If we just passed tax increases to raise 3/4 billion a year, then a 1 billion reserve fund would not even cover two years of budget shortfall. We need a larger reserve fund, I'd say 3-5 billion.

As the Speaker said yesterday, the well has been poisoned. In an ideal world, the Legislature might examine how the Unemployment Insurance Trust Fund and the associated tax rates are crafted. Statutorily, the fund must be "adequate" as defined in statute - that is, the ability to pay benefits during an economic downturn. The tax schedules are so designed that taxes are lowest when we enter a recession and begin to rise only AFTER the recession is over. Taxes then drop as fund adequacy increases.

But we are so hung up on it being "our" money (whatever that means) and that government ought to tighten its belt like households (as if there is any similarity) that I am beginning to think we are in a state of political entropy, dating back to the Founders.

The money belongs to the State. In fact, all money belongs to the State and should be treated accordingly. We allow people to take a salary to cover incidental costs that the State cannot, by reasons of practicality, pay for. It confounds me why we are even arguing about the "kicker". That policy should be rescinded immediately and the money put into the coffers for the well-being of the State. For the life of me, I can't understand why we placate these idiots who think it's their money.

”...that government ought to tighten its belt like households (as if there is any similarity)...”

As BHO pointed out the other day, it is exactly the same situation.

Kulongouski and those in the Ledge began salivating the moment 66/67 passed, thinking more $$ were in their future. Unfortunately they are misreading just what exactly the public was voting for.

Voters approved taxing someone else to pay for government. Changing the Kicker Law would take money out of every voters pocket, a much more egalitarian form of theft than the recently passed measures were.

Good luck with that one.

I completely concur, Kari.

Some of my ultra-conservative friends say it's their money, and that the government shouldn't touch it. I don't think they understand the financial ramifications of that line of thinking, especially in this state. I try to point out that one of the best ways to avoid tax increases is to make sure there's set aside in tough times to help fill budget gaps.

Until there is true tax reform in this state, we need to have a reliable source for a rainy day fund, and this is the best answer.

The proposed reforms seem reasonable enough but, as you well know "setting aside the politics" is not an option and having a kicker reform ammendment on the ballot in 2010 would be tying a big, fat bow around the legislature and maybe even a couple congressional seats and handing them to the republicans and in your heart, you know it. So think about it, discuss it, bring it up in committee, even, but DO NOT refer a "kicker killer" to the voters in an important election year.

How to reform the kicker?

Leave it alone like any other Third Rail Issue or get your asses kicked in the election when it is proposed to be "reformed."

The only plausible way to "reform" the kicker is to have another special election in the dead of winter when the Public Employee's Unions can spend the taxpayer dollars to get out the vote. Any other election, Presidential or Midterm, and it will come back to haunt you.

Baby steps my friend, baby steps.

P.S. How does not having annual CoLA fit into your term of "stability?"

The kicker is the stupidest thing I have ever seen. Of course we need a reserve fund. Who in their personal/business lives doesn't have a reserve fund when they can afford it.

I would readily support a reserve of $3-4B. In fact, I don't want any excess funds returned to the people. That is just plain stupid. If there were extra funds, one of the first things I would invest in is economic development(my personal bias). We need to grow our economic base and young businesses are the leading provider of jobs in this country(Kauffman Foundation).

The only area I would debate is HOW the rainy day funds are used. My reserve fund is for rent, insurance and food, not latte's, Blazer tickets and a new car.

I know we've tried to change the initiative system in the past, but the number one obstacle to changing the "Kicker" is amending the state constitution. Allowing special interest to easily amend the constitution is at the crux of the problem. We could try to revise and change the kicker incrementally, but I believe this would take too long and easily side-tracked by our friends on the no taxes no matter what side. Reforming our 2-legged stool tax system would have to be part of the process. Reforming the kicker and the tax system with 3-5 initiatives would take on hell of sales job.

"Public Employee's Unions can spend the taxpayer dollars "

Wow, I must of missed that line item in the Gov's budget.

I think now is the time for kicker reform to create a strong rainy day fund. It is important to do this when the financial situation is fresh in the minds of voters and any potential kicker refunds are far away. It seems like if we want to have any chance of comprehensive tax reform in 2011, it would be good to have made some progress on the rainy day fund in 2010.

I have heard that there are concerns that there will not be enough money for a strong campaign in favor of kicker reform in November, because business groups are angry about 66 and 67 and unions are tapped out. I would hope that individuals would step up and provide the resources necessary to run a competitive campaign. Obama was able to raise significant funds in small contributions; we need to find a way to do this here in Oregon.

So what happens if (1) the state economist highballs the revenue estimate and (2) the legislature, instead of budgeting money that may well turn out not to be there, budgets for a substantial rainy day fund with the understanding that it will be the first thing cut from the budget if actual revenue turns out to be lower than the economists projection.

Kinda hard to actually legislate that policy, but it's hard to imagine the government not feeling highly motivated to do it that way. What motivations are there NOT to do it that way, other than the risk that the government will treat a too-optimistic estimate as a license to spend as though they were sure to collect it all?

Alternatively, if eliminating the kicker entirely is politically unpopular, it doesn't have to be all or nothing.

How about a reform that says that, in the event of a surplus, HALF of the surplus (or some fraction we can agree on) will be put into the safety fund and the rest will be kicked back?

How about, in the event of a surplus, every taxpayer gets a kicker in an amount ranging from the first $50 to $500 they paid in taxes, depending on the amount of the surplus? The REST of the surplus would go into the safety fund. That one would be popular with voters who supported 66 and 67, as it would give the lowest income taxpayers a greater percentage of their tax contribution in kicker money, while the richest ones would contribute the most to the safety fund.

And if they don't have the guts to do that, in a pinch they could put the reserve fund into the budget using money already in the budget.

The alternative is to go the way of Colorado Springs. Maybe if those "Government is Bad" bellyachers read this story, they might have grounds to think again:

http://www.denverpost.com/news/ci_14303473

What was that I heard about 66 & 67---that conversation was a major tool in passing the measures?

Didn't I read some quote somewhere that without those conversations, all the ads wouldn't have led to a victory?

And yet we can't take kicker reform seriously unless there is a "soundbite worthy" slogan, a campaign already up and running with a campaign manager and a coalition?

Return with us now to those ugly days of yesteryear---the weeks immediately following the Measure 30 result.

Did Russ Walker et. al say "nothing more we can do--the well is poisoned"?

Or did they set about on the next crusade? Which, among other things, led to Kim Thatcher riding the wave and the volunteer army into a primary defeat of moderate Republican Vic Backlund?

Jeff and Brian, thank you for your comments.

I can understand being exhausted from the campaign.

But I think there is a lot of value in the old saying "strike while the iron is hot".

I would be amazed if there aren't many volunteers (esp. the young ones ) from Yes For Oregon who would be eager to finally reform the kicker.

Thank you MP--most intelligent thing you have ever said.

To get our budget back on track I think many Oregonians would be willing to give up kicker refunds for a few years, if all public employees would agree to a pay freeze for a few years. There is a lot of resentment and anger that public sector employees are doing better now than their counterparts in the private sector. Not always the case in the past, and maybe it won't be that way in the future when things turn around, but for right now the playing field needs to be leveled some. More folks might not mind giving up some more to the State if it is #1) spent wisely and #2) know that those who are safe for now are helping our vital services stay safe as well.

Kill it or reform it, but do something or we'll be in this mess again faster than we can blink.

Are there any trustworthy polls (yes, I know that may be an oxymoronic phrase) on the idea of reforming or killing the kicker?

"To get our budget back on track I think many Oregonians would be willing to give up kicker refunds for a few years, if all public employees would agree to a pay freeze for a few years. "

OK, how would that work? Twice the number of furlough days? You do realize that legally such things have to be negotiated, don't you?

Should management public employees take a larger pay freeze than frontline workers?

Every public sector worker is full time and is "doing better" than an equivalent full time worker in the private sector? Where is your evidence?

Any idea how many people earning public sector paychecks are part time, temp, etc?

LOVE this quote:

"Of course using the painful vote on 66/67 should (if the leadership has any political savvy at all) should be a no-brainer to use as the pivot-point on pushing for this sort of reform. "We are fixing the kicker so we never have to face another 66/67 again" is an easy sell for almost anyone.

That Dave Hunt thinks it is politically "it isn't the right time" is about a dumb-ass stupid an assessment as I can imagine. Now is the IDEAL time to address this ongoing problem."

"without something for the taxpayer "

means what?

That private sector employees filling out tax forms are more important than, say, an employee of the YMCA or an employee of a government agency?

Either "taxpayer" means everyone who fills out a tax form, or it is a form of spin made famous by people like Minnis and Kropf.

So, can we agree that real progressives want it killed, eliminated, a memory, full stop, and that the "real politik", tepid Dems are the ones wanting to fly in the face of their own rhetoric, that passage of the measures was a sea change?

The kicker is pure tax policy idiocy that could only grow out of a confusing ballot campaign. No other state in the country comes even close to mandating budget instability in its laws, let alone in its Constitution.

Unless Dave Hunt has some very good polling or focus groups, I think he is totally off-base. Reforming the kicker can easily be sold as a way to avoid another M 66-67 scenario. Enough grown-ups in Oregon understand that.

LT - Every public sector worker is full time and is "doing better" than an equivalent full time worker in the private sector? Where is your evidence?

Kurt Chapman - according to the 2009 Employer Health Benefits Survey published by Kaiser Family Foundation, private employee health insurance premiums have risen from $1,543 per family per year in 1999 to $3515/family/yr in 2009. Oregon state public employees pay $0.0/family/yr for their coverage.

Lt, in 2009 approximately 40% of all small firms offering coverage did so with at least $1,000 deductible for single coverage and $1,500/$2,000 deductible for family coverage. State public employees had first dollar coverage for all procedures with a nominal $5 co=pay for regular medical services.

"Kurt Chapman - according to the 2009 Employer Health Benefits Survey published by Kaiser Family Foundation, private employee health insurance premiums have risen from $1,543 per family per year in 1999 to $3515/family/yr in 2009. Oregon state public employees pay $0.0/family/yr for their coverage."

You miss my point. Your point seems to be that every public sector worker is like the Oregon state employees who pay nothing for their family coverage. How many public employees work part time and get pay but no benefits?

My question was "Every public sector worker is full time and is "doing better" than an equivalent full time worker in the private sector? Where is your evidence?"

If you have a grudge against state employees, I urge you to work on the campaign of a legislative or Gov. candidate who wants to change that.

But don't pretend that all public employees get the same pay and benefits as full time state workers.

Question 1. What about legislators and their staffs? Do they pay nothing for family coverage, or is that different?

Question 2. What about the half time worker in a public library, the temp. county employee, the seasonal city employee (parks and rec. for example) the classified personnel in school districts who in many cases work 20 hours per week or less?

Those are all public employees. If you are talking about full time state workers, you should specify that is what you are talking about.

According to the Analysis of Public Employee Compensation study commissioned by the Oregon Business Council and performed by Portland State University, about 40% of private firms offered defined contribution retirement plans to their full time employees in Oregon. about 20% offered plans to their part time employees. Almst all plans have voluntary match language.

State public employees (100%) are covered by PERS and over 75% of agencies voluntarily pick up the 6% employee contribution.

Dave Hunt is correct, now is not the time to go after the kicker. How about address some more structural problems with the state revenue system?

How about a serious look at a sales tax that exempts basic food, shelter and power and offers a reasonable income tax offset for those below the federal poverty level?

Well the state will have to convince they would actually do something to show they can spend the kicker better than voters.

How about they cut spending 2% (out of $50B all funds) for $1B and put that in the kicker.

In the long run it will jsut disappear like the $700M tobacco settlement that vanished into the general fund or the similar amount from the stimulus last year.

Lt, my point was that public employees are "doing better" right now because their jobs are pretty safe especially with the passage of 66/67. Why not freeze wages to keep those jobs even safer, insuring vital services remain fully funded. I just think most Oregonians will need to see something like this in order to ever give up the kicker. If times are better down the road, we can always re-start COLA raises again.

And yes, I am aware that any changes in contract language with represented folks would need to be negotiated. How about public employees get to keep their job right now as an opener in the new negotiations.

"Should management public employees take a larger pay freeze than front-line workers?" I don't get the question. A pay freeze means no increase for anyone, no matter the pay scale. And no, I don't mean temps. I am talking about only full time public employees with full benefits.

LT, It just seems that you are pretty defensive about my suggestion. Just for clarification I am not attacking public employees. I would agree the kicker should be kept by the state, and used to build a rainy day fund. I also appreciate the hard work that public employees do every day.

It's just that when wages were negotiated with public employees comparables were often used to guide the suggested pay scale. Now, many of those jobs that were used as comparables in the private sector no longer exist. Continuing with COLA raises right now for those PE's fortunate to have full time jobs just makes no economic sense.

If I had a business in the same economic condition as the State right now I would not be giving raises to anyone this year so that I could keep everyone employed and fully covered.

LT, perhaps I was too obtuse. I clearly related all of my data as STATE PUBLIC WORKERS. I did not inlude county, city, local school district etc, etc, etc. there are roughly 51,000 state public workers and they get the first cut of the public employee expenditures.

Many,many city, county and public school district employees contribute to their health, dental and vision benefits. state workers, including the legislative and judicial branch do not. You asked, I answered.

I have no particular issue with state workers except when others try to say that they have made some huge sacrifice by taking 10-12 furlough days over a two year cycle and went without a 2% COLA.

LT, perhaps I was too obtuse. I clearly related all of my data as STATE PUBLIC WORKERS. I did not inlude county, city, local school district etc, etc, etc. there are roughly 51,000 state public workers and they get the first cut of the public employee expenditures.

Many,many city, county and public school district employees contribute to their health, dental and vision benefits. state workers, including the legislative and judicial branch do not. You asked, I answered.

I have no particular issue with state workers except when others try to say that they have made some huge sacrifice by taking 10-12 furlough days over a two year cycle and went without a 2% COLA.

This is the PERFECT time to go after the kicker, once and for all.

1. Obama's ratings are skyrocketing.
2. The Democrat Congress has the complete trust of the people, and unprecedented popularity.
3. The Senate Majority Leader is ahead in the polls of his re-election race in Nevada.
4. Unemployment in Oregon is at an all-time low.
5. Voters in Oregon just passed a tax based on the fact they themselves would have to pay it personally.
6. Democrats just returned another solid blue democrat to fill the 50 year legacy seat of Ted Kennedy in the most progressive state in the union.

Could our timing BE any better? YeeHaw! Full speed ahead!

What to do with the kicker? Abolish it. Everyone is always praising Washington (state). "OMG look how well they do with no income tax, why can't Oregon do the same?" Well then we'd need a sales tax, but nobody wants that apparently.

WA also had a ballot measure in 2009 that would have implemented a revenue limit. It didn't pass: http://ballotpedia.org/wiki/index.php/Washington_Lower_Property_Taxes,Initiative_1033(2009)

Lestatdelc and LT: the comment you are attributing to House Speaker Dave Hunt is not what he actually said, so you should really stop putting it in quotation marks.

LT: The Kim Thatcher analogy is ridiculous. If we only needed to pass kicker reform in a Democratic primary, then it would be no problem. But we need to pass it before all the voters.

Are we ever going to get beyond this myth of the monolithic "state worker" and start talking about management apart from hand-on staff?

Kari said: Yup. If we'd kicked the kicker into a rainy day fund last time around, there would have been $800 million socked away - and there would have been much less need for measures 66 and 67.

Bingo. I can't believe I'm saying this, but I totally 100% agree with Kari. See Kari - you can find common ground with conservatives.

My problem with Measure 66/67 is the campaign was driven by class envy. All taxpayers benefited from those big fat kicker checks we got in 2008 but only the rich were asked to "pay it back" via Measure 66/67.

Moving forward, I'd like to see a new era of shared sacrifice -- ending the kicker, creating a rainy day fund (that eliminates the need to raise taxes during recessions) and arriving at a fair tax rate for each income level (a debate for another day). But when we raise taxes or lower taxes, all should benefit or all should bear some additional burden. The rich should bear more (because they can better afford to do so) but they should not be singled out as they were by Measure 66/67.

But as to Kari's idea about a rainy day fund and ending the kicker, this conservative is in total agreement. Unfortunately, in this hyper partisan, uber populist era ending the kicker is political suicide -- whereas Robin Hood measures like Measure 66/67 are political gold.

RedTed said: This is the PERFECT time to go after the kicker, once and for all.

Awesome post. Touche.

"Well then we'd need a sales tax, but nobody wants that apparently."

Put it on the ballot along with getting rid of the income tax (like Washington) and it'd pass.

Taxpayers aren't stupid enought o give the legislatures both an income and sales tax. You think we want to end like Cali?

"State public employees (100%) are covered by PERS and over 75% of agencies voluntarily pick up the 6% employee contribution."

Kurt, the 6% pick up was negotiated in the early 80's and is covered by the contract. It is not a 'voluntary' pick up. It was negotiated at a time when the state felt the workers deserved 8% but they did not have the money to grant them 8% raises.

In case some of you have a short memory, state workers have taken pay freezes and cuts many times over the years. And they never seem to catch up when times are "good".

Thank you Ms. Chan<

"Kurt, the 6% pick up was negotiated in the early 80's and is covered by the contract. It is not a 'voluntary' pick up. It was negotiated at a time when the state felt the workers deserved 8% but they did not have the money to grant them 8% raises.

In case some of you have a short memory, state workers have taken pay freezes and cuts many times over the years. And they never seem to catch up when times are "good". <<

I have known people who work for major corporations and were given help moving when they were transferred out of state.

Yes, at the other end of the income scale there are part time workers in some cases making less than $10 per hour, diff. work hours every week (often less than 40 hours), no benefits.

But the "private sector vs. public sector" stuff is getting stale.

Esp. when there is no differentiation between public sector employees working less than full time and not perm. They do not have the same pay and benefits as full time public management.

But of course talking about management pay packages doesn't allow union bashing.

We should abolish the kicker, but impose some type of spending limit -- not the rigid limits of TABOR, but something to force the government to put away tax money during periods of rapid growth. And we should put ALL surplus revenue into a large reserve fund to protect the budget against downturns, thus avoiding any more band-aid tax hikes like 66 and 67.

Whenever the reserve fund is filled, the remaining surplus tax money should go into a permanent endowment fund for Oregon's public universities ... pay for scholarships and endowed chairs at Portland State, OSU, and so forth.

I keep hearing people talk about how important higher education is, and how we need better higher education to support business in this state. I wonder how many businesses are willing to walk the walk on that one. If the kicker were reformed to have surpluses feed higher education, would there be a lot of business support for the campaign to get it passed?

"Kurt, the 6% pick up was negotiated in the early 80's and is covered by the contract. It is not a 'voluntary' pick up."

You do realize that is about to double? Or at least the PERS board was seriously considering it right before the vote.

That's the problem - The unions have been negotiating with the village idiot (the legislature/gov) and now daddy (the taxpayers) has to make it up - through no fault of his own.

Let's talk again about fair taxes, since any increase in taxes is going straight to feeding the PERS beast or hiring more employees which exacerbates the situation.

Taxpayers can expect <0% improvement in services no matter how much more they pay.

LT and Ms Chan are incorrect. While the 6% was negotiated into some contracts in the early 80's, many, many agencies voluntarily picked it up in the late 70's and continue to do so for their non represented state employees and managers. PERS in its current format is unsustainable.

Currently, state agencies are paying out about 12%-14% for PERS BEFORE the voluntary 6%. In addition they are also paying the mandated 6.2% federal FICA and as stated above, PERS is projected to rise again in July 2011 by another 4%-6%, due to unfunded liabilities in the state PERS. That is a stunning 22% - 24% before FICA.

Kurt, what legislators have you supported who did anything to change the situation?

Assuming all you said is true, what do you propose doing about it?

PERS IS BAD!!!!!! does not solve anything.

How about reducing management salaries in order to help pay for PERS? OR should only frontline workers pay the price because management should be paid whatever the market will bear?

How about reducing management salaries in order to help pay for PERS?

Yeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeees!!!

And rather than simply cut them outright, I say we create "service track" management positions. It puts qualified unemployed overeducated people to work, let's do-gooders do something good for once, is a zero in the PERS equation as they would take no retirement package, drastically reduces salaries by accepting a fixed low salary, and puts pressure on the full paid PERS eligible to earn their keep.

First time that idea showed up here a few years back it was called "the dumbest idea ever heard". Have things moved on enough that it's not the dumbest idea anymore?

FWIW, I think that people like Kurt and Dave with their one issue backbeat do a service in these discussions. Really pisses me off when some regulars call that trolling.

LT, I have never said PERS is bad. I have been consistent in stating that PERS, specifically PERS 1 is not sustianable. Part of the problem is that the very legislators and judical officials who should be working on a fix are beneficiaries. The very managers who should be working with the public employee unions regarding a NEGOTIATED fix are beneficiaries.

PERS 1 is based upon an assumed 10% average investment return annually. the problem does not rest with state managers and employee unions, the problem rests with the PERS Board. However, unfortunately the fix does rest with the managers and public employee unions of the state.

Some ideas to halt the rspid rise in all PERS agency costs going forward from 7/1/2011:

1. Engage in a 1-time retirement inducement encouraging vested PERS 1 employees to retire.
2. Lifting the capricious ceiling of 600 hours working when a PERS 1 employee is no longer 'retired' 3.Engage in meaningful negotiations regarding the employee 6& contribution. the practice of entities paying this is 25-30 years old. It should be reviewed in light of the huge increases all agencies are projected to be paying.

Those are specific solutions, Kurt.

I have no problem discussing specifics.

My problem is with those who bash anyone on PERS. I wonder if those who bash public employees would last long in those jobs.

<h2>I concur with LT. Good, constructive suggestions, Kurt. That's the kind of dialogue we should all be having about issues. Not "let's all have a race to the bottom. And you go first..."</h2>