Upper Left Coast

Thoughts on politics, faith, sports and other random topics from a red state sympathizer in indigo-blue Portland, Oregon.

Wednesday, September 13, 2006

What can Oregon learn from Massachusetts?

Massachusetts Gov. Mitt Romney gives us the answer in an op/ed he authored in yesterday's Boston Globe. In it, he talked about the desperate status of the state's economy when he took office, and the process he took in making tough choices for budget cuts.

But it also noted that Massachusetts had a rainy-day fund that helped the Commonwealth endure that dry period in state income. A rainy-day fund that -- when the economy improved -- was refilled, and became just one more way to fund pet projects for the spend-happy Democratic-controlled Massachusetts legislature. Here's the significant section of Romney's piece (all emphasis is mine -- be sure to read the sections that are both italicized and boldfaced):
When things are up, it's easy to forget the law of cycles, and to spend like "up" is the only direction the economy will ever go. That's just what happened in this year's budget debate. On June 30, the Legislature passed a budget that spent not only all of the record tax revenues and all of the billion-dollar surplus, but also $500 million from the rainy day fund. The Legislature's bet must be that if the Massachusetts economy keeps booming next year, no one will be the wiser. But there may already be signs that this is a bad bet: Tax revenues are below forecast for each of the last two months. And the law of cycles will not go away. Sooner or later, a downturn is inevitable. The spending spree will lead to deep cuts, big borrowing, a call for higher taxes, or all of the above. The fingers of blame will be pointed in many directions, but spending -- runaway spending -- will be the real culprit.
...
Every legislator and politician knows this spending can't be justified, so why do they do it? Because it gets politicians praised -- and re-elected. There's no courage involved in spending more money. Drawing a line on spending is hard and fraught with criticism. When I vetoed $458 million of excessive spending in the budget this spring, I knew that community newspapers across the Commonwealth would decry my elimination of local pet projects. And, I knew that the Legislature would over ride most of my vetoes. In fact, they over rode all of them, to a chorus of community acclaim. But someone has to say "no."

This year's budget battle is history, but my concern is that the spending binge will continue unabated. Social service advocates always want more. Last month, I vetoed a bill mandating free pre-school for everyone, which would have cost over $1 billion a year. It's a wonderful concept, but leaders need to know where to draw the line on spending. Government unions will want more. We have attempted to limit increases in state employee contracts to roughly 2 percent annually, unless there are significant concessions. But the unions will be expecting a more generous deal from the politicians they endorse in the fall elections -- and if history is a guide, they'll get it. And, most of all, lobbyists want more. Beacon Hill is alive with hands hired to get government money -- your money -- for their clients.
So how does this apply to Oregon? Well, as anyone knows who has listened for more than three seconds to the state's elected officials, Oregon doesn't have a rainy-day fund. When we plunged into the nation's economic toilet back in 2001, the state's tax income dropped by billions of dollars; the lack of a rainy-day fund established by law, combined with a Kicker Law established by law and reinforced by initiative, meant the state had no money set aside to cover the revenue decreases.

Such a fund helped Massachusetts, yet even the discipline of a Republican governor committed to lower spending was insufficient against a liberal legislature committed to buying the favor of unions, lobbyists and constituents. Did you catch that line from Romney above? The legislature overrode every single line-item veto from the governor's pen. (Of course, Massachusetts Democrats hold a 34-6 advantage in the State Senate and a 138-21 advantage in the House, so it's no surprise.)

Unions will always endorse and campaign for Democrats, and then expect big paybacks in the form of overly-generous public employee contracts. Lobbyists will always want more money for their clients. A governor committed to spending restraint will not always be in office. A legislature looking for more taxpayer money will rarely be unusual.

That's a big reason why I was surprised by Ron Saxton's refusal to back Ballot Measure 48 this year. I choose to believe Saxton when he says he will be "a governor who demonstrates that he is himself willing to responsibly manage voters' tax dollars." Still, Ron Saxton was in his twenties the last time Oregon elected a Republican governor, and the likelihood of consistent fiscal discipline in Oregon's state leadership is only marginally better than in Massachusetts.

The Rainy Day Amendment would set up an emergency fund that -- with voter approval -- would help the state through the next economic downfall. It would also allow budget increases that keep up with population growth and inflation, so the legislature could spend what it needs to serve the state, but couldn't go spend-happy in economic good times.

Because I have not thoroughly investigated it, I'm still not 100 percent sold on the RDA, but Mitt Romney gives us a bushel of reasons why it makes sense.

2 Comments:

  • At 9/13/2006 11:39 AM, Blogger John Eyler said…

    Great Post,

    I was luke warm to the RDA when I first heard about it. My concern would that it might strap the government in times when deficit investment in infrastructure was important, but that can be handled under the current proposal so I'm not sweating it.

     
  • At 9/13/2006 2:19 PM, Blogger Max said…

    good catch; great analysis!

     

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