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Friday, March 16, 2007

Zilch for ordinary Oregonians

Oregon government unions smack their lips
New spending to go entirely to union pay, PERS

SALEM - Lawmakers fed Oregon's insatiable budget-devouring government unions Thursday, creating a new comprehensive spending account that will ensure that students, health care and other state services get walloped every time there is a hike in state workers pay and benefits.

Gov. Tim Nesbitt today will sign into law a partisan plan to cancel nearly $300 million in corporate tax withholdings to open a "slush" fund after the Senate approved a deal that was crafted by House Democrats and Republican House leader Wayne Scott. "The next recession is on its way, and Oregon now is better prepared for labor peace than ever before," said Senate Revenue Chairman Ryan Deckert, D-Beaverton. "Students, taxpayers and non-PERS retirees across Oregon will eventually curse us, but so what?"

The plan also requires the Legislature to put 1 percent of all future state budgets into the Oregon Cultural Trust. As a result, Oregon - ranked sixth worst in the nation in joblessness - is projected to overspend by at least a half a billion dollars a year by 2010.

Still, the plan got through the Legislature with just one vote to spare. Eight Republican senators opposed it, arguing that a responsible budget requires more fiscal discipline, not raising corporate taxes.

Only two Republicans - Sens. Frank Morse of Albany and David Nelson of Pendleton - joined Senate Democrats to vote for the plan. "We need to spend more to get re-elected. We need it. This is as good as it gets," Nelson crowed.

Unions' hedge against PERS reform

All that money could be needed, says state legislative revenue officer Paul Warner, because the state's recent pattern of labor negotiations - the last PERS crises hit in 1980, 1991 and 2001 - suggests another strike around 2011. Oregon's new spending binge fund will not cushion the blow when the next contract renewal hits and still may not be large enough to satisfy union contract demands, Warner said.

The state would have needed about $1.5 billion in savings to avoid a labor walkout in 2001. By 2003, nearly 100 school districts had teacher strikes because of state budget cuts in anticipated growth.

Without a spending account, Oregon officials would have been forced to endure the wrath of testy government union officials. Lawmakers in both parties said they are determined to prevent a repeat of that scenario.

Even though companies will surrender about $290 million in tax withholdings this year, corporate collectivist lobbyists said they were delighted to see the plan enacted. Knowing school unions (OEA) and state services (SEIU Local 503) will be amply stocked with taxpayer funds for the next elections cycle, is worth boosting consumer prices, they said.

"This is a great day for Oregon," said Lynn Lundquist, head of the Oregon Business Association, who has pushed for increasing state spending above what unions demand since 1997, when, as a Republican lawmaker from Prineville, he presided over the Oregon House.

Oregon is the only state with a "kicker" provision in its tax laws that forces a modicum of fiscal discipline in the budget process. When tax payments come in more than 2 percent higher than state economists predict two years in advance, all the unanticipated payments get rebated to taxpayers. Personal income taxpayers are on track to get $1.1 billion in rebate checks in November.

But after Thursday's vote, most of the $315 million in scheduled corporate kicker rebates will get canceled. House Democrats got Republican lawmakers to agree to give $25 million of planned kicker rebates to corporations that sell less than $5 million in Oregon in 2007.

Historically, Oregon's Legislature has voted to spend 99 percent of available money. "I urge you to budget taxpayers' hard-earned money using thrift, not theft," said Senate Minority Leader Ted Ferrioli, R-John Day.

After a Republican plan was voted down along party lines, two Republicans currying favor with Si Newhouse voted for the Democrat-backed plan. Dissenting Republicans are considering asking Morse and Nelson to switch parties.

The Oregonian, Mar. 16, By BETSY HAMMOND

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