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Friday, November 30, 2018

Too Soon To Tell

I’m back from the far side of the world.  It was a fabulous trip that not only provided endless photographic opportunities, but literally closed me off from any useful news during the week before the election and for nearly two weeks after.  Only limited news got through and I enjoyed the freedom to relax and let my inner Anthropologist emerge with new people, new situations, and an endless vista of new, gorgeous scenery.  (BTW, without prompting, we were offered opinions from our Tanzanian hosts about our current occupant of the White House.  Needless to say, it wasn’t favorable, and I had the opportunity to buy a T-shirt that acknowledged I had visited one of those sh*thole countries.  I demurred).

Back to the present.  The election is over.  My own state representative, the not-lamented Julie Parrish, is gone, to be replaced by someone I like and trust more, Rachel Pruzak.  That surprised and pleased me.  Kate Brown has finally been elected to her OWN term as Governor, and the Ds now control both Legislative bodies with supermajorities.  That means that they can pass any revenue bills without support from a single R.   Whether this is a good thing or not remains to be seen.  On one hand, the fear of draconian anti-PERS legislation has diminished considerably, but that does not mean PERS is entirely out of the Legislative crosshairs.  The media, the employers, the Oregon Business Alliance, Nike, and others continue to agitate for PERS reform, while progressives continue to agitate for revenue reform, particularly an increase in the Corporate Income Tax.  This is going to set up a classic battle in the Legislature as business lobbyists square off against labor lobbyists, education lobbyists, School Boards to balance those conflicting interests.  There is nothing in Kate Brown’s proposed 2019-21 budget that suggests she grasps the magnitude of the issues that the Legislature will have to confront.  At first blush, it seems like the Legislature would be easy-peasy.  Pass tax increases without R support.  Governor signs bill.  Legislature distributes revenue to starving agencies.  Sine die.  But, and this is a big one that people sometimes forget.  Whatever the Legislature does can be undone with an initiative, referendum, or constitutional amendment.  And trust me, those groups are already starting to organize, and the Legislature is well-aware of their existence.  Any tax increase, except maybe on cigarettes or liquor or marijuana, WILL BE referred to the voters, and the likely outcome is defeat.  In the past, this has had some serious consequences.  The earliest any such measure could be on the ballot would be May 2020 or November 2020.  That is more than halfway through the next biennium.  Thus, any budget increases seen by agencies will disappear shortly after the vote, and this will be more havoc-producing than not having the money in the first place.  What all this means is that the Ds have complete control of the entire legislative and executive branches of State Government, but they will have to exercise that control with more caution than their progressive supporters would like.

So, at this juncture after the election, the only thing I can conclude about the 2019 Legislative Session is that “it is too soon to tell” anything.  There probably won’t be massive PERS reform; there also won’t be massive tax increases either.  Revenue will be tight; agencies will be squeezed, and the various issues in play will probably, yet again, be pushed down the road to 2021 or later.

9 comments:

M&S said...

Although you have commented on the Kicker Law before, for the upcoming session, any updates on good, bad, and uglies of changing/tweaking/cancelling the Kicker Rebate/ Or, is the Kicker too untouchable for the taxpayers? Can't remember is Kicker is a law or is constitutionally frozen. Seems that reducing/eliminating the Kicker would NOT be a tax increase, as we have already paid the tax, but "messing with my Kicker money" would be spinned as tax increase.

Why do I feel that who, and what, and when taxes get paid is just a shell game invisibly run by the late great hand-illusionist Ricky Jay (look him up on YouTube if not known). E.g., if we mess with corporate tax, the referendum will say that the new tax will simply be passed onto to consumers, which in part may be true, but the pass-thru is not that simple for businesses. Ahhhh, well, as my Dad used to say: "In a 100 years it won't make a bit of difference" But then again he is now paying zero taxes in Heaven.

mrfearless47 said...

I have no real, solid information on the kicker. Anything I write would be nothing more than speculation. It is a dumb idea, drafted by dumb people, and administered by morons. The kicker should not exist, but if Oregonians are too stupid to realize that I oppose it but I will be a big winner, then why the hell should I bitch about it. I know a heck of a lot about economic forecasting. Setting the bar at 2% is idiotic, but an intelligent rewrite of the kicker law would only refund the excess anove 2%, not the excess above 0%. Either that, or raise the threshold to 5%. Give the state economist a fighting chance. The current law demands precision that it almost impossible to achieve.

mrfearless47 said...

BTW, the Kicker is in the state constitution, making it more difficult to change. This reinforces my already low opinion of Oregon voters.

Worried said...

Question: Do PERS retirees have to confirm Oregon state residency every year? I thought I read this somewhere. If yes, does PERS mail the retirees a form that is to be completed then returned?
Thank you. I’m glad you had a great trip;?I’m starting my great retirement!

mrfearless47 said...

No. As long as you file an Oregon tax teturn each year by April 15, your residency is taken from that. Last year they screwed up with a poorly worded email; they’ve cleaned up their act this year.

Worried said...

Thank you for your quick response! A follow up question: The IAP investment returns are now calculated on an age-based target date method. I have retired, but my birthday has me assigned to the 2020 Target Date Fund. When a person retires, are they automatically assigned to the Retirement Allocation Fund category, or do they remain in their age based category? Thank you again!

mrfearless47 said...

I don’t know how the IAP age-related funds work. If you want, check withnPERSBdirectly, and if you don’t like the classification, withdraw the funds and roll them into an IRA of your choosing.

mrfearless47 said...

I don’t know how the IAP age-related funds work. If you want, check withnPERSBdirectly, and if you don’t like the classification, withdraw the funds and roll them into an IRA of your choosing.

Greg B said...

Brown is already pushing 2 Billion in new taxes on top of the 2 Billion last session so it is bad. Republicans have one hole card - they can walk out and prevent any Bill from being voted on so it might be fun.