Labor criticizes budget proposals of Oregon's governor, legislators

SALEM - Co-chairs of the Joint Ways and Means Committee and Governor Ted Kulongoski rolled out their respective budget proposals April 17-18 - and both drew swift reaction from organized labor.

The legislators' budget cuts $118 million in funding for schools from the level approved two years ago, without adjusting for enrollment growth and inflation; terminates health coverage for 125,000 Oregonians now covered by the Oregon Health Plan; closes four Youth Authority facilities; eliminates the Bureau of Labor and Industry's Apprenticeship Division; cuts 800 state positions; freezes pay and benefits and cuts pension payments for state and school employees. "Neither the governor's spending budget ($11 billion) nor the legislators' budget ($10.8 billion) acknowledges the additional loss of federal funds that Oregon will suffer by cutting its contributions to health care and senior services," the Oregon AFL-CIO said. "Every General Fund dollar cut from those services forces the state to forgo another $1.50 in federal funds. So, by eliminating Project Independence, the state will give up $10.7 million in federal funds for those services."

The Columbia-Pacific Building and Construction Trades Council issued an "urgent call to action" asking union members to contact lawmakers and urge them not to cut $2.5 from the Oregon Bureau of Labor Industries apprenticeship training budget - which would essentially shut it down. "Oregon's apprenticeship programs and our state-of-the-art facilities have produced thousands of skilled workers," said Executive Secretary-Treasurer Wally Mehrens.

Co-chairs of the Joint Ways and Means Committee are Senator Kurt Schrader of Canby and State Representative Randy Miller of Lake Oswego. Schrader can be reached at 503-986-1600 and Miller can be reached at 503-986-1437.

Leslie Frane, executive director of Service Employees Local 503, Oregon Public Employees Union, said lawmakers are asking too much of public employees during the spate of high unemployment. "Politically, it's' easy for politicians to demand sacrifice from public workers," she said. "After all, public workers are a small segment of the state's population. But asking any one group to sacrifice disproportionately is fundamentally inequitable. And we're being asked to sacrifice on four fronts: retirement, wages, health insurance and jobs."

Frane said citizens and her union "expect elected officials to lead Oregon toward a solution, and that requires a plan for increasing state revenue. Unfortunately, neither the Legislature nor the governor has demonstrated leadership thus far on the revenue side."

According to the Oregon AFL-CIO, about half of the proposed reductions are caused by new revenue shortfalls ($366 million) and half from the co-chairs' desire to build reserves for the future above the levels funded in prior years ($400 million).

"The question of whether to make deeper cuts to services in order to build reserves for the future is certain to be an issue of contention that may be clarified with the release of the next revenue forecast on May 15," said Oregon AFL-CIO President Tim Nesbitt.

Kulongoski's proposal is down from the $11.4 billion he proposed in January. It cuts $92 million in funding for schools from the level approved two years ago, without adjusting for enrollment growth and inflation. It cuts funding for the Oregon Health Plan close to the level in the co-chairs' budget; closes the Portland campus of Oregon State Hospital, eliminating intensive mental health services for 240 patients; eliminates the Family Health Insurance Assistance Program; eliminates home care services under Oregon Project Independence; and freezes pay and benefits and cuts pension payments for state and school employees.

The governor's budget also proposes a Stability Fund (reserve) of $230 million, which allows him to use more funds to preserve services than the co-chairs' budget does.

Oregon Revenue Coalition wants a limit on loopholes

Between the announcements of the legislators' and governor's budgets, the Oregon Revenue Coalition delivered a different kind of budget to the House and Senate Revenue Committees - a list that detailed $7.7 billion in state income tax giveaways and a proposal to solve the state's budget problem by repealing or scaling back enough of the tax giveaways to rebalance the budget. The Oregon Revenue Coalition is comprised of 18 labor, social and religious groups.

"For every dollar the state levies in income taxes," Nesbitt told the Revenue committees, "you collect only 55 cents; the other 45 cents is given back in the form of deductions, exemptions and exclusions."

If the Legislature were to limit income tax giveaways to 33 cents on the dollar, Nesbitt said, the state would recover $1.7 billion in otherwise lost revenues and still have the capacity to protect tax breaks that serve good public purposes.

Nesbitt and Laurie Wimmer Whelan, lobbyist for the Oregon Education Association, presented the coalition's report, which can read in full at www.oraflcio.unions-america.com.

Nesbitt and Wimmer Whelan cited several examples of tax giveaways that they said should be repealed or revised to save services.

The first is an "extraterritorial income exclusion," which subsidizes the foreign operations of a few large corporations. It is considered to be an illegal trade subsidy by the World Trade Organization and will cost the state $24.9 million in the next biennium.

"That $24.9 million could otherwise fund a full school year for 1,000 children, Oregon Health Plan coverage for 1,290 Oregonians and in-home care for 345 seniors and get a pay-back of $21.7 million in matching federal funds," Nesbitt told the committee.

The Oregon Revenue Coalition questioned extended tax breaks for persons with second homes and vacation homes.

"Tax breaks to make home ownership more affordable are a good thing," Nesbitt said. "But why extend such housing assistance to second homes and vacation homes? Oregon will give away $42 million in income tax revenues for these deductions on second homes in the next biennium - enough to pay for 30 days of school for every second-grade class in the state."

The coalition suggests scaling back the $50 per person income tax credit that is available to those who contribute to political campaigns.

"This promotes political giving by working families, which is another good purpose," Nesbitt said. "But if we scaled that credit back to a maximum of $40, we would recover enough revenue and generate matching federal funds to restore Oregon Health Plan coverage and life-saving medications to 11,610 poor adults."

The coalition said a new tax credit for donations to a cultural trust will consume $17.9 million in the next biennium, while the co-chairs' budget wipes out state support for Oregon Public Broadcasting, the Oregon Historical Society and the Arts Commission.

"Reducing the maximum tax credit for the new trust from $500 to $300 per person would recover enough revenue to maintain funding for OPB, the Historical Society and the Arts Commission," Nesbitt said.

The Oregon Revenue Coalition has asked House Revenue Committee Chair Lane Shetterly, R-Dallas, to establish a work group to review all tax giveaways and come up with recommendations for revenue recovery.

(Editor's Note: Some of the information in this article is from the Oregon AFL-CIO Weekly Update.)