E-Newsletter Volume 7, No. #16




Representative Brad Witt
District 31

Phone: 503-986-1431    900 Court St. NE, H-374, Salem Oregon 97301
Email: rep.bradwitt@state.or.us    Website: http://www.leg.state.or.us/witt
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May 17, 2013              E-Newsletter              Volume 7, No. 16

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Hi Everyone,


Earlier this week, in anticipation of the final Revenue Forecast of the 2011-2013 biennium, Governor John Kitzhaber called upon both Houses of the Legislature, and both Republicans and Democrats, to move toward the center and devise a budget that would strengthen Oregon’s economic future and bring the session to a close on time and within a balanced budget.  Last night, it became evident that not all of the players were on the same page.  Here is a brief description of the impasse:  

The Governor’s proposal to achieve a balanced budget included additional cuts to the PERS system by modifying the use of money match by inactive members. Combined with previous reforms, this modification would produce up to $902 million and it would reduce the unfunded liability of the retirement fund by up to $4.2 billion, or approximately 25 percent.  He also suggested developing a workgroup to evaluate reducing tax rates on Oregon’s small businesses.  On the other side of the ledger he was asking for $200 million in additional revenue, i.e., higher taxes.  As I write this column, it is clear that right now, the “additional revenue” part of the equation is the sticking point.  I’ll keep you posted as negotiations continue.

In the meantime, and on a sweeter note, we heard a presentation from the Legislative Revenue Office regarding the state of our economy presently, and what we may be looking forward to over the next two years.  We were able to give a collective sigh of relief as we learned that the revenue picture has started rebounding from the minus column into the positive, with a net income for this quarter of $115 million, and $272 million over the 2013-15 biennium. 

After the huge budget crisis that confronted our state during the recession, the legislature is now in the position to reverse disinvestment in education, health care, and other services important for continued growth in Oregon.  Corporate profits are up almost 11% and cash holdings are higher than during the housing boom of the last decade. 

Although we are relieved to know that we won’t have to look under every cushion for spare change, the positive revenue forecast comes with a cautionary message: These numbers reflect improving employment statistics, but we nonetheless have 62,000 Oregonians on the long-term unemployment list, many of whom live in rural areas.  Also, present budgeting will still lead to teacher layoffs in some school districts.  While the Portland metro area continues to experience consistent job gains of approximately 20,000 jobs yearly, the overall labor force participation rate in Oregon is declining due to both young and old workers dropping out of the workforce, again, especially in our rural counties (more below on this). 

We need to continue aggressive recruitment of business and industry to our state so that no one is left behind as the economy improves. Last week I outlined seven reasons why Oregon is good for business.  Governor Kitzhaber’s wish to reduce taxes on Oregon’s small businesses is another example of our continuing efforts to help create jobs and business development as a means of getting unemployed Oregonians back to work.

Coincidentally, my Business and Labor Committee listened to an informational meeting this week in an effort to drill down a little deeper into the character of the recession, its effect on the workforce and the issues that we must still address.  Graham Slater and Nick Beleiciks of the Workforce and Economic Research division of the Oregon Employment Department spoke on five major trends in Oregon's Workforce. Their five trends were:

1. The Great Recession was deep and its effects are lingering
2. Oregon’s labor force is declining. That’s very unusual.
3. It’s difficult to figure out businesses’ need for workers.
4. The recession had a significant impact on younger workers.
5. Always remember ‐ rural areas have it worse.

First, the recession that began in 2007 is the second worst recession in terms of jobs lost since WWII and is projected to be the slowest return to pre-recession employment levels. The only recession that compares to what we just went through was the downturn that began in 1980 and took 7 years to return to pre-recession employment after losing over 11% of the workforce (we lost just over 8% this time).

While the economy seems to be far more healthy, employment levels have not rebounded the same way. This has partly to do with demographic shifts, more people retiring and fewer babies being born; there is also the trend, in most industries, that you can now do more work with fewer people.

This lack of hiring back workers has had the highest impact on younger workers. As older workers are still lacking jobs, they have moved into entry-level or lower skilled jobs which have historically been filled by younger workers. Because of this, teenage participation in the labor force has fallen from over 60% in the 1970s to less than 40% now. It has dropped from 50% in just the last 12 years. For workers in their early 20s, their level of participation has also been trending down for the last decade, and all of these trends have been more intense in our rural communities.

There was also some good news hidden in their report. There are some industries that are doing well and expanding in Oregon. Professional and Technical Services, and the Health Services industries are expanding, and manufacturing is still relatively strong compared with much of the country.

While it’s never going to be easy, Oregon still has a lot to offer businesses and to get more people working. As always, there is still more work to do.

If you would like to see the slideshow that came with Mr. Slater and Mr. Beleiciks' presentation here is the link: http://www.qualityinfo.org/pubs/presentations/gs051513hbl.pdf
You can also find more information on the Research Division's blog: http://oregonemployment.blogspot.com/

Finally, I’ll be in Scappoose on this Saturday, May 18th, at 10:00am for the Armed Forces Memorial Dedication in Veterans Park on J.P. West Road.  This memorial is dedicated to ALL men and women who have served in any branch at any time.  The main speaker will be former Governor Ted Kulongoski, and the Scappoose Jazz Band will perform.  I hope to see you there.

 Thanks for taking the time to read my newsletter…have a great weekend!