Don't Even Think About It
you were in the vicinity of Salem in the middle part of December you may
have heard a plaintive sound emanating from the State Capitol. No it wasn’t
the carolers or high school choirs there to sing festive songs. It was
the high-pitched whining of government stakeholders pleading that nothing
be taken from their big budget increases. Yes, committees of the legislature
met to hear from interested parties to discuss the significant budget
shortfall now upon us in Oregon (a little over $700 million). And hear
they did from anyone and everyone with a dime to lose. What’s that?
Well yes, if you listen carefully you can still hear the howling and whining.
The special session to deal with this shortfall will no doubt go a long
way to defining the difference between the government stakeholder class
and the productive free enterprise class. It will go a long way to explaining
why some people vote Democrat and some people vote Republican. (And it
ain’t just the social issues.)
Here’s why some people vote Republican. Because when the economy
a recession, some people understand that raising taxes to fill in budget
gaps is not
Make no mistake, many of these
same people also understand that voting Republican does not guarantee
that taxes will not be raised. They’re not that naïve. You
can drag the horse away from the water, but in the long run you can’t
always keep them from joining the herd for a drink.
But good old common sense tells them that when the economy is in a downturn
and government revenues are in decline, business and family incomes will
also be in decline. Businesses are failing; layoffs are everyday occurrences.
Families and businesses are struggling for sheer survival. This is no
time for government to say, “Our budgets must stay whole.”
Declining government revenues are, after all, an indicator of the difficulty
businesses and families are already experiencing.
Who are these arrogant leaders that ignore
this suffering and instead demand more?
Well, for one The Oregonian editorial board, who wrote on December 9:
“Gov. Gary Locke also is expected to soon propose a massive package
of transportation projects and the new taxes to pay for them. That’s
how you jumpstart a stalled economy. Oregon needs that same kind of spark...”
And for another, at least one gubernatorial candidate, Jack Roberts, who
has already given the nod to increasing revenues by adding...drum roll…line
games (to bolster lottery revenues). Now there’s a great idea—another
bite from low income, addicted gamblers. In all fairness to Roberts, he
was right when he said, “At a time when the governor is considering
eliminating the Jobs Plus program (which has moved thousands of Oregonians
from welfare to work) and Project Independence (a program which for more
than twenty years has provided cost-effective non-institutional care to
seniors), I think it makes sense to consider ways to avoid these cuts
without raising taxes.”
We agree. Consider every option. But then discard this one for the trash
it is. Besides, the lottery is just a devious form of taxation. And while
you’re at it, throw out the idea of any increase in income taxes.
That one is worse than trash; it is downright destructive. As one tax
expert said, an income tax increase of any kind right now would have the
same effect that the income tax surcharge had in the recession of the
’80s—it would fill the immediate budget hole, but it could
deepen and lengthen the recession here in Oregon.
But Roberts is an astute politician who has witnessed a lot of the behind-the-scenes
whining and wrangling. So he was also right when, in response to The Oregonian’s
criticism of his line games suggestion, he said: “Perhaps The Oregonian
will list the cuts they would prefer be made in the state budget rather
than allow line games to be added to the games currently offered.”
Don’t hold your breath Jack, because the O’s best idea is
already in evidence—a tax increase that would further damage the
fragile livelihoods of Oregon’s small businesses and families. Give
Roberts credit—at least he has ideas. The other candidates are taking
the fifth, refusing to answer on the grounds it may shed some light on
their actual thinking (or lack thereof).
Getting down to business on budgets isn’t any-one’s idea of
a good time, but despite all the cries of pain and anguish there are some
facts and some numbers that every Oregonian should force themselves to
sit down and take a hard look at. Here are some nuggets from the charts
The 1991-1993 state budget was $5.5 billion.
The 2001-2003 state budget was $11.9 billion.
That’s a 116 percent
increase in the overall budget over the last ten years.
Yes, there are about 15 percent more people than in 1991 and total inflation
has climbed by 45 percent. That still leaves a 66 percent increase.
After inflation, has your home or business budget grown by 66 percent?
Gov. John Kitzhaber and every legislature for the past ten years (that’s
five different groups of 90 +1 elected officials) have raised the state
budget dramatically. Not once, not once, did they look for ways to slow
the growth of government, not even one little ratchet back to match the
healthy, but slower, growth in the private sector.
In particular, last session the legislature approved an overly-optimistic
budget well past the point in late spring when the economy was in a clear
downward trend. Responsible budgeting or procrastinating on the inevitable?
All those individuals are responsible for this collective train wreck,
but the group most recently elected will have to solve the problem. Before
you feel sorry for them, keep in mind that many have been there at least
part of the time and by rights should be responsible for finding solutions.
Those that are brand new, well, the phrase “gluttons for punishment”
comes to mind.
Budget growth has raced ahead of private sector growth for the past ten
years. And what do we have to show for it? What do we have to show for
our 66 percent increase beyond inflation and population growth?
Well look at all the new highways and roads we’ve constructed in
Oregon over the last decade. Look at the bridges that have been repaired.
Look at our highly-regarded university system. Look at our model public
school system. Look at all the salmon we’ve saved.
No wait, don’t do that.
Because not one major highway has been built in Oregon for the past 20
years. Our bridges and roads are crumbling—they beg for repair.
Our university system is consistently ranked as a third-tier public system.
And our K-12 public schools have a dropout rate of one-third of their
students. And we club to death at least as many fish as we save.
Where did all the money go? Did Portland’s anti-business, not-so-smart-growth,
pro-light rail, elitist planning agenda swallow up big chunks of it with
fat consulting fees and developer payoffs? Is our state budget just one
giant jobs program for public employees, or is something tangible going
Of course, good work, necessary work, is being done every day by government
employees who work hard to meet the needs of their fellow Oregonians every
day. That can, but should not, go without saying. But very little more
or less seems to be going on than was going on 30 years ago in 1971 (remember
the numbers already reflect population increases and inflation).
Cuts in the increases to the budget can and must be made rather than trying
to cull more revenue from businesses and families in Oregon whose reduced
incomes mirror the reduced state revenues.
The only proper response to Oregon’s recession is for everyone,
including government, to tighten their budget belts and look for productive
avenues to stimulate business and job growth (such as lower fees and taxes,
fewer regulations, more predictable and lower energy prices, and a change
in attitude from Multnomah County).
Declining revenues have brought the budget down to $11.3 billion. So instead
of a 12 percent increase over last year, a six percent increase will have
to suffice. That’s right. That’s what all the whining is about—a
six percent increase over the next two years instead of a 12 percent increase.
The recession has brought some real pain to Oregonians, but complaints
about a six percent increase do not qualify as real pain.
Legislators, Gov. Kitzhaber: find a way to make the necessary six percent
across the board cuts. Take a field trip to other states where roads are
being built, where budgets are being cut, where schools are succeeding.
Have a conversation with a governor who has successfully cut a budget.
Listen to the nuts and bolts of how that task is done. Don’t even
think about a tax increase in Oregon.