Governor gives state employees raises and
increases in other benefits and then expects the
legislature to pay for them. This is exacerbated by
the cozy nature of our public employee unions and
elected Democrats. The final factor is that the
Legislature often implements new programs at the
end of the upcoming budget cycle to reduce
pressure on the budget. These costs, however, roll-
up in the next budget cycle, as they must be paid for
during the entire two-year budget period.
So, that is a snapshot of how we got here. Now, what
are we going to do about it? The proposal, from the
Democrats, that is currently on the table is for a
broad based gross receipts tax on business with
elimination of the corporate income tax and a small
reduction in the tax rates for the personal income
tax. The Republicans counter that they will support
a gross receipts tax if the Democrats cut state
budgets and deal with the PERS issue. Of course,
the Democrats do not like the Republican proposal
because it will anger a huge part of their base and
their campaign funds—the public employee unions.
In Oregon, the Legislature must balance the budget.
According to Senate President Peter Courtney, at
the present time he does not have the votes for a tax
increase, nor does he have the votes to pass the
budgets without a tax increase. The Senate President
is also predicting that the Legislature may not be
LEGISLATIVE UPDATE
6
The View From the
State Capitol
The total or all
funds budget for the 2015/2017 biennium
is about
$71 million,
however, the legislator has
no control over most
of this amount
as it includes federal funds and other funds like the
State Highway fund.