Smith and Metsger work budget crisis

A tough legislative session for Hood River’s bi-partisan team just got tougher since Oregon’s money problems appear to be even worse than expected.

For the eighth straight quarter, the state revenue forecast has dropped. The latest deficit of $646.5 million has put a 6.2 percent hole in the anticipated $10.42 billion budget for 2003-05. That dire news has the Joint Ways and Means Committee looking at even more program cuts and/or possible fee increases.

“Whether you drop off a 100 or 150 foot building, the splat’s the same,” said Sen. Rick Metsger, D-Mt. Hood.

He and Rep. Patti Smith, R-Corbett, said the latest round of grim figures from Oregon State Economic Tom Potiowsky underscores the need to stabilize the private tax base. They believe that job creation is essential to accomplish that goal and have both taken top leadership roles on economic development committees.

One of their successful ventures this session was to co-sponsor a bill that simplifies the process for a city or county to rezone or redevelop an abandoned mill site.

However, Metsger and Smith have had to put their economic development focus on hold. They have turned their energies toward stopping further program cuts. To accomplish that task, the bi-partisan team said some tax breaks may have to be eliminated and they will have to consider a limited number of fee increases. Next week, they will join their peers in reviewing about 95 different budget proposals, including four to five different methods of taxing beer and wine.

“Everything’s on the table right now and we’re looking for efficiencies, we’re looking for accountability, we’re looking for different sources of revenue,” Smith said.

“Everything is now a very calculated balance between providing business incentives and making sure local partners have enough resources they don’t have to reduce services and lay people off,” Metsger said.

Smith and Metsger agree that it is vital to repair Oregon’s aging bridges to encourage commerce that will stimulate the sluggish economy. However, they believe the funding for those repairs will have to come from a hike in motor vehicle registration fees — from $30 to $54 dollars every two years.

Smith thinks that fee increase needs to be accompanied by a legislative mandate for the Oregon Department of Transportation to streamline its operations and possibly reduce its workforce. She also wants the agency to improve its interactions with the public while planning a project to ensure that all outstanding issues are addressed.

Smith said the House has also taken an unusual move to address another key budget problem. She said legislators have voted to not accrue benefits from the Public Employees Retirement System (PERS) during their term in office.

Metsger said that proposal has not yet been brought before his legislative branch but he has stepped forward as one of five Democrats in the Senate to vote for a sweeping PERS reform plan.

House Bill 2003-B is expected to be legally challenged by public employee unions for a breach of contract. However, it has been endorsed by both the House and Senate and signed off on by Gov. Ted Kulongoski. Smith said the bill, which is slated to go into effect on July 1, will save the Hood River School District about $1.7 million in the 2002-03 budget alone. In addition, it eliminates $678 million in statewide expenditures over the next two years — and cuts in half the $16 billion shortfall facing PERS over the next 25 years. It also reduces employer contribution rates to below 10 percent.

“Just because it’s a government, it doesn’t mean that it can’t go bankrupt, this was a difficult thing to do but it had to be done,” said Metsger, referring to the existing PERS program as an “out-of-control train.”

Although an outcry has arisen that public employees are having their pensions reduced, Metsger reiterated that the new plan does not take one dime out of existing accounts. He said the only “losses” are expectations on future earnings.

Hood River’s legislators both supported dialing back the 8 percent annual growth guarantee that some PERS members have gotten even during poor stock market years. They also upheld suspension of the annual cost-of-living increases for some recent retirees until an “over-crediting” of about 9 percent on earnings for 1999 is repaid. Another key piece of the approved legislation is that, beginning on Jan. 1, 2004, the 6 percent employee salary contribution to PERS will be eliminated. These wage deductions will instead be put into a “401K-like” plan that is administered by PERS and invested by the Oregon Investment Council.

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