- Associated Press - Monday, August 17, 2015

The Bend Bulletin, Aug. 12, on wildfire spending:

Let’s stop letting forests burn down. More than 44,000 acres are burning in Oregon as of Tuesday. The Rocky Fire in California is bigger than all those in Oregon put together.

Wildland firefighters worry they are seeing larger fires. Hotter fires. They devour lives, wildlife habitat, homes and watersheds.

Congress could have done something about this. There have been proposals around for years that would change how wildfires are fought. It wouldn’t be about different firefighting techniques. The bills - backed by Oregon legislators - would have overhauled how the fire money is spent.

The Department of the Interior and the U.S. Forest Service now typically run out of money to fight wildfires every year. Then they start eating into money from other parts of their budgets, including thinning and other fire prevention. In other words, to fight wildfires they take money that would reduce or prevent them.



The bills would have forced the federal government to stop using wildfire prevention funds to pay for fighting fire. The biggest fires would be fought instead like the natural disasters they are with Federal Emergency Management Agency money.

Last year, the bill didn’t pass because of concerns it would raise federal spending. But a Congressional Budget Office analysis suggests that it would not actually spend more federal money. That’s because money intended for wildfire prevention would actually be put to work to reduce the threat and intensity of wildfires. Wildfire prevention is much cheaper than fighting a conflagration.

Sen. Ron Wyden, D-Ore., told us this week he thinks there is support in Congress to pass this sort of wildfire funding bill this year. He and the other members of the Oregon delegation should make it happen.

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The Daily Astorian, Aug. 13, on banking services for marijuana businesses:

Nationwide, many legitimate marijuana businesses continue to struggle with a lack of access to the normal channels for handling financial transactions.

Key federal legislators from Oregon are making a renewed push to normalize banking services for the legal marijuana industry. This is a much-needed and overdue reform.

Oregon is in the process of joining other states including neighboring Washington in outright legalization of marijuana, with sales set to start Oct. 1. Medicinal marijuana has been legal here since 1998 and the Legislature legalized medical marijuana dispensaries during its 2013 session. Nationwide, many legitimate marijuana businesses continue to struggle with a lack of access to the normal channels for handling financial transactions.

Currently, marijuana businesses operating under state laws that have legalized medicinal or adult-use marijuana are mostly denied access to the banking system because financial institutions that provide them services can be prosecuted under federal law, according to Oregon U.S. Sens. Jeff Merkley and Ron Wyden and U.S. Rep. Earl Blumenauer, all Democrats. In Washington state, U.S. Sen. Patty Murray is also a supporter of reform. Without the ability to access bank accounts, accept credit cards, or write checks, businesses must operate using large amounts of cash.

“There’s a reason most of us don’t walk around with thousands of dollars of cash stuffed in our backpacks. It’s an invitation to crime and malfeasance,” Merkley said. “But that’s what we are forcing legal Oregon businesses to do because financial institutions are prohibited from providing services. That must change.”

Marijuana businesses are heavily regulated and monitored at the state level. This keeps drug cartels out of the legal industry, insures compliance with rules designed to keep marijuana away from underage residents, and helps avoid federal intervention in legalization.

But by denying these enterprises the ability to handle money in a modern and transparent way, federal law places them at greater risk of robbery, while essentially maintaining undesirable traits associated with the outlaw past. Legalization is a fact of life and is certain to spread to additional states. It’s time to dispense with the remaining vestiges of the unlamented past that saw millions of lives disrupted or destroyed in a failed effort at prohibition.

The new law proposed by Oregon’s federal lawmakers would prevent federal banking regulators from:

-Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated marijuana business;

-Terminating or limiting a bank’s federal deposit insurance solely because the financial institution is providing services to a state-sanctioned marijuana business;

-Recommending or incentivizing a financial institution to halt or downgrade providing any kind of banking services to these businesses; or

-Taking any action on a loan to an owner or operator of a marijuana-related business.

The bill, as described in a congressional press release, also creates a safe harbor from criminal prosecution and liability and asset forfeiture for financial institutions and their officers and employees who provide financial services to legitimate, state-sanctioned marijuana businesses, while maintaining financial institutions’ right to choose not to offer those services.

These moves all make sense and should be enacted as soon as possible.

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The Oregonian, Aug. 13, on the next director of Business Oregon:

Help wanted: Experienced leader and administrator to oversee economic development activities in Oregon. Limited support and budget available. Ability to work with others valued, though many people won’t want to work with you. Must be thick-skinned.

That doesn’t sound like a very enticing job, but it’s an honest assessment of what awaits the next director of Business Oregon, the state’s economic development agency. Sean Robbins has announced that he will step down as director this fall after a little more than a year on the job to return to his native Wisconsin. Before joining Business Oregon, Robbins was president and chief executive officer of Greater Portland Inc. for almost three years. In both jobs Robbins helped bring together the state’s various business constituencies and elevate discussion about the importance of economic growth. He also became an important champion for stimulating rural economies. It’s vital to the state’s future that Gov. Kate Brown finds a leader capable of building on Robbins’ work and taking it to the next level.

The economic development position is one of a handful of important leadership positions that have come open since Brown assumed office after the resignation of former Gov. John Kitzhaber in February. She recently selected a new leader for the Department of Administrative Services and is searching for a new director of the Department of Human Services.

Business Oregon lags well behind Human Services in staff size and budget, but the department will play an outsized role in determining whether the state achieves its goals. Without economic growth, efforts to better fund education will continue to fall short. The new Human Services director’s task will grow ever more difficult unless economic growth helps reduce demand for the agency’s services. And it won’t matter what minimum wage voters or the Legislature enact or how many benefits workers are guaranteed unless there is an adequate supply of jobs.

When asked what needs to happen to help encourage economic growth in Oregon, Robbins honed in on a frequent complaint of businesses. “For many companies, predictability and clarity in our tax and regulatory system is crucial for long-term job growth,” he said. “Uncertainty can drive business away just as much as cost.”

That’s not a radical message. States known for economic growth live by it. And it should be noted that Robbins didn’t say taxes need to be lower or regulations reduced. That probably would help in some circumstances, but it’s not essential - especially if the state sticks with Robbins’ emphasis on helping existing companies grow rather than trying to lure new ones from out of state. But most businesses aren’t inclined to make a long-term investment in real estate and equipment if they suspect that the state or city where they operate might change the rules after the expenditure is made. That’s why the Legislature’s moves to give Intel and Nike tax certainty were so important and why Portland Mayor Charlie Hales’ flip-flop on Pembina’s proposed propane export terminal was so damaging.

The next Business Oregon director will need to be the lead evangelist for that message. Kitzhaber was more attentive to the state’s economic foundation than many Oregon Democrats. Few, if any, currently in statewide elected office have shown a similar inclination. Oregon’s initiative system elevates the importance of strong elective leadership on the economy. When the Legislature fails to act, voters can take matters into their hands - sometimes with unintended consequences. The mere threat of initiative adds to uncertainty for businesses.

It’s also important that Robbins’ replacement shares his enthusiasm for helping the rural parts of the state. In the 14 months since joining Business Oregon, he has worked to strengthen connections with those communities, first with a statewide series of public meetings and then with follow-up visits.

As is the case with many issues, it remains unclear how much emphasis Brown will put on economic growth and how she will try to achieve it. Her choice for Business Oregon director will send an important message. She could amplify that message by giving the next director more resources with which to work. The state budgeted $688 million for economic development in the 2015-17 biennium, but $516 million of that is designated for infrastructure, from seismic upgrades to various small-scale projects. Only $85 million was set aside for initiatives that do things like help businesses launch products or enter new markets.

Oregon’s economy currently is in decent shape, posting job growth above the national rate. When things are going well, urgency for economic issues declines. But history shows that when problems arise, Oregon usually gets hit with an economic earthquake. The state will be in a better position to survive the next recession if the governor selects the right person to replace Robbins and gives the new director enough tools to upgrade Oregon’s economic foundation.

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The (Medford) Mail-Tribune, Aug. 16, on lobbying efforts in Oregon:

Despite all the focus on ethics in government during the 2015 legislative session, one key element of the lawmaking process got little attention: lobbying. A report released last week by the Sunlight Foundation, an open-government group, gives Oregon an F grade for its rules governing lobbyists and what they must disclose.

Lobbyists play an important role in the Legislature, advocating for their clients and for and against bills, and in many cases educating busy legislators about the details of often complex legislation. There is nothing wrong with that - as long as the public knows who is doing the lobbying, for whom they are working and how much they are spending. The Sunlight Foundation report says Oregon is one of four states with the most lenient rules for what lobbyists must disclose.

Lobbyists must register in Oregon, but they need not report the causes they are advocating or their positions on specific bills, as many other states require. When it comes to money, Oregon allows lobbyists to spend up to $50 per year on any individual legislator before reporting any expenditures. That means a lobbyist can buy meals, drinks or small gifts for lawmakers without disclosing it as long as it doesn’t reach the threshold. Other states have a threshold of zero, or set it very low, such as $5.

The biggest lack of disclosure, however, doesn’t directly involve lawmakers. It’s the amount of money lobbyists spend lobbying other lobbyists.

If that sounds confusing, it’s really not. When a lobbyist is trying to build support for a particular bill, or organize opposition to one, it’s helpful to enlist other lobbyists in the effort - a coalition of industries, for example, to oppose new requirements on employers. And because lobbyists aren’t public officials, there is no limit on how much can be spent to influence them. What’s more, lobbyists have been specifically exempt from reporting these expenses since 2013, and a bill passed this year extends that exemption for two more years. Gov. Kate Brown signed it on Wednesday.

The bill originally would have made the exemption permanent, but Ron Bersin, executive director of the Oregon Government Ethics Commission, urged lawmakers to amend it to include only the two-year extension, because a new online reporting system for lobbyists is due to be finished in 2016, making the reporting easier and muting opposition on those grounds.

Bersin noted that industries, organizations and other interests reported spending a total of $26 million on lobbyists in 2014, but the lobbyists themselves reported spending only $92,000 on people they lobbied.

That huge difference would shed a great deal of light on who is spending what to influence Oregon government.

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The (Eugene) Register-Guard, Aug. 16, on Oregon’s Public Employee Retirement System:

The financial hydraulics of Oregon’s Public Employee Retirement System are simple: If more money goes out, more must come in - and if less money comes from one source, more must come from another. Similar principles govern the politics of the pension system: If nothing is done to control the cost of PERS, public frustration will be directed at other targets.

State and local governments will see both types of cause-and-effect sequence soon. The courts and the pension system’s actuaries have delivered a double whammy that will increase the cost of PERS by $1.7 billion per biennium starting in 2017. To soften the blow, the initial cost will be reduced, resulting in even larger increases later on. As pension costs soak up revenues, public resentment will rise: Voters won’t be easily persuaded to pay more for public services if they have reason to believe that PERS is first in line for every tax dollar.

So far, Gov. Kate Brown and the Legislature have responded to this threat with a shrug of resignation. The attitude seems to be that nothing can be done: The 2013 Legislature passed a package of PERS changes, but in May the Oregon Supreme Court tossed most of them out, ruling that only pension benefits earned after the effective date of the legislation can be altered. That decision will add $790 million to the cost of PERS in the 2017 biennium, and an additional $250 million in subsequent biennia.

The biggest change at issue in the court case illustrates the toxic potential of PERS as a political issue. The 2013 Legislature reduced annual cost-of-living increases from 2 percent to 1.25 percent for retirees receiving pension benefits of less than $60,000 a year, and to 0.15 percent for benefits exceeding $60,000. To most Oregonians, a $60,000 pension with COLA sounds like something from a dream world. Even the average PERS pension of $29,602 looks rich to someone with no pension at all. But the court ruled that all benefits earned before 2013 are entitled to the full 2 percent yearly increase.

More than 70 percent of those benefits are paid with income from investments. The rest must come from employers, meaning state and local governments and the taxpayers who support them. Two weeks ago, acting on the advice of its actuaries, the governing board of PERS shifted the balance between investment and employer-provided income. The board has previously assumed it would earn an average return of 7.75 percent on its investments. The actuaries said a more realistic target would be 6.9 percent to 7.51 percent. The PERS board made the optimistic choice of assuming future returns of 7.5 percent.

A small change, compounded over time and applied to Oregon’s $70 billion in pension funds investments, has large effects. A slightly lower rate of return means employers will need to increase their contributions by $760 million per biennium starting in 2017. That’s money that will not hire public-health nurses, reduce class sizes or pave roads. And it will be paid by Oregonians whose own investments, if they have any, will be subject to the same market conditions that led the PERS actuaries to recommend more modest expectations of future returns.

Public resentment over these rising costs is sure to build, but would be contained somewhat if Oregonians were confident that the Legislature had done everything within its power to lighten the PERS burden. A basis for such confidence has not been established. One reason the assumed rate of return needed to be scaled back is because the Legislature refused to approve a plan proposed by Treasurer Ted Wheeler to give his office the flexibility to manage a complex portfolio of investments. Wheeler estimated the plan would have yielded $1 billion in savings over a 20-year period. The Legislature left that money on the table, deepening the hole for state and local governments to fill.

Oregonians also can’t be confident that the Legislature has exhausted all options for controlling PERS costs. The Supreme Court ruled that the 2013 changes amounted to a breach of contract - but contract rights may not extend to all PERS benefits. A number of ideas examined but rejected in 2013 could be reconsidered, such as prohibiting employees from using unused sick leave and vacation time to spike the final salary calculation on which their retirement benefits are based.

Paying close attention to PERS is not just a matter of saving money, vital though that is. It’s a matter of preserving public support for government. With big increases in PERS costs coming soon, people will be given reason to believe that pensions are more important than the services that state and local governments provide. Brown and the Legislature must do what they can to keep a corrosive and divisive cynicism from taking hold - even if little can be done, evidence of a sincere interest in reducing pension costs would be helpful. It would show those Oregonians who aren’t entitled to PERS benefits that someone is on their side.

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