Opinion: Stabilizing Oregon’s Fiscal Foundation Should Be Legislative Priority

Joan McGuire

The CEO of Oregon Business & Industry discusses the need for collaboration and why the group opposes emissions reduction bills that were unveiled today in the state legislature.

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Oregon’s business community is as united as it has been for years.

The creation of Oregon Business & Industry on July 1, 2017 reflects a common vision that brings businesses together: For Oregon to fulfill its potential, businesses must help lead the way into a new competitive landscape that is being reshaped by demographic, environmental and economic changes.

The successful effort in 2016 to defeat Measure 97, a poorly conceived revenue proposal to impose a gross receipts tax on Oregon businesses, has been the most visible display of the business community’s resolve to work together on key issues.

But OBI and its members know that simply opposing bad policy is not enough to move Oregon forward. We also must collaborate on solutions to the systemic challenges that hold back our state from realizing it’s great potential so that all Oregonians can flourish.

As the first President and Chief Executive Officer of OBI and a former Legislator, I am committed to increasing collaboration between the state’s business organizations and elected leaders in pursuit of proactive policy solutions to Oregon’s biggest obstacles. When we work together on common goals, all Oregonians win.

The 2018 short session is likely to draw attention to two high-profile issues: carbon-reduction policy and the state’s fiscal imbalance.

Carbon policy, specifically a cap-and-trade proposal, appears to be the bigger priority for legislative leaders. OBI believes this is not the time for such a complex proposal. To see why, look at the trend lines on the two issues:

Oregon already is one of the lowest carbon-emitting states, in part because Oregon businesses have made significant gains in reducing energy use and carbon emissions.

Businesses are committed to doing more and the state is on track to further reduce CO2 emissions. In recent years the Legislature has passed landmark legislation to decarbonize significant portions of our economy. These factors are evidence that our state is moving in the direction that Oregonians support, and we are doing it at a responsible pace.

The OBI board of directors believes that the cap and trade topic is too complex for the brief 35-day session. While there have been conversations about the issue occurring in various settings for a while, there remains little specificity on how such a program would be implemented by the state and what costs would be borne by consumers and business. 

Whatever CO2 reduction strategies our state adopts should feature measurable reductions and market based solutions that don’t disproportionally impact any sector of our economy.

OBI is committed to collaborating with environmental groups, other business organizations, and stakeholders to craft effective solutions for the 2019 session that all of Oregon can support.

In contrast, little meaningful progress has been made on controlling public pensions costs in the state. As a result, the costs associated with funding the Public Employees Retirement System (PERS) will continue to consume ever-larger chunks of the state budget until action is taken, and that means less money for classrooms and vital services.

Consider the results of the 2017 legislative session. Legislators approved an 11 percent increase in K-12 spending ($800 million), yet many districts still had to reduce teaching positions.

Losing ground in the classroom despite large budget increases has unfortunately been a long-term trend. Expected state revenues for the 2017-19 biennium are $8 billion higher than during the 2009-11 biennium, an increase of almost 60 percent.

Despite that increase, Oregon has one of the nation’s worst teacher-to-student ratios and shortest instructional years.

The PERS problem is just one contributing factor to the structural budget deficit that our state has. Our health care costs for public employees continue to significantly outpace the national averages and because we find it difficult to keep our costs controlled, its hard for us to invest in the programs we need to truly move our state forward and prepare our workforce of tomorrow.

These are also big issues for a February session. But once the problem is defined, the framework can be created that can lead to the same type of bipartisan problem-solving that resulted in the transportation package this past session.

OBI will be joining with our other association partners to take our fiscal reform ideas to all corners of the state to listen and incorporate feedback into the solutions we would like to propose for the 2019 legislative session.

It is important that we tackle these big issues now. An aging workforce and increased automation will make it more important than ever for younger Oregonians to be highly trained for a career. 

Once Oregon creates a stable, sustainable fiscal foundation, the other hurdles facing the state will become a little bit lower. OBI pledges to be a leader and a partner in putting Oregon on the path toward a future that is sustainable, both fiscally and environmentally.

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Mark Johnson became President and CEO of Oregon Business & Industry Nov. 1. Previously, he served almost seven years in the Oregon House of Representatives serving House District 52.