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Chair's Blog

Government leadership is needed to solve Oregon's fiscal problems December 2016
By Jim Mark, Melvin Mark

In November, voters rejected Measure 97, a costly and damaging $6 billion tax proposal that would have hurt Oregon consumers and small businesses and sent billions of dollars to state government without any guarantee for how the money would be spent.

Now that voters have made clear that Measure 97 was the wrong answer to the state's budget issues, the hard work must begin to address some very real problems that threaten our state's prosperity and livability. At the Portland Business Alliance, where I am chair-elect of the board, we agree and we are ready to be part of the conversation, led by our state's elected leaders.

Oregon does have a financial crisis; understanding the nature of that crisis is critical to developing a sustainable, durable solution for the future. State revenues have increased by more than 40 percent since the 2009-2011 biennium, but costs have grown faster, resulting in a projected deficit of $1.7 billion for the 2017-2019 state budget cycle. With voters wisely saying no to Measure 97, the question becomes where do we go from here?

There are a lot of lessons to be learned from the costly battle that was Measure 97, but one stands out for me: Voters want elected leaders to lead. Poorly written proposals driven by one special interest group lead to fights, not solutions, and 59 percent of voters said a resounding "no" to that kind of approach on Election Day. In my view, this is a clear signal that elected leaders need to drive a process that brings a broad array of interests to the table to work collaboratively on a plan that we can all get behind — even if we all have to be open to compromise and negotiation to get there.

The Portland Business Alliance joins with our partners from across Oregon to unite behind the Oregon Business Plan, our blueprint for statewide economic vitality. At the Leadership Summit earlier this month, we unveiled the goals of the 2017 Business Plan, and key themes were how we bring together interests in this state to address the fiscal challenges ahead. They were:

Maintain strong economic growth. We are seeing job growth in Portland-metro and across Oregon, and we know strong jobs that can support families are the best path to economic vitality. And it is the best way to fill government coffers. In an income-tax-dependent state like Oregon, more jobs mean more revenue for such important programs as education and health care. We must stay focused on job creation and retention as the top priority in our strategy for ensuring our state's fiscal health.

Slow the unsustainable growth in the cost of government. We have seen the impact of letting costs get out of control. Even with growing revenue, there isn't enough money to balance the state's budget because of rising expenses. Costs related to the state's Public Employee Retirement System (PERS) are expected to eat up a growing share of the new revenues our economy is producing, which means there is less money for efforts like reducing class size and boosting graduation rates. For school districts alone, the increased PERS obligations will amount to an inflation adjusted $600 per student statewide, which is the equivalent of 14 days of school. Oregon courts have told us what we can't do to reform PERS, but they also have shown an achievable path to cost containment, and we must move forward with that. We need to manage costs and start tying funding allocations to outcomes. Let's focus on what works to get Oregonians the results they want and deserve from state and local governments.

And, lastly, adjust the tax code to improve revenue stability and generate more revenue for investment in health care, improved education outcomes and more opportunity for Oregon kids to go to college. Yes, I am saying we are open to talking about new taxes so long as we know they will be invested well and be accompanied by real spending reform that addresses the unsustainable growth in government costs.

Oregon's top business leaders stood up at the Leadership Summit and endorsed a strategy that included all three of the components I have listed here. The Portland Business Alliance will be with them at the table to work on a plan that serves all of Oregon and that gets broad support from a wide variety of interest groups.

It will be hard work and it will require leaders with the strength and dedication to drive a conversation that includes parties that fought bitterly just a few months before. But that is what needs to happen. So when the state's elected leaders call us to that table, we will be ready to go, ready to talk and ready to do what's right for Oregon.
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