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Co-Chairs state budget announced; AFSCME, other unions quickly respond
Updated On: Apr 15, 2013
Rep. Peter Buckley (left); Sen. Richard Devlin

The legislative budget framework document relies on likely illegal PERS rollbacks

Oregon schools appear to be the big winners in the two-year state budget proposal released Monday by two key legislators, while

The real budget work now begins at the 2013 Oregon Legislature with the release March 4 of what is informally referred to as "the Co-Chairs budget."


That document is the proposed state spending plan from the Co-Chairs of the Joint Ways and Means Committee, the budget-writing sub-group holds the monetary power in Salem. Much more so than the governor's budget, it is the Co-Chairs budget that sets the framework for Oregon's 2013-15 biennium.


Not unexpectedly, despite the fact that this session's Co-Chairs are generally union-friendly Sen. Richard Devlin (D-Tualatin) and Rep. Peter Buckley (D-Ashland), the proposed budget relies heavily on cuts to PERS to balance its bottom line. Included in their proposal is ending certain benefits for out-of-state retirees and capping retirees' annual COLA increases. It appears the Co-Chairs budget targets approximately $36,000 annually as the benchmark for capping retiree COLAs. Gov. John Kitzhaber's budget document included a retiree COLA cap beginning at $24,000.


Devlin's and Buckley's proposal also incorporates some $300 million in PERS savings by re-amortizing the 2008 PERS losses out on a longer payback schedule, a PERS-related idea that AFSCME endorses.


K-12 schools are the big winners in the Co-Chairs budget, allotted $6.55 billion — up almost a full billion from last biennium. As the full budget details are released, that could spell trouble for other state General Fund agencies, which includes the Department of Corrections.


What happens next? There will be lots of agency budget hearings — many are already underway — and legislators eventually vote on all agency budgets individually. However, the Co-Chairs budget serves as the overall framework and the agency budgets cannot total more than their final number. All this will play out over the next two months or so while lawmakers await the state's May revenue forecast, which triggers legislators' final opportunity to tweak state budget numbers before their anticipated late June/early July adjournment.


AFSCME AND OTHER MAJOR UNIONS immediately released a joint response to the Co-Chairs budget proposal. The text of the unions' response is as follows:


Oregon's educators, front-line, public safety and health care workers recognize that our economy continues to struggle as a result of the recent economic collapse. We fully appreciate the Co-Chairs faced tough choices in putting together a budget that ensures that we can fund services that middle-class families and vulnerable Oregonians rely on.


Research and election results clearly show that Oregonians want legislators to prioritize schools, health care, public safety and services to seniors and the vulnerable. They also expect a shared sacrifice and want corporations and the wealthy to pay their fair share.


We are disappointed that the Co-Chairs' proposed budget does not call upon corporations and the wealthiest Oregonians, who have enjoyed almost all of the benefit of the economic recovery, to do their part in funding schools, senior services and other vital programs. It's unfair and irresponsible to balance the budget on the backs of working Oregonians and on those who rely on services. Legislators should make sure that those who've prospered even through this economic crisis are paying their fair share. 


It is extremely troubling that the co-chairs budget breaks a promise to hard working, middle class Oregonians and retirees on a fixed income. At the same time, the Legislature recently bent over backwards — even calling an emergency session — to be able to promise special treatment to profitable corporations like Nike.


The PERS proposal included in the Co-Chairs budget is very similar to a 2003 proposal that was ruled unconstitutional. This means that these dollars will likely never make it into Oregon's classrooms or to other valuable programs.


Making matters worse, the COLA proposal will cost the state millions of dollars to litigate and once this proposal is found to be illegal — again — the Legislature would have to rebalance the budget and slash funding for schools, health and senior care, and public safety in the middle of the biennium.


It's important to remember that every public employee group — teachers, public safety, health care and other front-line workers — have taken pay cuts, furloughs and are paying more out of pocket for health insurance. They are also doing more with less. Class sizes are bigger. Caseloads are larger. Public employees, like all middle-class Oregonians, are making sacrifices. Unfortunately, the Co-Chairs' budget continues to ask working and middle-class families and the vulnerable to carry all of the burden.


This budget appears to be another way of scapegoating those with a target on their back: public employees. We are now seeing the kinds of demonization of public employees here in Oregon that were the foundation for what happened in Wisconsin, Michigan and Ohio, where middle-class workers' voices have been silenced. We've seen clear evidence of this trend through continued attacks on promised pensions, and petitioners are now on the street with an initiative to put right-to-work on Oregon's ballot.


We believe that we can do better. The budget can be balanced in a way that is fair, sustainable and prioritizes what Oregonians value. We call on our lawmakers to consider the following:


  • Cut out-of-control tax breaks and make sure everyone pays their fair share. Oregon's corporate tax rate is tied for the lowest in the nation, and over the next two years, Oregon is expected to give away more than $36 billion in tax breaks. We need to do more to close loopholes and ask those with the ability to pay to invest more before we ask teachers, front-line workers and retirees on fixed incomes to shoulder even more of the burden.


  • Make every dollar count. A report released by a broad coalition of 10 organizations identified $278 million in savings at state agencies by increasing efficiencies and cracking down on tax cheats. These recommendations should be exhaustively examined before seniors and the vulnerable face cuts to services or attacks on their pensions.


  • Pursue common sense, legal approaches to PERS. Wall Street misdeeds crashed our economy and significantly harmed PERS financial health. We are now faced with having to clean up the mess made by bad-behaving investment banks and others who abused our financial system. We should strive to recoup losses from fraud caused by Wall Street. The Treasurer and Attorney General have already recovered some of the money PERS was defrauded and they should continue down this path.


Additionally, in bringing certain financial and investment functions under the authority of the State Treasurer, we can keep a closer watch on how Oregon's tax dollars are invested, and we can significantly reduce wasteful spending on unnecessary fees to out-of-state corporations who don't have any ties to Oregon.


We can also realize substantial savings by having the PERS Board recapture the loss from the malevolence of Wall Street in 2008 over a longer period of time to help smooth the dramatic impact on schools, seniors and families.


  • It's raining now. Our economy is slowly recovering from Wall Street's illegal and irresponsible actions; we should use our reserves for the purpose for which they are intended: preserving services when Oregonians need them most.


There is a better way forward. Before a single retiree has the rug pulled out from under her in her golden years, we need to make sure that the wealthy and every corporation pays their fair share. Before our teachers, firefighters and personal support workers are asked to do more with less, we need to make sure that our leaders are being responsible and efficient with our tax dollars. It may be a challenge, but it's what Oregonians expect from their leaders.


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