Category: Economy

Oregon State Legislature sent this bulletin Thursday, January 9, 2020 by devadmin

A recent Wall Street Journal book-review, When the Earth Had Two Moons, by Erik Asphaug, starts with,

“If you visited the surface of the Earth 4.5 billion years ago, you wouldn’t recognize it. The newly formed planet was still cooling from its recent coagulation. There was a hot rocky surface (probably; we don’t know for sure), volcanoes (again, probably) and a steamy atmosphere (maybe). It seems unlikely that even the smallest thing resembling life was yet present, though, really, we don’t know. … We can be forgiven for not knowing what the surface of the Earth was like before this moment, as nothing survived that day intact.”

The reviewer’s thoughts are remarkable because, 1) there is a frank admission of uncertainty and 2) there is a profound recognition that our planet is always changing.

This WSJ book-review affirms my argument that the anthropogenic global warming (AGW) crowd and the tax and spend proposals we see cascading through various legislatures have put too much weight into stasis. The environmental balance that we witness today will not be the balance of tomorrow. The T. Rex and Mastodon are proof of that. It is one thing to recognize that the barred owl is a more successful survivor than the spotted owl but does this warrant shot-gunning the former to preserve the latter? This policy is not rational or scientific, it is a moral argument that demands an appropriate moral response.

Scientists have extensive knowledge of the Earth’s most recent 4,000-year period of glacial expansion and retreat. Historical references to the Little Ice Age and the Medieval Warming Period, are quite robust. Documentation particularly notes the improvement in mortality rates, farming, horticulture, livestock management, population growth and cultural achievements across most known cultures during the warmer periods of human history.

If this is fact, then why the political clamor? Why does the public at large expect the state, or federal government, to control or dictate the best type of energy that should be available? All our choices – nuclear, ethanol, diesel, low-octane rotaries, natural gas, fuel oil, solar, wind – all have drawbacks and benefits. Why not let the market decide?

Government mandates are blunt force instruments that shrewdly coerce compliance through costly fines, penalties and taxes without having the bandwidth to assess alternative technologies and innovative approaches that might solve our problems. Unlike the private sector, government is not an ingenious inventor. Economic data suggests that government is too costly, too inefficient and bureaucratic while being prone to corruption, misdirection and fraud.

The results seen on the street rarely match the political hype. Missed targets and cost overruns abound while with every election cycle the public gets promised newer, bigger, grander and longer-term, yet, more costly and unsustainable programs.

I would prefer an approach which more closely resembles the paradox witnessed throughout world history. A situation where free people enjoy the rewards of their hard work and where disseminated freedom leads to increased human well-being, societal growth and creative problem solving. Free people are creative people.

So, why the relentless drive to force Oregonians into a new proposal for a look-alike HB2020 Cap and Trade Carbon Management scheme? I am convinced it is nothing more than scare-mongering in order to tax Oregonians. It is nothing more than a cleverly worded grab and run, tax and spend, swindle.

The proposed legislation will grow the state, empower the political elites, raise taxes and redistribute the wealth of the most productive without even slightly impacting worldwide carbon emissions.

If you think I’m out on limb, look at this map with regard to existing, planned and currently under construction, coal-fired electrical production facilities and ask yourself, “Given the world’s population demographics, will taxing Oregon families and businesses impact the behavior of the heaviest carbon polluters?” Can Oregon’s population make up for emissions from expansive fires in California, Russia, or Australia, or, volcanic activity through-out the world?

Clearly, no.

The Democrat super majority should have asked this same question when they outlawed plastic straws and single-use plastic bags, “will it make a difference or is it just a costly hassle?”

People and their personal choices can make big differences. Personal responsibility and stewardship are the appropriate tools for each of us to use in our personal and public lives. I’m not making the claim that everything is peachy, and people aren’t wasteful or thoughtless when it comes to environmental concerns. Instead, I’m making the claim that government mandates never represent a balanced, efficient or rational choice due to the conflicting interests that guide public policy.

For example, I can remember when paper bags were outlawed to “save the trees.” The legislated solution was a floppy, thin, shapeless, “single-use” bag that never had any groceries in it by the time you got home because they were strewn about the car.

These constantly changing perspectives on right, wrong and which bag is the correct bag, shows that government policy can be irrational. Politicians make decisions based on limited knowledge with biased information. Paper bags were banned because legislators believed the environmentalist rhetoric about diminishing forests. Now there is a new emergency because people have been so diligent in following the law and not using paper.

Yet, the real solution would have been to allow free choice in the marketplace. Some folks would have used paper, others plastic, some would tend toward variations on recycled products while clever stewards would have developed the inexpensive reusable bag two decades sooner. Was it helpful to force people to use nothing but plastic only to berate them and force a nickel charge for buying the next version of the correct bag?

Yet, reality does not appear to inform the super majority. Free market solutions are lost to AGW fanaticism, as though state power is the only goal. Thus, we see the ‘politicizing’ all areas of our lives and society. Success hinges on being able to implement all-encompassing and ever-more complex social experiments where results become difficult to recognize and evaluate.

Additionally, the true societal costs are never properly accounted for as profound economic and community distortions, dislocations, and malinvestments pile onto the balance sheets of families and businesses.

The Climate Policy office holders will not be the people’s representatives as they will be appointed by the Governor and represent the statists’ interests, instead. They will have near universal control over Oregon businesses through rulemaking, unlimited taxing authority, penalty assessments, discretionary enforcement and other extensive economic burdens that will never make headlines. Oregonians know better, as we’ve seen unfettered giveaways and compliance incentives before, like the $1.2 billion Business Energy Tax Credit (BETC) scandal.

The super majority continually reaches for near-tyrannical mandates that are wasteful and extremely expensive to Oregonians without ever accomplishing any measurable goals. Therefore, I will do everything in my power to stop any HB2020 look-alike  which will subvert our individual liberty and bankrupt businesses, whether small or large, in the metro area, or in the rural heartland of Oregon.

Remember, if we don’t stand for rural Oregon values and common-sense, no one will!

Dennis Linthicum
Oregon State Senate 28

Oregon State Legislature sent this bulletin Thursday, July 18, 2019 by devadmin

The 2019 Regular Legislative Session finally came to a rumbling halt on the constitutional day of adjournment, Sunday, June 30. It reminded me of a run-away, “tax and spend” freight train finally hitting a concrete barrier. What a wreck!

The total state budget for the 2019-21 biennium rose by 9.9% over the 2017-19 budget and 24.4% over the 2015-17 budget. What does a careening budget look like?

The budget grew to $85,799,479,438 to provide services to a mere 4.1 million people for two years.

The supermajority’s revenue raising tactic was no penny and dime affair. They scheduled monstrous tax increases, like the Corporate Activities Tax (gross sales tax – HB 3427) and the Carbon Tax (HB 2020) but needed to lessen political resistance.

The chosen tactic was to raise money from vastly different groups of people, across different periods in the year. This type of money-grab greatly increased fees and citizen participation costs (i.e., Fishing Licenses, Drivers Licenses, Vehicle Registrations, Permits, etc.), while dissipating blowback and squelching any revolt. The total take from this seemingly penny-ante game was enormous and increased the Other Funds category by 19.6% or $6.2 billion.

As you are aware, I was among the eleven Republican Senators who left the state to deny the administrative quorum required for the legislative body to conduct business. The impact of this effort was a success and brought reasonable Democrat supermajority members back to the negotiating table. They willingly helped kill several bad pieces of legislation.

Earlier in the session we aimed at protecting constitutional issues, such as SB 978, an extensive gun-control bill that would have saddled all gun owners with rigid ownership requirements. These included, locked-while-not-in-use regulations, burdensome insurance requirements, criminal responsibility for actions of other parties and extraordinary financial obligations.

Another bill that tore at the constitutional rights of constituents and their children was HB 3063. It would have removed religious, philosophical and specific medical condition exemptions from Oregon’s vaccination requirements. This bill would have placed Oregon Health Authority (OHA) bureaucrats between the patient and their physician and I considered this a violation of an individual’s right to volitional consent for medicine and medical procedures.

During the close of the session we specifically focused on the crippling Cap and Trade Bill, HB 2020. The thrust of my opposition to HB 2020 was it cost too much while doing too little – it just wasn’t worth it.

The bill’s arbitrary regulations on greenhouse gas (GHG) producers in Oregon could never successfully impact world-wide GHGs. Oregon is too small to impact global pollution stemming from giants like, China and India. China produces 28 percent of the world’s carbon emissions while India has thirteen of the world’s twenty most-polluted cities.

In other words, stifling Oregon’s 2 million taxpayers with restrictive laws and punitively higher taxes will not impact the issues seen on the horizon. The only solution can, and should, come through the creative genius, technological advances and innovation that blossoms from our productive use of capital resources within our own free economy.

The 2019 Legislative session has ended but the political battle is not over. I remain convinced that these legislative concepts will return during the 2020 short session.

The central planners in state government have an insatiable appetite and are always looking for higher taxes, green energy subsidies, carbon taxes, free college tuition, single-payer government-run health care and the list goes on and on. At the same time, they burden taxpayers by out-lawing non-existent problems like fracking in Oregon, plastic straws, single-use plastic bags and making “legal” immigration simply unnecessary.

Yet, people are smart and the elite planners can never predict how individuals might change their habits due to taxes and regulations. What would the state do if people quit playing the Lottery, buying cigarettes, hunting or boating? Remember, part of the reason the state promotes and regulates these areas is for the revenue stream.

This misguided course of raising taxes, increasing regulations and removing spending restraints will result in the inevitable. It will destroy private sector jobs, productive assets, economic output and viability while disrupting the landscape in a vain search for Utopia.

Each of us realizes the inherent danger that stems from political power. It has the potential to corrupt all it touches including the public, politicians, businesses, schools, industries, associations, non-profits and even news outlets.

For people to be free, they must seek to live by the highest standards of personal virtue, justice and honesty. Lawrence W. Reed, President Emeritus of the Foundation for Economic Education, penned this encouragement for personal character. He writes:

“In America’s first century, we possessed it in abundance and even though there were no think tanks, very little economic education, and even less policy research, it kept our liberties substantially intact. People generally opposed the expansion of government power not because they read policy studies or earned degrees in economics, but because they placed a high priority on character. Using government to get something at somebody else’s expense, or mortgaging the future for near-term gain, seemed dishonest and cynical to them, if not downright sinful and immoral.”

In closing, I’ll hearken back to 1942 when the fans of the innovative radio series, “Adventures of Superman”, were thrilled to hear of Superman’s battle for “truth, justice and the American way.” This motto is simple and straight-forward; we know it by heart; all political affiliations can recognize these values and our American experiment in self-government requires that we live by it.

If we don’t stand for rural Oregon values and common-sense – who will?

Dennis Linthicum
Oregon State Senate 28

Oregon State Legislature sent this bulletin Wednesday, June 28, 2017 by devadmin

State law proved to be no match for Senate Democrats’ desire to illegally pass a $22.8 million-dollar tax hike in the House last week. Senate Bill 28 was passed in the House and will spike taxes at least $22.8 million in the two upcoming budget cycles. Our Republican legislators universally voted against the tax increase and made the claim that SB 28 should have originated in the House because it is a revenue raising bill.

Additionally, the bill allows taxes to be raised with a simple majority vote versus the three-fifths or 60/40 margin required by the Oregon constitution.

In 1996, Oregonians approved Ballot Measure 95, now Article IV, Section 25, of Oregon’s Constitution, which mandates that tax increases receive a three-fifths vote of all members in the Legislature. Article IV, Section 18 of the Oregon Constitution requires tax hike bills to start in the House of Representatives. Therefore, SB 28 is illegal on two fronts, 1) it passed without the legally required three-fifths vote, and 2) it inappropriately originated in the Senate.

Senate Republican Leader Ted Ferrioli stated, “Disregard for the Constitution prevails yet again, with the House passing an illegal tax hike. This outrage will be countered with litigation. Democrats want to ignite fury within the hearts of Oregonians by trampling on the Constitution.”

Oregonians are being exploited by House and Senate Democrats who are violating Oregon’s Constitution to dramatically spike taxes.

This tax hike is a demonstration of their willingness to approve “lawlessness.” Small Oregon businesses will see a dramatic hike as the legislature schemes for revenue. For some businesses, it will be a brand-new tax. Senate Republicans decried the passage of SB 28 saying it thwarts the will of voters. Republicans also point out that it should have first been introduced in the House of Representatives. Senate Bill 28 modifies how Oregon corporate income taxes are apportioned for intangible property and services. It changes the apportionment method from a cost-of-performance method to a market-based method.

The cost-of-performance method attributes all corporate income tax revenues to the state where the greatest proportion of the activity is performed. For example, if most of the effort for manufacturing and creating your product is done out of state then your product would be taxed based on the appropriate proportion of in-state verses out-of-state work.

The market-based method attributes corporate income tax revenue to the state where the customer is located. In other words, even if all your work, offices and effort are in another state, Oregon will tax your business based on total sales if any of those sales occur in Oregon.

However, the Democrat raiding party is not finished picking your pocket. House Bill 2060A is another direct tax increase on small businesses. It too, passed out of the House by a simple majority.

HB 2060A imposes a tax increase, up to 40%, for small businesses with fewer than ten employees while preserving lower rates for larger S-corps, LLCs and LLPs.  It is a $196 million-dollar tax increase on Oregon’s smallest businesses.

The 2013 Grand Bargain between Democrats and Republicans provided tax relief to small Oregon businesses. House Bill 2060A would remove the protection provided to small businesses by Republican legislators in 2013.

Also, the tax-grabbers decided to go after the smallest-of-small businesses. They changed the language to expand the size of companies that could quality. Formerly, the Grand Bargain allowed an individual business owner to qualify for a lower tax rates. This House Bill increases the size of the company receiving the benefit by ten-fold. This means a small individually-owned business, or the Mom and Pop operation, are eliminated from the possibility of a reduced tax liability. These small businesses will be forced into paying more of their hard-earned income into this Democrat sponsored revenue collection scheme.

Not only are more employees required to qualify, but the Democrats jimmied the numbers by adding even more requirements for qualifying businesses. These added conditions reduce the overall number of businesses that will be able to qualify for the lower tax rates.

See… Money is easier to find than gumballs in the sofa cushions

This financial tyranny runs contrary to our state and nation’s most sacred principles. George Washington said, “I think the Government hath no more Right to put their hands into my Pocket, without my consent, than I have to put my hands into your’s, for money…”

Washington’s thoughts flow directly from our Declaration of Independence, immediately following Life, Liberty and your happiness through just pursuits. It states, “to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.”

However, today the folks in Salem are following the rule that Ronald Reagan criticized so poignantly. He claimed that big government policy wonks believe in the motto – “if it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Remember, if we don’t stand for rural Oregon values and common-sense – No one will.

Best Regards,

Dennis Linthicum
Oregon State Senate 28

Oregon State Legislature sent this bulletin Friday, April 27, 2018 by devadmin

Last week Governor Kate Brown pulled a PR stunt by asking for a special legislative session. The Governor’s press release expressed her desire to clean-up Oregon’s adaptation of a pass-through law by including only the smallest of Oregon’s small businesses.

The Governor’s statement is cleverly worded to make it sound like she will be stepping up to rescue small businesses, and sole proprietorships. Her claim is that a simple fix would give these businesses access to the same tax breaks afforded larger businesses.

The Governor said, “We have an obvious inequity in Oregon’s tax system that is prejudiced against thousands of small Oregon businesses, and a simple change can fix it. I’m simply not willing to let these main street businesses — entrepreneurs, mom and pops, and start-ups — go through another tax year with unfair tax treatment as compared to their larger competitors.”

Doesn’t this message sound grand, generous and legitimate?

The Governor can apparently conquer inequity, solve the Democrat Majority’s long-standing prejudice for extracting taxes from hard-working Oregonians and provide well-deserved tax relief.

Hoooooray!

The governor’s statement continues by bragging this will help, “an estimated 9,000 sole proprietorships [who] could qualify and use this new opportunity to reinvest more of their profits into their businesses and employees.”

Only 9,000? Who are we kidding?

Recall, Oregon’s tax gulag recently imprisoned 192,000 of Oregon’s small businesses (mom and pop operations, sole-proprietorships, and “Schedule-C” filers) through Senate Bill 1528.

“Schedule-C” filers represent self-employed owners of small businesses who utilize the Form 1040 (Schedule C). This is the form used by businesses to complete income tax information for the federal government.

More importantly, this form is also known as “Profit or Loss from Business” and it documents exactly what the State of Oregon is interested in – your profits. Oregon is rapacious when it comes to scraping the last morsels off the plates of their small-business inmates.

The Oregon Department of Revenue estimated that SB 1528 would deny 192,000 “Schedule-C” filers their eligible for a 20% reduction on their Oregon income taxes. Although these businesses would qualify under federal tax-law they become trapped in an environment where it would be legal, except it’s not. This is exactly what SB 1528 from the 2018 legislative session was designed to do. It was engineered to disconnect Oregon’s tax code from Trump’s recent federal tax relief efforts.

With an effective state tax rate of 7.7%, these hardworking Oregonians already pay a higher tax rate than large Oregon C-corporations. In my view, SB 1528 represents the Democrat Majority’s official assault against small business owners and operators.

Here is another item that you may not realize: all revenue bills are constitutionally obligated to originate in Oregon’s House of Representatives. House bills are numbered with an HB prefix while Senate bills carry the SB prefix. Obviously, SB 1528, is a bill for generating tax revenue which started, unconstitutionally, in the Senate.

Additionally, raising revenue or increasing taxes requires a two-thirds majority to pass. SB 1528 passed by a simple majority without a single Republican vote.

The increased taxes on these 192,000 small businesses will be nearly 40 percent of the estimated $258 million in increased tax revenue pinched during the 2018 session. That means nearly $103 million will not be available for those local and family owned businesses to reinvest in their enterprises. That will be money that is no longer available for employees, benefits, or business expansion. For the young family running a small, sole-proprietorship, it could mean bread, milk and cheese which can no longer be afforded.

It seems that the language about solving the state’s tax-inequities quickly evaporates like green-house-gas emissions right into the night sky when we realize that this is  $103 million which will no longer be spent in our local communities but funneled into Salem’s grimy machinery.

Meanwhile, large multinational corporations will be allowed to hustle the system with special tax credits. Oregon’s inequitable tax-program allows its highest income earners to buy tax credits to offset their tax liability. This means that wealthy Oregonians will enjoy these tax savings at the expense of the small business owner who can’t afford to purchase these credits, let alone a box of Mac ’n’ Cheese for the kids.

In the typical fashion of the classic redistributionist, this scheme transfers general fund dollars to Oregon’s top 1% income earners while stealing federally allowed tax deductions from mom and pop businesses.

High-income investors have the financial resources and the means to lobby for these quirky tax rules. They can arrange to successfully game the tax system by using their Democrat allies who support complex giveaways hidden beneath layers of statist bureaucracy.

Gov. Brown could have exercised her leadership skills with a veto of SB 1528, but instead, she signed it into law. Typically, Oregon would copy federal tax breaks for businesses into state law. However, this year’s federal tax breaks have Trump’s signature all over them. In response, Gov. Brown reminded us once again why capitalist prosperity in America is so dangerously imperiled as she built her own version of a wall preventing Oregonians from accessing legitimate tax benefits.

This brings me to a question. Why all of the press notices and expense by Gov. Brown for this special legislative session? Why? Because the Governor is on the ballot this November. The Governor’s claim that there is an “obvious inequity in Oregon’s tax system that is prejudiced against thousands of small Oregon businesses” will sell. It’s true. There is great inequity. However, setting a mere 9,000 filers free does not make up for marshalling the other 183,000 tax-payers into Oregon’s scheme for preventing access to the Trumpian tax-breaks.

What gets missed is that the Democrat majority used unconstitutional and illegal means to create the initial problem and the Governor signed this into law. Despite claims about protecting small business, Gov. Brown and Oregon’s Democrat majority are masking their true objectives behind generous words.

They have accomplished their goal of raising an additional $1.3 billion in unneeded tax revenue over the next 6 years off the weakened souls of small businesses, local mom and pop shops and “Schedule-C” filers trapped within the state’s labor-camp boundaries.

The sad truth is, Oregon’s fiendishly unfriendly business environment will eventually push Oregonians to cut the wire, jump the fence and escape to more business-friendly states.

Remember, if we don’t stand for rural Oregon values and common-sense – No one will!

Dennis Linthicum
Oregon State Senate 28

Oregon State Legislature sent this bulletin Monday, February 20, 2017 by devadmin

In 1946, Henry Hazlitt wrote a wonderful book, Economics in One Lesson. This small, easy to read book is still widely available and ought to be read and contemplated by all. The reason is simple. Hazlitt uses easy to understand stories to gently eviscerate the public policy mistakes that the know-it-alls and political wonks use to separate taxpayers from their wallets.

Meanwhile, the policy-wonks in Oregon’s majority party are hard at work trying to stuff the Governor’s budget with money straight out of your wallet. They seem to be only looking at this current budget-cycle and not ever contemplating the long-term health of Oregon’s economy, it’s families and businesses.

One example is the crazy idea to put a $1000 tax on any car purchased before 1997. Yikes! There is another idea for a $.05 tax on every wholesale pound of coffee sold. Hearing this, I can imagine that ODOT is trying to re-engineer their GPS milage tracking device to also include a tax on every sip that you enjoy from your Dutch Bros Kicker cup.

Another shameless tactic which is fast spreading throughout Oregon’s counties is using government to provide “affordable housing.” Proponents claim this can be partially accomplished by rent control. This economic fallacy of rent control is continually embraced by pundits, politicians, editorialists, news reporters and academics as a requirement for economic development. HB 2004 is the rent control bill currently making it’s serpentine way through the twisted logic of Salem’s hallways.

Here is a portion of the bill’s contorted control language:

Thomas Sowell wrote, “History alone should be able to tell us what the actual consequences of such laws have been, since they have been around for thousands of years. Anyone who has taken a course in Economics 1 should understand why those consequences have been so different from what their advocates expected. It is not rocket science.”

The advocates make claims like, “this will ensure stable housing for workers,” or “it will stop the landlords from gouging tenants,” and finally, “land-owners should not be making tons of money during a housing crisis.”

In Oregon, the reason there is a lack of affordable housing is there is a lack of housing. This means housing is not being built. Why not? One of the main reasons is  because of existing laws which prevent housing from being built. This is a particular problem in Oregon where designated Urban Growth Boundaries (UGB) are a major component of the zoning, planning and building requirements.

High and unaffordable housing costs are not the problem, they are a symptom. The real problem is a shortage of houses.

I can illustrate this by using an example of an ice cream shop. With low cost ice cream and cheap treats, everyone wants some. If the ice cream supply were limited because of some legal requirement or some unforeseen circumstance then the local ice cream shop would quickly. Some would label this a “shortage.” However, if store owners can raise prices the will slow demand for the product.

Owners don’t do this because they are meanies and they want to gouge ice cream lovers.They do this to slow demand and their stabilize inventories. The higher price makes people think twice, reconsider their resources and/or needs and weigh any options. Just like the housing market, as prices rise, inventories stabilize and more treats are available on the street (or in the freezer.)

The high cost of housing is not something that needs fixing. Rather it is the supply of housing that needs fixing. You know that local housing is in short supply because it is becoming more expensive. When bidding wars break-out among home buyers, as is currently happening, it is a sign of a shortage. This is a not a sign of an outbreak of unbridled greed among wealthy landlords.

Supply and demand is one of the first things taught in introductory economics textbooks and you will find great examples in Hazlitt’s book. If only I could get some folks here in the capital to curl up with Hazlitt’s book, too. Now that would be an accomplishment.

Also, please let your voice be heard with regard to Oregon’s upcoming budget (2017-2019). Without any viable increases in the State’s income, non-critical services will require budget cuts over the next two years. Representatives need to hear whether your wallet is up for grabs, or not.

• Here is the Full Roadshow schedule.
• Here is the backgrounder on the current state of the budget, and Co-Chair’s proposed budget framework for 2017-2019.

Oregon State Legislature sent this bulletin Thursday, February 2, 2017 by devadmin

Last weeks article highlighted that the Governor’s released budget had everyone in media gasping for breath because of a $1.7 billion shortfall. Yet, Oregon is expected to receive $1.5B more revenue this biennium than last. That is an increase of 15 thousand million or 1,500,000,000 extra dollars in the state’s coffer.

I pointed out that Oregon’s budget has increased eight-fold since 1980 and then I posed some thoughtful questions:

• Did our state’s service requirements or population grow by eight-fold?
• Did your school district attendance grow by eight-fold?
• Did your own personal salary or wages grow eight-fold since 1980?
• Did the value of your home grow by eight-fold?

If you are like me, you are probably having trouble identifying anything in our lifetime that has grown as rapidly as government.

This has occurred mainly because we have allowed government to absorb responsibilities that previously belonged to families and individuals. Government has done this quite stealthily.

It starts with people who want to help. They become politicians. Politicians get elected to the legislature. Legislators have a job to do – legislate. Yet, even if the legislature, their committees and constituents propose solutions that sound reasonable, it doesn’t mean the legislation will work reasonably.This is exactly where we are today – Legislators are legislating and government is growing.

Our unique American form of government was designed to protect the rights of the people and ensure their individual freedom. Oregon’s constitution does not provide a mandate to micromanage, interfere and legislate away citizen’s individual choices and freedoms on a daily basis.

How much would government services cost if we had constrained government by the Bureau of Labor and Statistics – Inflation Calculator?

Using the inflation calculator, for example, $10B in 1980 is the equivalent to $29.1B today (cf., Figure 2). This means $50B dollars of the current $80B budget is in excess of the cost of inflation.

Even accounting for an increase in Oregon’s population which has grown by only a factor of 1.54 since 1980 levels, not an 8X increase, the $29.1B number would only increase by $15B, not $50B.

Again, why is Oregon’s budget pegged at nearly $80B?

Are Oregonians really that much more needy? Do we need that many more state bureaucrats shuffling paper and creating regulations?

The problem rests with the baseline budgeting methodology where after funding our last biennium’s base of operations no one has enough resources available to seek answers to different questions.

There will never be a change to any part of an agency’s inner-workings if the agency will automatically receive the same, or better, for doing the same ol’, same ol’. This is partially why Oregon’s graduation rates stay so abysmally poor – same ol’, same ol’.

ORS 291.210, requires the Legislative Fiscal Office (LFO)  to develop a projected tentative General Fund/Lottery Funds budget for the 2017-19 biennium.  A couple of bullets from that document are below:

• State personal services growth is projected at 9% for the biennium, including step increases, roll-up of current collective bargaining agreements and management salary packages, health benefit costs, Pension Obligation bond payments, and an increase in the PERS rate.
• Standard biennial inflation of 3.7% for services and supplies and 4.1% for medical costs.
• Backfill of 2015-17 one-time funds with General Fund, or fund shifts, that change 
funding sources for programs between the two biennia, total a net $626 million. This is primarily in the Human Services and Education program areas, and includes $328 million related to an increasing state responsibility for Affordable Care Act costs and other federal match changes.

These are all growth items.

We don’t face a revenue problem, we face a problem with government growth and spending. Oregon’s legislature must be willing to address our state’s spending problem and this will mean breaking through factional barriers.

Otherwise, we really are just kicking the can down the road.

We all recognize there is more squeezing that needs to be done in the state’s budget. But, if the Governor has her way, the squeeze is going to happen with our wallets. Oregon’s Governor put forward a budget proposal that is “too expansive.”  As legislators we must be committed to squeezing government, not the hardworking taxpayers wallets.

Please remember–if we do not stand up for rural Oregon values and common-sense, no one will.

Best Regards,

Dennis

Senate District 28

Oregon State Legislature sent this bulletin Wednesday, January 30, 2019 by devadmin

Last year, Oregon’s Public Employee Retirement System (PERS) extracted roughly $1,400,000,000 ($1.4 billion) in contributions from tax-payers to fund state employees’ pension benefit programs. Over that same period, it paid out $4,700,000,000 ($4.7 billion) in pension benefits to state employees. (See Figure 1.)

Any bookie would recognize a lame horse when they saw it. Namely, PERS had a negative cash flow of $3,300,000,000 ($3.3 billion) during that one-year period and the problem is getting worse.

One would think that a negative operating cash flow of this size, shape and demographic velocity would be seen as a bad omen and everyone would be worried. Yet, no serious reforms can even get traction because everyone is bogged down in language about fairness, safety, inclusion and the need to fulfill promises.

Yet when the trestle bridge gets overloaded because everyone wants off the island at the same time, a lot of people will get hurt.

In this environment it’s hard to project the details lying dormant within the blue-sky assumptions undergirding the PERS system. Even more difficult to grasp is the catastrophic potential that these assumptions mask when market events slowdown causing liabilities to balloon.

In a recent Oregonian article, Allen Alley, a past gubernatorial candidate, inventor and technology investor, suggested that policymakers should start looking at the actual cash flowing out of the system. Alley calculates, that the 4.1 million tax-payers will owe $225,000,000,000. ($225B) for state employee retirement benefits over the next three decades.

Although PERS, as an issue, is always present, it is treated like a heavy punching bag in the corner at the gym–it gets ignored. Unfortunately, our governor’s top two policy goals aren’t related to PERS. They are revenue, staff, and policy issues that grow government and eventually worsen the tax-payer burden while ignoring the economic reality barreling straight at all municipal, county and state governments across the US.

All public sector retirement plans, and most private sector plans, carry unheard of levels of unfunded actuarial accrued liabilities (UAAL). The public pension crisis has been intensifying for quite some time and state governments are unwilling to go to the bag. This is mainly because governors, senators, representatives, county commissioners and city council members get elected on “present day promises,” not “future unintended consequences.”

For many years, annual returns for employees and their benefit accounts were pegged at 8-percent per annum. These promises were made during a brief period when that rate seemed  reasonable but would have long-term unintended consequences. Additionally, this return-on-investment (ROI) was guaranteed by tax-payer pickups during years with lower returns.

The folly of this strategy becomes clear in a Bloomberg article, which looked at long-term returns (50-year periods) and noted average returns, for pension-fund-like portfolios, are well below 6-percent and have only generated returns of 7 percent or greater twice since 1871. (See Figure 2.)

The article continues, saying the problem is worse today for two primary reasons: 1) “Cumulative returns are lower than the averages;” 2) “An extended period of bad returns cannot be made up even with astronomical returns later.”

Bloomberg goes on to explain that the compounding of these return projections is the real fly in our collective soup bowl. According to Bloomberg most funds can never keep up with their actuarial demands following a market downturn. The capital lost and the compounding interest required on the remaining capital is too great. This would be true, even if the pension was already fully funded, which Oregon PERS is not. Following market retractions, “there is no chance existing assets are enough to pay already-contracted liabilities.”

The proverbial spilled-soup comes when one realizes that once the base value of assets starts to decline there is no scooping it back up. The shrinking asset base can’t keep up with the demand pressure from the actuarially accrued increases in liabilities. Additionally, as payouts create greater shortfalls, the overall asset base shrinks even more, further inhibiting the fund’s ability to ever get ahead of the curve.

Bloomberg goes so far as to say, “Worrying about the next five decades is pointless, because there’s also no chance the current system will survive long enough to discover what the next 50-year average returns will be.”

This is a truly dire situation created by more than 50 years of unrelenting government growth sanctioned by elected representatives. It is unconscionable to not address this inadequacy when there are thousands of folks who will be negatively affected by this tragedy if we fail to act.

Alley claims that his calculation of $225B doesn’t even account for any new employees coming into the system but focuses only on existing employees. “As a CEO of a company, you think about cash,” he said. “What’s the check I have to write and where’s that money going to come from?”

Rest assured, there are no worries in that quarter… the political majority can easily figure out how to use our slowly deteriorating social contract and government’s misused power of coercion to their own advantage. As the noted 19th-century philosopher Pierre-Joseph Proudhon outlined, the tax-payers can expect to be:

fleeced, exploited, monopolized, squeezed, hoaxed, drilled, registered, counted, taxed, stamped, measured, numbered, assessed, licensed, authorized, admonished, prevented, forbidden, reformed, corrected, punished regulated, enrolled, indoctrinated, preached at, controlled, checked, estimated, valued, censured, repressed, fined, harassed,  judged, condemned, or deported…

Without a momentous shift toward slowing the growth in government our PERS dilemma will only worsen. Additionally, significant and serious modifications to new employee standing is the only mechanism that can begin to stem the potential economic tsunami resulting from a market downturn. Without these changes Oregonians will face far more turmoil than the political elites ever imagined.

Remember, if we don’t stand for rural Oregon values and common sense – No one will!

Dennis Linthicum
Oregon State Senate 28

Oregon State Legislature sent this bulletin Tuesday, January 24, 2017 by devadmin

Oregon’s Legislative Session starts on February 1st and the biggest topic will certainly be the budget. Gov. Kate Brown released a recommended budget last month that has everyone in media gasping for breath because of a $1.7 billion shortfall.

The governor is quoted as saying, “The budget includes significant cuts at a level I find absolutely unacceptable…”

I agree–the budget proposal is unacceptable.  It is unacceptable because it merely supports the status-quo by presenting ever-growing government, more regulations and increasing taxes as the only reasonable budget expectation.

Yet, Oregon is expected to receive $1.5B more revenue this biennium than last. that is an increase of $1,500 million or $1,500,000,000 extra dollars in the state’s coffer. The story that Oregon has a shortfall is fiction. We have a budget that has grown beyond any semblance of normal.

The budget proposal has been created by assuming that Oregon’s current service levels or baseline of operations should be the standard for next year. The baseline budgeting process starts with current programs intact and then adds cost of living adjustments (COLA) combined with increases in service level goals.

Using “baseline budgeting” ideology as the operating standard doesn’t identify programs  that are inefficient or unnecessary. It also fails to address or support any significant technological choices that might transform the lives of Oregonians. It only instills more of the same for the future. This is not how our future should be planned.

During the governor’s inauguration speech there was a reference to our Oregon Trail heritage. The governor said, “And we now have two modern-day Oregon trails to choose from. One trail is to continue the endless process of slicing and squeezing, of diminishing our hopes and expectations, and shrinking our dreams of what it means to be an Oregonian. The other trail is to follow the advice of Governor McCall.  To not be guided by regionalism and factionalism.”

This is good advise.

Let me wade past the rhetoric and imagine trying to use our illustrious Oregon Trail heritage as the historic baseline mark on the landscape.  Think of the transformative technologies that have occurred. Now, ask yourself which of these modern technologies you would be willing to ignore because you were wed to the old stuff you brought from Missouri. Your Conestoga wagon, for example.

The reason baseline ideology can’t properly assess the potential efficiencies that might be gained through alternatives is because the baseline receives the funding not new ideas.  A requirement when trying to address maximum utilization from limited resources requires flexibility in weighing and ascertaining the value of various approaches.

A more flexible management approach would provide a credible rationale for reallocating resources by focusing on a systematic review and justification of the funding and performance levels in current programs.

However, if this sounds too complicated then let’s just drive our wagon down the well traveled trail of common-sense.

Since 1980, Oregon’s budget requirements have ballooned by eight-fold.  This means it has doubled three times, 2 x 2 x 2 = 8 (cf., Figure 1). In 1980 Oregon’s budget was near $10B and today the budget projection is approaching $80B.

Noticing this eight-fold growth, let’s ask some thoughtful questions:

• Did our service requirements grow by eight-fold?
• Did our state’s population grow by eight-fold since 1980?
• Did your city’s population grow eight-fold?
• Did your school district attendance grow by eight-fold?
• Did your own personal salary or wages grow eight-fold since 1980?
• Did the number of seniors living in your community grow by eight-fold?
• Does your computer/cell-phone or TV cost eight-fold more than it did in 1980?
• Did the value of your home grow by eight-fold?
• Is criminal activity in your neighborhood up eight-fold?

Even if a couple of these questions come out within a reasonable close-call, my question is still valid: Should the cost of government services have risen eight-fold since 1980?

Please remember–if we do not stand up for rural Oregon, no one will.

Best Regards,

– Dennis

Senate District 28