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A business take on the state budget crisis

June 2, 2010

Tackling Oregon’s Budget Woes
By  J.L. Wilson
Associated Oregon Industries,

Associated Oregon Industries, in concert with some of Oregon’s leading business and trade associations, is devoting much of 2010 to an effort to address the State of Oregon’s projected $2.5 billion deficit for fiscal years 2011-13. Economists predict that Oregon will run multi-billion dollar deficits for the next decade unless corrective measures are taken.

As a recent study from the Oregon Business Council and ECONorthwest suggests (see study here), Oregon’s budget problems stem primarily from three factors. First, there simply aren’t enough jobs in Oregon. In addition to the lack of jobs, there is not enough income generated in the state to produce a vital public sector. Finally, government expenditures, primarily with regard to employee costs and Medicaid expenditures, are unsustainable.

AOI, the Oregon Business Council and other business groups are organizing around a common platform and agenda regarding this daunting fiscal challenge by using a three-tiered approach.

The primary question that must be answered is: How does Oregon grow jobs and income? To do this, business groups are focusing on the state’s economic development policy. There are several available proposals that could spur immediate job creation, but over the long term, Oregon must take inventory of a “best practices” approach to fostering industry growth.

The second tier involves an in depth look at government expenditures and addressing why those expenditures have become unsustainable.

The third tier takes a look at Oregon’s system of taxation and determining if there are better methods of taxation that would have a greater positive impact on investment and job creation.

The need for this intensive effort will be brought into sharp focus this week with the state’s economist giving the state legislature a $563 million shortfall in the revenue update. Oregon is one of just a handful of states with no improvement on unemployment numbers, and the state’s depressed revenue collections will underscore the importance of business groups coming together to produce solutions.

  
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Bob Clark June 2, 2010

This perspective is constructive but the taxation policy portion should be deleted. There is no trust by the voting public politicians will not just use this study as a basis to make a grab for more tax revenue by introducing a new broad based sales tax. Oregon politicians will ignore the parts about deregulation, easing permitting and better management of forest resources, and fostering a broader base support for all industry rather than the current policy of feebly picking winners and losers for rich state subsidies.

The focus of the study needs to be reduced to two overwhelming factors. First and foremost, economic growth. This is the only true long term way to fund more public services. Second, reduce the relative compensation for public employees. Some ideas on this matter: Raise the retirement age for public employees to be more in line with social security full benefit levels of 66 and 67; and raise the employee contribution towards health insurance premiums from the current free level.

Marvin McConoughey August 13, 2010

One small part of coping with too few jobs is to make hiring simpler and more affordable for very small businesses and individuals. A great many persons wish to hire a small amount of labor from time to time. The complexities of making sure that one complies with the hundreds of rules, regulations, policies, etc. is daunting. Minimum wage laws introduce another man-made barrier to hiring low-skilled labor.

Marvin McConoughey August 13, 2010

One small part of coping with too few jobs is to make hiring simpler and more affordable for very small businesses and individuals. A great many persons wish to hire a small amount of labor from time to time. The complexities of making sure that one complies with the hundreds of rules, regulations, policies, etc. is daunting. Minimum wage laws introduce yet another man-made barrier to hiring low-skilled labor.

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