There was plenty of sparring and one-liners during last Wednesday's Big Idea discussion on the state budget, hosted by The Oregonian/OregonLive's Editorial Board. But the two-hour forum featuring Gov. Kate Brown, Sen. Minority Leader Ted Ferrioli, R-John Day, Sen. Mark Hass, D-Beaverton and consultant Tim Nesbitt also yielded some glimpses of the behind-the-scenes work that legislators are doing to bring resolution to the $1.4 billion budget deficit facing the state for the coming biennium.
Here are four takeaways from the discussion.
Takeaway 1: It's taken a long time for Gov. Kate Brown to get here, but she is now calling out the Public Employees Retirement System's unfunded liability as a priority for the state to address this session. This is a marked difference from just a few months ago when Brown termed the $22 billion unfunded liability only as "concerning," and largely brushed aside pleas from Katy Durant, outgoing chair of the Oregon Investment Council, to show "bold leadership." Granted, it remains to be seen what the governor delivers. She is directing a task force to identify ways to raise cash, such as through selling state assets, to buy down the liability by about $5 billion, but she should also rally support for legislative proposals to tame public employee pension benefits and require workers to share more of the risks and costs of funding their retirement.
Takeaway 2: Businesses have some legitimate beefs that elected officials should consider in developing a new commercial activities tax. While there's no getting around the fact that businesses are paying only about 5 percent of the general fund, that does not include the fees that they pay to non-general fund pots that support government agencies. Meanwhile, growth in state government expenses is far outstripping growth in revenue, even though the state is raking in more money than ever before. As one audience member noted in a comment, state government needs to slow down on the mandates it is heaping on business. From paid sick leave, to a higher minimum wage to new penalties businesses may have to pay under a bill for changing employees' work schedules, businesses are having to cope with higher costs, stricter requirements and legal threats that understandably curbs their enthusiasm for higher taxes without cost controls in government.
That said, while Republicans and businesses are shaping proposals for raising new revenue for transportation needs and health care, they must also help shape the commercial activities tax which backers say could go to education. Ferrioli's suggestion that any tax go to voters for approval and that it be designated for education is worth considering.
Takeaway 3: Legislators are considering an array of cost containment proposals. However, Ferrioli criticized that work on Wednesday saying that he would instead push for spending reforms that represent at least $1 billion in savings. Brown accepted the challenge, saying she was willing to push toward that figure. While details have been slim, a bipartisan group of legislators earlier this year presented a long list of ideas for overhauling state practices, including its employee pension and benefit programs, in hopes of bringing down the long-term trajectory of costs. If calculations bear out Brown's estimates, that's a significant, and well-needed shift in spending and, more important, in thinking.
Takeaway 4: There's not much time left in the legislative session and a lot of work to be done. Businesses, public employee unions, legislators and the governor must execute on multiple fronts to deliver a budget that not only adequately funds education, health care and other services, but puts the state on a path to long-term fiscal health. That's a tall order in this climate of divisive politics and lack of trust. But Wednesday's panel provides hope. All four, deeply involved in policy and public life for decades, showed what honest debate and healthy disagreement looks like, uncovering more common ground as a result. Whether there's enough time and will to turn that into viable solutions will determine whether this session ends in spectacular success or spectacular failure.
- The Oregonian/OregonLive Editorial Board