Savings to save Oregon's credit rating

According to the state director of debt management, Oregon has one of the three worst state credit ratings in the country -- only ahead of California (land of multi-billion-dollar deficits) and Louisiana (which has been shelling out cash for a little storm called Katrina).

What's the cause for this low rating? The lack of a state savings account, the debt managers told state budget writers on Wednesday. All we have to do is sock away more in a rainy-day fund, and we're on our way to happy days in the eyes of our creditors.

But wait, I thought to myself. When a family gets into financial trouble and its credit rating drops, it's usually because that family is maxing out its credit, paying late or not at all, and losing assets through repossession, foreclosure, legal judgments and/or bankruptcy.

In other words, the family is spending too much.

Sure, a well-stocked savings account would be helpful, but that's not the cause of its credit troubles, only one symptom of the challenges that have contributed to the financial slide.

I realize that it's difficult to compare a family and a state, considering the latter (usually) can't descend into deficit spending. But could it be that the state's credit worthiness is based on a decade of drunken-sailor spending when it had the cash to create a rainy-day fund? Could it be that the credit rating firms are looking for all-around financial responsibility from Oregon, which includes fiscal restraint?

And what do we have instead? The Oregonian's political blog spells it out:

In his budget proposal, Gov. Ted Kulongoski proposed spending all but $145 million of the nearly $15 billion projected to be available for the state to spend in 2007-09, plus raising more taxes and spending them too. He would fatten the state savings account by canceling all $275 million of corporate "kicker" tax rebates and putting the money into savings instead. Doing so would require a two-thirds vote of the House and the Senate, a daunting hurdle.

In other words: spending every penny of tax revenue, increasing taxes, and hoping that 20 senators and 40 representatives will go along with killing the corporate kicker to put that money in savings -- because those corporations (especially the out-of-state companies) need to hire our residents and send their taxes to Salem, but otherwise should shut up.

Don't get me wrong -- I think a savings account is important (for a family, a business, or a government) and I hope the state implements a rainy-day fund in this session.

But maybe, if Ted Kulongoski and the Oregon legislature weren't hell-bent on spending every penny of revenue (and then some), maybe they'd have plenty of money for savings. And I bet the credit rating firms would be just as impressed by spending restraint as by a rainy-day fund.