When the 2019 legislative session convenes, Oregon’s business community plans to be ready with legislation and budget recommendations to address Oregon’s fiscal problems.
Tackling rising costs of the Public Employee Retirement System is on the top of the list.
On Friday, representatives of the Oregon Business Council and Oregon Business & Industry visited Hermiston, where they convened a roundtable discussion with area business and government leaders. The title was “Facing Oregon’s Fiscal Crisis” and the goal was to gather feedback for a partnership known as the Oregon Business Plan, which will use that to create a series of proposals for the 2019 legislative session.
Ginny Lang, acting vice president of OBI, told the group that the initiative would be a mixture of recommendations for cost containment, changes to revenue and new investments in areas such as education that can help grow the economy.
“We can’t do it alone,” she said. “Every one of you will be important ... this is a crisis and we need to get started on getting it fixed now.”
Jeremy Rogers, vice president of OBC, said despite “very strong revenue growth” in the state, expenditures are outpacing revenues, creating about a $1 billion shortfall per biennium. The largest problem he pointed to was PERS, which has been rapidly increasing operational costs for government entities. While the courts have made it clear that current retirees’ pensions are off-limits, Rogers said the state needed to look at what reforms can be implemented to reduce the PERS burden in other ways. Other drains on Oregon’s budget the Oregon Business Plan is looking at include the increasing costs of Medicaid and increasing costs for public employee health care plans.
The group is also interested in tax reform. Lang said they “learned a lot from Measure 97” about looking at the entire tax system instead of just trying to introduce a new idea, like a gross receipts tax, without making adjustments to other revenue sources first.
“We have to take a step back and look at the whole tax system,” she said, “to look at how to shift it a little to make it more sustainable.”
One idea she gave was getting rid of the kicker, which sends money directly back to the taxpayers when state revenue overperforms what state economists had predicted. But she said that was a difficult topic that would probably have to be discussed further down the road than 2019.
Rogers said moving forward, the Oregon Business Plan needs to have four different strategies in mind based on whether Kate Brown or Knute Buehler will be governor next year and whether Democrats will have a supermajority in the legislature.
Local leaders had some ideas of their own for helping fix Oregon’s fiscal issues.
Tamra Mabbot, city of Umatilla community development director, said regulatory reform was a small thing that could make a big difference to a lot of cities that have economic development projects held up by state regulations. She said after the city had an idea for recycling clean water from a developer into irrigation water it took two years to get a permit from the state. Things like that are partly a regulatory problem, she said, but there is also a problem with state agencies not being willing to take a risk on funding projects that are “outside the box.”
Kim Puzey, general manager of the Port of Umatilla, said the port had reduced its PERS burden over the years through attrition, as PERS employees left and the port replaced them with contract employees who had a different set of benefits instead.
“To a degree you can get yourselves out from under that,” he said.
J.R. Cook, director of the Northeast Oregon Water Association, said he noticed that the “Salem culture” was always to ask for more employees instead of looking at how the department or office can be more efficient with the resources they have.
“I think these types of crises lead to the ability to have those discussions about staffing,” he said.
Mark Morgan, assistant city manager for the city of Hermiston, said unfunded mandates from the state were a big problem for local government jurisdictions. He also pointed out that in talking about investments into growing Oregon’s economy Rogers and Lang had mostly mentioned education initiatives. Things like making more water available for farmers can also grow the economy, he said.
The Oregon Business Plan group plans to do more roundtables around the state and unveil a set of proposals at its summit on December 3.
Contact Jade McDowell at email@example.com or 541-564-4536.