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Over the past several months, representatives of
Governor Kate Brown and the progressive liberal Democrat Party majority have
been quietly discussing new labor contracts with the State’s public employee
unions. Not surprisingly, these labor negotiations, with some of the Democrat Party’s
major political contributors, have
not gone well for Oregon taxpayers.
It appears the negotiators who “represent the people”
have conceded most of the unions’ demands, including annual cost of living
increases, step increases and an entire extra day of paid leave. The increasing
costs of other payroll expenses such as health insurance premiums, retirement
contributions and paid leave contribute significant additional cost to these
labor contracts.
Incredibly, the state negotiators did not determine, and
apparently even failed to estimate, the future costs of the labor contracts
prior to their completion. They still have not disclosed those amounts to
Oregon taxpayers. What seems evident is that the negotiators find other
peoples’ money too easy to spend.
Several weeks ago, I asked both the Legislative Fiscal
Office and the Department of Administrative Services (DAS) to determine, or to even
estimate, the long-term costs of these enormous expenditure increases. At the
time, they were unable to make accurate predictions, explaining the labor
contracts are complex, convoluted and difficult for even these fiscal experts
to understand. They are continuing their efforts to accurately quantify my
basic cost questions.
It is apparent the new four-year labor contracts will
be very expensive for Oregon taxpayers. By my computations, the aggregate
concessions made by state negotiators appear to increase total compensation
between seven and nine percent per year. It is my understanding that the
contracts leave open the potential for additional salary increase negotiations
after the first two years. The outcome may well be a 30 percent or more
increase in average state public employee total compensation by the fourth year.
The full impact will be due and payable by the 2019-21 budget period.
Several years ago, the average Oregon public employee
was earning more
than $70,000 per year in total compensation, according to calculations
made by DAS for my office. The number of public employees is capped
at no more than 1.5 percent of Oregon's population under state law. However,
several significant categories of employees that appear to be subject to the
terms of the new labor contracts are technically not state employees.
My own calculations are admittedly rough. However, I
believe they represent “in-the-ballpark” predictions. I estimate the increase
in compensation to state employees, and other quasi-state employees that may be
subject to the terms of the new labor contracts, may well exceed $1.5 billion
per year by the fourth year of the contracts. My estimate assumes no
significant growth in the number of employees subject to the terms of the
contract and no further negotiated salary increases.
Unlike our federal government, the State is prohibited
by its Constitution from borrowing money to pay for ongoing operations. Escalating
employee costs must be met by either increasing tax revenue or decreasing
expenditures in other parts the budget. Decreasing budget costs appear to be
anathema to most majority Democrats.
The immediate question demanding an answer is: How
will the State pay the enormous costs of the new labor contracts?
Our Oregon, a political arm of the public employees’
unions, is working on that answer. Their solution is an initiative petition
designed to raise as much as $5
billion per budget cycle, allegedly needed to pay for
critical shortages in public services, by enacting a new tax on a supposedly
wealthy minority of other Oregon taxpayers.
Initiative
Petition 28 would increase state General Fund revenue
more than 25 percent by enacting a 2.5 percent gross receipt tax on most
corporations with Oregon sales greater than $25 million per year. This is not a
tax on corporate profits. The tax is for the privilege of doing business in
Oregon. It is an enormous new tax on gross revenue, due and payable, regardless
of whether the company makes a profit.
The Our Oregon petition further attempts to convince
voters the more than 25 percent increase in new General Fund revenue will be
used to pay for public safety, education and services for senior citizens. However,
no Oregon law can direct or bind the purpose for which future Legislative
Assemblies spend General Fund revenue. In reality, the preponderance of the new
money will be spent to line the pockets of their public employee union members.
The Initiative Petition represents a “must pass” issue
for the public employees’ unions. Their recently negotiated 30 percent or more
increase in compensation must be paid for with either new revenue or other
budget reductions. Those rich new contracts will require a similar, significant
reduction in the number of public employees, and of public services, in the
event that the people fail to enact their massive new tax.
For that reason, Our Oregon is mounting a “full court
press.” We may expect a veritable "blitz"
of advertising aimed at misdirecting
the public's attention from their true purpose.
It is my understanding that signature collections on
the petition are progressing beyond expectations. Their initiative is virtually
certain to appear as a Ballot Measure in the November 2016 general election.
Representatives of Our Oregon suggest their political polling demonstrates a
broad majority of Oregonians will vote to enact their new taxing scheme.
We can only hope that Oregon voters will take the time
to learn the real purpose of Our Oregon’s initiative. If they are successful, Oregon’s
already stagnant economy will take another enormous hit from yet another exodus
of Oregon employers.
Please remember--if we do not stand up for rural Oregon, no one will.
Best Regards,
Doug
Senate District 28
Email: Sen.DougWhitsett@state.or.us I Phone: 503-986-1728
Address: 900 Court St NE, S-311, Salem, OR, 97301
Website: http://www.oregonlegislature.gov/whitsett
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