- Associated Press - Tuesday, August 9, 2016

Selected editorials from Oregon newspapers:

The East Oregonian, Aug. 1, on the state’s management of natural resources:

Across the West, rural counties, school districts and local governments that once depended on natural resources such as timber have been slowly sinking into a sea of red ink.

The problem: State and federal land managers have unilaterally changed the rules of how natural resources are managed. The result has been less economic activity such as logging, leading to ever-tighter local budgets. Those local governments and school districts once shared the revenue from timber cut on public lands. Now they receive only a small fraction of what they previously received.

Those who defend the change in resource management say those counties and school districts should just pass special tax levies to cover the shortfalls. Such statements reflect their ignorance about the economy of the rural West. If logging is the primary economic activity and it is curtailed, then a tax levy will not cover the shortfall. People collecting unemployment insurance cannot afford higher tax bills.

This argument is playing out in a courtroom in Albany where Linn County officials are suing the state for $1.4 billion they and 14 other counties have been shorted since 1998.

According to Linn County’s lawyers, that’s the year the state changed the way it manages Forest Trust Lands. The counties gave those timber lands to the state to manage on their behalf.

Under the change, instead of managing the timber to produce revenue, the state decided to manage it for other objectives - without the counties’ consent.

During a hearing in July, the state’s lawyers essentially tried to duck the question of whether the state owes the counties any money. They talked about “greatest permanent value” and that the statute doesn’t require “revenue maximization.”

What they didn’t argue is whether the state has a moral and ethical obligation to manage those lands in a way that doesn’t leave the counties and school districts broke.

It should be noted that across the West, the federal government has also done its best to squeeze natural resource companies out of business. In many rural areas, where once a thriving timber industry existed, there remains only abandoned mills or a mill operating at a fraction of its capacity. The only mills that remain profitable are those that own timber and don’t depend entirely on government timber sales.

This is a direct result of federal managers - Uncle Sam owns most of the land in the West - deciding to shut down or vastly reduce logging in many areas.

With the state of Oregon managing timber land for “greatest permanent value” and the federal managers tightening the timber supply, rural counties and school districts have suffered financially.

Instead of ducking this lawsuit, we’d like to see the state’s lawyers argue in open court that precious few bigwigs in state government care one bit about rural communities. We want them to argue that the trees - a renewable resource - are more precious than rural economies. We want them to tell the judge that it’s more important to the state of Oregon to protect as many trees as its managers see fit, no matter the impact on rural Oregonians.

Of course, they won’t say that outright, but that’s what they mean.

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The (Albany) Democrat-Herald, Aug. 8, on state employment:

An interesting nugget was buried in the last batch of monthly statistics prepared by economists with the state Employment Department.

These reports lately have been bursting with positive trends, as Oregon workers take advantage of the economic rebound. In fact, according to statistics released last week, the labor force in Linn County is the largest it’s been since November 2011 and within shouting distance of the all-time mark. In fact, with so many people entering (or re-entering) the workforce, the county’s unemployment rate jumped upward a bit in June.

The private sector continues to add jobs, according to the figures from the Employment Department, and that’s a good sign. In the 12 months from June 2015 to June 2016, a number of private sectors posted gains: The trade, transportation and utilities sector, for example, added 360 jobs, a 4 percent jump. The leisure and hospitality sector added 310 jobs during those 12 months, a 9.1 percent leap.

The construction sector is booming, as you can see for yourself just by driving around the county: That sector added 250 jobs in the 12 months from June 2015 to June 2016, up an impressive 9.8 percent. It’s been particularly nice to watch the construction sector bounce back, since it was so hard-hit during the recession.

We’ve seen good increases during that 12-month span in other sectors as well, including manufacturing (up 150 jobs, 2.1 percent) and education and health services (up 4.6 percent). Government jobs also have increased during that period, but by only about 1.5 percent, so it’s clear that job creation in the private sector is helping to drive the recovery.

But what’s particularly interesting in this new batch of jobs data is not so much where the growth is occurring, but the age of the workers available to take those jobs.

Employment Department economists broke the working-age population (15 years old and older) into three broad categories: Under 25, 25 to 54 (considered the prime working age) and 55 and older. They then looked at the change in the size of those three cohorts from 2010 to 2015.

Here’s what they found in Linn County: The number of workers who are under 25 actually declined from 2010 to 2015, by about 1.4 percent. The number of workers in the prime age category, 25 to 54, had posted a slight gain, up about 0.5 percent.

But the number of workers who are 55 and older was up by a whopping 12.1 percent.

The results were similar in five neighboring counties. (In Benton County, for example, both the youngest group and the 25-54 age group declined slightly, but the number of potential workers 55 and older jumped 14.2 percent; the big outlier in the group was Polk County, where the number of the youngest workers was up 11.9 percent for some reason, but even in that county, the number of older workers jumped 13.3 percent.)

Workforce economists have talked in the past about a coming “silver tsunami,” as older workers retire from one job but keep searching for other employment to keep them occupied (and to pay the bills). It looks like that tsunami has arrived in mid-valley workplaces.

This is a demographic trend with deep implications. For one, it looks as if we need to get much more serious about developing training programs for older workers. Programs like Pipeline, which works with high school students to groom them for good jobs after graduation, are crucial. But we also need to pay attention to their much older counterparts.

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The Bend Bulletin, Aug. 6, on a financial plan to help people with disabilities:

Oregonians with disabilities and their families can start planning for a new financial tool that becomes available this winter, courtesy of the state of Oregon and the federal government.

The state’s Achieving a Better Life Experience (ABLE) Savings Plan, created after Congress gave states the ability to do so, goes into operation in December. It offers a way for the disabled and their families to put money aside for future needs. It’s a good change.

Currently, those with disabilities can have no more than $2,000 in savings before they begin losing the federal benefits on which many rely. Their families can set up special needs trusts, but those are expensive propositions and require lawyers and trustees. That has put them out of reach for many disabled individuals.

ABLE accounts will change that. They’re relatively inexpensive to set up, says Michael Parker of the Oregon 529 Savings Network, of which the ABLE accounts will be a part, and there need be no trustee. The network also includes the state’s 529 college savings program.

After-tax dollars can be added by the ABLE account beneficiary or by nondisabled family members, and no taxes will be levied against the accounts. Those who add to the accounts can qualify for tax deductions of up to $4,000 per year.

The accounts will give disabled beneficiaries more control over their money than many have today. They can be used to pay for a house or a new wheelchair, or nearly anything else that improves a beneficiary’s quality of life.

And, an account can contain $100,000 before there’s any loss of federal benefits - a big jump up from the current $2,000 limit on assets. Even then, a beneficiary would lose benefits only until the ABLE account - which can contain as much as $310,000 - is spent down to the $100,000 level. At a beneficiary’s death, the account becomes part of his or her estate.

ABLE accounts won’t create financial independence for every person with a disability. But they’ll provide a bit more peace of mind to families who must worry about continued financial security for disabled relatives after parents or others die.

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The (Eugene) Register-Guard, Aug. 7, on Oregon’s retirement system:

Actuaries for the Public Employees Retirement System paint a grim picture of the next half-dozen years: State and local governments will have to increase their contributions to the pension system by an amount equal to about 4 percent of total payroll costs next year, and again in 2019, and again in 2021. Those increases will absorb most or all of the money otherwise available for pay raises for current employees, or for improved public services. PERS is squeezing everything, testing the Legislature’s ability to act.

In the current biennium, according to PERS, payroll costs for all governments enrolled in the pension system - school districts, cities, counties and state agencies - totaled $19 billion. An additional $2 billion will be contributed to PERS. In 2017-19, payroll costs will rise an estimated 7 percent, while PERS contributions will climb 44 percent to $2.9 billion.

Here’s another way to put it: Over the next two years, state and local governments will spend an additional $1.3 billion on everything that counts as payroll: teachers in the classroom, cops on the beat, nurses in the clinic, and for any raises or benefit enhancements these people receive. In that same period, those same governments will pay an additional $885 million to cover pension obligations. Of all the additional resources available to government during the next biennium, 41 percent will go to PERS.

It gets worse: By 2021-23, governments’ aggregate PERS contributions will be $4.5 billion, more than double the $2 billion for the current two-year budget period.

Even contributions at that level won’t be enough to cover the pension system’s unfunded liability of $21.8 billion. PERS currently has enough assets to cover only 71 percent of its future obligations. The shortfall must be made up by the system’s only two sources of funds - income from investments or the taxpayers.

John Thomas of Eugene, a benefits consultant who is chairman of the PERS board, told The (Portland) Oregonian that no one should expect a Wall Street miracle. “This is not a situational problem that is going to go away if returns spike a bit,” he said. “It’s a systemic problem. … Everything is predicated on a linear 7.5 percent investment return, and that has not been sustainable.”

The annualized rate of return on PERS’s invested funds over the past 10 years has been 5.9 percent, and was only 2.1 percent last year.

The pension system’s insatiable appetite is often cast as a contest between the interests of public employees and everyone else, but that is less the case each year. PERS’s heaviest obligations are owed to public employees hired before 1996, when the Legislature began reducing pension entitlements. Currently, nearly 1,200 PERS retirees receive pensions of more than $100,000 a year, and more than 23,000 receive more in retirement than they were paid in salary while working - almost all of these are pre-1996 hires. Increasingly, public employees who are on the job today are seeing their wage growth slowed and working conditions worsened to maintain pension benefits for those who came before.

Current public employees also pay the political price of PERS costs. Any proposal for a tax increase is reflexively criticized as raising money that will be swallowed by PERS, which makes it harder for governments at all levels to persuade voters to provide funds for anything from reduced class sizes to sheriff’s patrols. Retired teachers and deputies aren’t affected - those in the classroom or on patrol today are.

The Legislature has repeatedly attempted to rein in the cost of PERS, but its scope of action is limited. In a series of decisions, the courts have held that PERS benefits can’t be changed retroactively without violating contract rights. Republicans in the Legislature criticize the state’s Democratic leaders for failing to lighten the PERS burden - but in fact members of both parties have tried, sometimes at political expense, to change the system, only to encounter a legal brick wall.

But legislative Republicans offer a list of ideas they say have not been tried, such as capping the final salary on which pension benefits are calculated, shifting further toward a defined-contribution type of pension plan, and ending the practice of including unused vacation and sick leave to inflate the basis on which benefits are paid.

Some of the Republicans’ proposals seem vulnerable to the same legal challenges that have scuttled earlier attempts to lighten the burden of pension costs. But both economic and political gains could come from pursuing another round of reforms.

Any changes that stand up in court would reduce PERS’s unfunded liability, and therefore its cost to the taxpayers. And Oregonians’ resentment could be cooled from a boil to a simmer if they see that lawmakers have exhausted all possibilities for cost savings.

State and local governments’ purpose is to provide vital services to all Oregonians - but rising pension costs feed the cynical belief that their real purpose is to provide well-upholstered retirement to a privileged class. Lawmakers need to do all they can to weaken the basis for that belief, which is well-established already but will grow stronger in the years to come.

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The (La Grande) Observer, Aug. 5, on Gov. Brown’s support of the corporate tax proposal:

Discouraging.

That is the most apt word to describe Gov. Kate Brown’s announcement Thursday she supports a ballot measure designed to tax firms in Oregon that generate more than $25 million a year.

The initiative is now known collectively as IP 28 but when it reaches the ballot for voter consideration in November it will most likely be dubbed Measure 97.

The rationale behind Measure 97 is a simple one and also one that casts a wide populist net. The measure will change the current minimum tax on C-corporations in Oregon. The plan would levy a

2.5 percent tax on corporations that generate sales in excess of $25 million a year.

Advocates of the proposal assert - among a host of things - a kind of self-styled populist rhetoric whereby only huge, out-of-state owned firms will be forced to pay. After all, the theory goes, these megalithic firms are out-of-state intruders anyway, and they don’t pay enough to begin with. So let’s tax them and make them pay their fair share.

Sounds like a pretty good populist argument. The only problem with this theory is that it fails to take into consideration several important factors that have nothing to do with rhetoric but are actually based on reality.

First, supporters of the measure contend that the money accumulated by it will be directed toward education, health care and senior services. Again, that sounds pretty good. Yet, again, that isn’t necessarily true because the Legislature could rework the law to spend the money somewhere else. Unless the governor has somehow forgotten that we live in a democracy, what the Legislature does or does not do is something she has no control over.

The very way the tax initiative is being sold should also be troubling to legislators and those who actually believe in the three-tiered American system - legislative, judicial and executive branches - as a viable method. That’s because this tax hike - configured to hit big business - isn’t going through a legislative vetting process. It isn’t going to face debate regarding its pros and cons in the House of Representatives or the Senate.

Most troubling, though, is that the proposed tax boost most likely will not be a hit big firms will simply shrug off. Nope, they will either leave the state, lay-off workers or - and this is more likely - pass the extra costs onto consumers. That is, you and I. Plus, in an economically struggling area such as Eastern Oregon, such a measure will simply be one more reason for a large corporation to go somewhere else.

Brown made a bad judgment on this one. It is a discouraging move and unfortunately shows that the governor may regard her ties to public unions - who back the tax boost - as more important than the future economic health of the state.

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