Oregonians May Get Another Turn at Term Limits

Oregon experimented with legislative term limits more than two decades ago and the outcomes weren’t what was promised. Once lawmakers were elected, they immediately started angling for their next job, often overlooking serious policy choices staring them in the face.

Oregon experimented with legislative term limits more than two decades ago and the outcomes weren’t what was promised. Once lawmakers were elected, they immediately started angling for their next job, often overlooking serious policy choices staring them in the face.

Oregonians may get another chance to vote for legislative term limits. It would be a good opportunity to buy the idea once and for all.

Unsuccessful GOP gubernatorial candidate Bud Pierce is sponsoring an initiative to re-impose legislative term limits and apply them retroactively to sitting lawmakers. His measure, if it makes it to the 2018 general election ballot and is approved by voters, would disqualify Senate President Peter Courtney and House Speaker Tina Kotek, even though both will be running for re-election on the same ballot.

Term limits are not theoretical in Oregon. Voters approved them overwhelmingly for state and federal lawmakers in 1992. Ballot Measure 3 was partially voided in 1995 by the Oregon Supreme Court to exclude congressional representatives. The entire measure was tossed out in 2002, but not before the fruits of term limits could be assessed. To say the least, the fruit was over-ripe.

Instead of the intended new blood in the legislature, several former lawmakers decided to return to office. That was the good news compared to what happened to the newcomers. They hadn’t settled into their Capitol offices before beginning to plot their next electoral opportunity.

With just three terms in the Oregon House, lawmakers had to make their mark quickly and aim at their next political dart board. A body once distinguished by bipartisan collaboration switched almost overnight to caucus politics by both parties and a political merry-go-round by individual lawmakers of office-shopping.

Perhaps ironically, caucus leaders assumed greater power and imposed stricter party fealty. The concept of new blood morphed into political bloodletting, political opportunism and kicking the can down the road. Why make tough decisions when you would be gone in three or fewer sessions?

Oregon survived the experiment with term limits, but arguably didn’t benefit from it. Now it may have a chance to restore the concept.

For the moment, Attorney General Ellen Rosenblum must rewrite the measure’s ballot title – the most-read part of any ballot measure – to refer to its retroactive provisions. Then Pierce and his allies must collect 88,184 valid Oregon voter signatures by next July to place the measure on the November 2018 general election ballot. Because the idea of “throw out everybody” has a certain visceral appeal, chances are good the measure will make it to the ballot.

Previous Oregon term limits were voided largely on procedural grounds. It is still an open question whether term limits are constitutionally valid. Oregonians – and Americans – have accepted the two-term limit for governors and presidents.

Whether constitutional or not, the question Oregon voters should ask is whether term limits actually do what they promise to do. Empirical evidence in Oregon suggests they didn’t. They had the inimical impact of creating a shifting cast of political characters who began running for a new office moments after being elected to a legislative seat.

The concept of new blood ignores the demonstrable benefits of legislative continuity, not to mention legislative experience. It would be hard for anyone but cynics to deny the enduring contributions of long-serving lawmakers such as Senator Peter Courtney, a Democrat, and Rep. Eldon Johnson, a Republican, to mention only a few. Senate GOP Leader Ted Ferrioli has served for five terms and newly elected Senate GOP leader Jackie Winters has served in the Oregon legislature since 1998. 

Ironically, most lawmakers serve for less than 10 years and move on with their lives. Insiders know it takes at least two to three terms in the legislature to learn the ropes, let alone influence policy.

Hailing term limits is a lot like shopping for a brain surgeon who just graduated from med school. They may be cheaper and less experienced, but they aren’t who you want cutting into your skull to dig out brain tumors.

There will be a lot of heavy breathing if the term limit measure reaches the ballot. Voters would be well advised to seek out the voices of people who lived daily with term limits and can tell you how they worked out in real life.

 

 

It’s Taxing Time in Oregon

As Congress works on a federal tax cut measure that could significantly impact Oregon income taxpayers, Oregon voters face a decision in January on how to pay for the state’s Medicaid program. And along the way, Oregonians owe their property taxes, too.

As Congress works on a federal tax cut measure that could significantly impact Oregon income taxpayers, Oregon voters face a decision in January on how to pay for the state’s Medicaid program. And along the way, Oregonians owe their property taxes, too.

It’s official. Oregonians will vote in a special election January 23 to ratify or reject tax proposals approved by the 2017 Oregon legislature to sustain the state’s basic and expanded Medicaid program. From all early appearances, this will be a bare-knuckles fight.

Major parties have already lined up for and against Referendum 101. Health care providers, doctors, organized labor, minority groups and social equity organizations are urging a “yes” vote. Taxpayer groups, the Oregon Family Council, small business representatives and the Oregon Firearms Association oppose the taxes.

The stakes are high. As reported by the Portland Business Journal, if the taxes are rejected by voters, the State of Oregon stands to lose between $840 million and $1.3 billion in state and federal funds, depending how courts interpret the wording of the referendum. That would plunge Oregon lawmakers back into a deep budget hole with few escape ladders in the short 2018 legislative session that begins in February.

Defenders of the taxes on health insurance and hospitals say that is the only viable economic way to maintain Medicaid spending levels and avoid forcing more people out of coverage and into emergency rooms for care. Supporters of the referendum say there are other ways to maintain Medicaid without resorting to what Rep. Julie Parrish, R-West Linn, calls a “sales tax on health care.”

The challenge of voting on tax measures is that subtleties are usually lost in the shuffle. Calling anything in Oregon a “sales tax” is usually a kiss of death. [The City of Ontario, perched on Oregon’s far eastern border, enacted a 1 percent sales tax, which is also being referred to voters next May.] Trying to explain the exigencies of a pair of taxes to attract federal matching funds is a hard message to squeeze onto a bumpersticker.

The decision by legislative Democrats to force a special election in January before the short legislative session has created its own political reverberations. Referendum backers have called it a rigged political scheme. Democrats counter that it makes sense to know the outcome before the February session so lawmakers can pursue other options. That argument could come back to haunt Democrats who privately say they really aren’t any viable options to sustain Medicaid at its current spending levels.

Little wonder Senator Richard Devlin, co-chair of the Joint Ways and Means Committee, accepted a paying job as a gubernatorial appointee to the Northwest Power Council. Senate Republican Leader Ted Ferrioli is probably glad he is the other appointee and can skip the 2018 legislative session. Senate President Peter Courtney may appoint himself to replace Devlin, at least temporarily, in the 2018 session – and any special sessions that are needed to deal with the financial shortfall if the health care taxes are rejected.

The aftermath of Referendum 101 may be the headliner issue in the 2018 session, but the issue sucking all the oxygen out the room remains how to strike a grand bargain that involves spending restraint and additional state general fund tax revenue. Political leaders have by and large punted this bigger-scale issue until the 2019 legislative session, after the 2018 elections. Governor Brown is seeking re-election to a full four-year term and legislative Democrats want to cement super-majorities in both the House and Senate so they can pass tax measures with or without GOP votes.

This stalemate is a political hangover from the 2016 election when pro-business interests overwhelmed union-backed forces and defeated an initiative to raise corporate taxes. While the opportunity seemed to exist to bring the parties to a table to start negotiating some kind of compromise, the opportunity was never seized. Brown shied away from any discussion of cuts to the Public Employees Retirement System, which gave little incentive to business groups to sit down to discuss raising their taxes.

The upshot is that Oregonians can expect to hear a lot about taxes between now and Christmas. The GOP-led federal tax cut appears on a path to be considered by then, at the behest of Trump who refers to the tax cuts as a Christmas present to Americans. The uncertainty of whether the tax cuts will be real and durable for middle-class taxpayers could overlap into their voting views on Referendum 101. Confusion and taxes is never a good mixture.

And for good measure, Oregon property owners must pony up their 2017 property taxes next week and make end-of-year decisions that can impact their state and federal income taxes.

Trump's Stormtrooper Tactics

Frustrated by the failure of Congress to repeal and replace Obamacare, President Trump has started his own executive war against the health care plan named after his predecessor, which threatens the stability of US health insurance markets.

Frustrated by the failure of Congress to repeal and replace Obamacare, President Trump has started his own executive war against the health care plan named after his predecessor, which threatens the stability of US health insurance markets.

There's a funny myth in movie fan culture: Stormtroopers are poor shots. Despite plenty of easy opportunities to hit Luke Skywalker and his allies, the embarrassingly incompetent Empire troops consistently miss. Instead, they spray the target hoping one of their many shots finds an enemy. Once in a while, a shot finds its mark.

I was thinking of this comparison as I watched President Trump try, and fail, on multiple accounts to erode the foundation of the Affordable Care Act. Despite months of work and two very visible failures in Congress. What Trump hasn't achieved through legislation, he is now trying to do by executive orders. Here, unfortunately for backers of the ACA, is where we see the Stormtrooper hitting his mark. 

Over the past three weeks, Trump has used his executive authority to end critical payments to insurers that allow low-income and vulnerable Americans to afford health care coverage. Trump has cut 90 percent of the advertising and education budget in advance of the November 1 open enrollment period – the time of year when people sign up for health care benefits on the open marketplace created by the ACA. By also shrinking the enrollment period, Trump hopes fewer will sign up, reaffirming his narrative that Obamacare is failing across the nation.

Thankfully in Oregon, the leadership at the Department of Consumer & Business Services anticipated this move and took immediate action to supplement public awareness with $1.8 million in ad buys around the state.  However, it's only a matter of time before Trump pursues yet another shot at derailing the ACA, and we cannot expect state and health care leaders to bail out Oregon every time he strikes.

Trump has many additional tools at his disposal that should frighten Oregonians who value our 95 percent coverage rate and who appreciate the importance of improving access to vulnerable populations – those more likely to forego primary care and end up in the emergency room, costing the state and Oregonians more in the long term.  

Trump could continue to erode enrollment assistance programs and funding across the country, putting barriers between individuals and their health care. The federal Department of Health and Human Services could give states the ability to limit enrollment – including who is covered in a state's ACA expansion – by requiring proof of employment or increasing cost-sharing requirements. Finally, he could put all of his effort behind urging Congress to remove the individual mandate, effectively gutting a key component of the ACA that is providing some semblance of stability for insurers to remain in marketplaces across the country.  

I wish Trump was as poor of a shot as an Imperial Stormtrooper, but recently he's been finding his target way too often. Where's Luke Skywalker and Princess Leia when we need them most?

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Dale Penn II, senior public affairs associate, has been deeply involved in government relations and regulatory affairs in Oregon for 10 years. During his work for the 2005 Senate Judiciary Committee, Dale began developing close relationships with key legislators and agency staff across party lines and issue fields.

PERS Task Force Ideas Fall Short of Brown’s Goal

The task force appointed by Governor Brown will submit its suggestions soon to shrink the Oregon PERS unfunded liability, but during the time the task force met the liability hole grew bigger. Photo Credit: The Oregonian

The task force appointed by Governor Brown will submit its suggestions soon to shrink the Oregon PERS unfunded liability, but during the time the task force met the liability hole grew bigger.

Photo Credit: The Oregonian

The task force named last May by Governor Brown to identify ways to slice the unfunded liability of PERS will soon submit its ideas, but don’t expect them to be easy to implement or add up to the $5 billion goal Brown set.

One of the most promising concepts floated by the task force emerged at its last meeting and doesn’t have anything to do with selling surplus state property or imposing fees here and there. That idea involves an incentive structure to the 900 or so PERS employers to increase their contributions to pay down the unfunded liability.

None of the ideas coming from the task force could be described as a slam dunk.

  • Imposing an additional tax on PERS retirees receiving more than $60,000 annually in benefits (likely to face an uphill court battle);
  • Increasing permit and fee prices (likely politically feasible, but the amount of money it raises would be minimal); and
  • Transferring some of the $1.6 billion surplus in the State Accident Insurance Fund (a possibility, but it is unclear how much of the surplus could be transferred without adversely affecting SAIF).

Complicating the exercise, the PERS board in July lowered the assumed rate of return on investments, which had the effect of increasing the unfunded liability by another $2.4 billion to almost $25 billion. Business interests pushing for PERS reforms said the investment rate change “unmasked the severity of the problem.” PERS employers, which include school districts, will be expected to pay an additional $900 million over the next two years.

As reported by The Oregonian’s Ted Sickinger, Brown’s 7-member task force, which has met four times, looked under state seat cushions for spare change to shrink the PERS unfunded liability without directly addressing PERS benefits. The search included selling surplus properties, privatizing state agencies and putting a surcharge on liquor sales. None of those ideas gained much traction in task force deliberations.

In the absence of a silver bullet idea, task force members privately said the sum total of their ideas might only reach around $1 billion, far short of Brown’s goal. Even $1 billion may be difficult to achieve since the task force is submitting suggestions, not recommendations by its November 1 deadline. The suggested incentive to PERS employers to increase contributions to qualify for some sort of state matching funds may wind up attracting the most interest, though it would require lawmakers to scratch together the state revenue to provide matching funds.

There is little doubt the PERS unfunded liability will be a major issue in the 2018 gubernatorial election. GOP frontrunner Knute Buehler regularly criticizes Brown for her failure to offer ideas on how to address the PERS liability and put state budgeting on a sustainable basis.

Majority legislative Democrats, supported by Brown, appear poised to push cap-and-invest legislation in the short 2018 session that begins in February, which could generate an additional $1.4 billion in state revenue. Legislative Counsel has opined that the cap-and-invest measure is not a tax and therefore doesn’t require of a three-fifths majority to pass in the House and Senate.

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Zack Reeves is a state affairs associate who represents CFM clients in the Oregon legislature. He began working as a legislative staffer in 2011 and has developed a wide range of contacts and experience on a broad spectrum of legislation. Before politics, Zack worked as a reporter and copy editor.

Oregon Health Plan Goes from Secure to Shaky

 Congressional inaction to continue funding for the Children’s Health Insurance Program is just the latest financial challenge facing Oregon policymakers and putting Oregon’s health plans on shakier ground.

 Congressional inaction to continue funding for the Children’s Health Insurance Program is just the latest financial challenge facing Oregon policymakers and putting Oregon’s health plans on shakier ground.

When the 2017 Oregon legislature adjourned in early July, the state’s health care exchanges and Medicaid program seemed secure for at least another biennium. A lot has changed since then, and the stakes continue to grow.

The funding package to sustain the Oregon Health Plan faces a likely referral vote in January. Congress allowed federal funding for the Children’s Health Insurance Plan (CHIP) to lapse as it debated, but failed to repeal and replace the Affordable Care Act. The Trump administration continues to threaten actions to undermine the Affordable Care Act.

No matter how you spin the situation, Oregon could feel a financial pinch as early as mid-November when its funding runs out for health insurance for thousands of children in the state. The legislature won’t convene until February, so a potential gap in coverage could lead to a reduction in benefits and new enrollments.

Oregon Senator Ron Wyden is working with Senate Finance Chair Orrin Hatch on a bipartisan funding plan for CHIP, but House GOP leaders want to tie continued funding to spending cuts for Medicare, community clinics and grace periods for Affordable Care Act payments.

Oregon policymakers could have an even bigger problem on their hands if voters reject the $320 million funding package that includes a health insurance tax and a new hospital tax. While the majority of the $320 million will shore up the state’s Medicaid program, it also would fund a reinsurance pool that limits individual insurers’ financial exposure for high-cost patients.

The Oregon Reinsurance Program calmed Oregon’s market and paved the way for 6 percent lower insurance premiums. The shaky status of the reinsurance program could affect Oregon’s pending application for a waiver from the Centers of Medicare and Medicaid to administer its programs flexibly. If Oregon’s funding package is rejected, the waiver request could be in jeopardy – along with lower insurance premiums.

According to the Portland Business Journal, Alaska requested a similar waiver, which was approved. However, waiver applications by other states have been rejected or withdrawn. The Washington Post reported Trump intervened to block a waiver request from Iowa, which was seeking ways to increase competition and bring down premiums. Oklahoma withdrew its application after CMS inaction. Minnesota was granted a waiver, but CMS reportedly cut a low-income enrollee program.

The longer-term view isn’t any better. The US House has approved a budget resolution that will be used as the vehicle to move a major federal tax cut and that calls for massive cuts over the next decade to Medicare and Medicaid.

Will Oregon Follow California and Advance Its Primary?

 California is moving up its primary from June to March to be a player in presidential politics. Oregon might follow along since being political afterthoughts in selecting a presidential nominee since 1968 when Robert F. Kennedy surged in Oregon and captured the California primary a few weeks later.

 California is moving up its primary from June to March to be a player in presidential politics. Oregon might follow along since being political afterthoughts in selecting a presidential nominee since 1968 when Robert F. Kennedy surged in Oregon and captured the California primary a few weeks later.

Even though many Americans are still recovering from the last presidential election, maneuvering has already begun for the 2020 election with California moving its primary from June to March to have greater influence on who is nominated. Oregon may follow suit.

Senator Ricardo Lara, the Democrat who carried the legislation that Governor Brown signed into law, said, “The intent of the bill was to put our voters at the front seat in choosing the next president and helping us drive a different agenda at the national level.”

In other words, California kingmakers are tired of Iowa, New Hampshire and a ring of southern states creating unstoppable presidential bids that may not reflect West Coast or progressive values. Oregon may catch the same fever and shift its primary forward from May to March to get some of the overlapping love from candidates attracting votes in California.

At present, Oregon is mostly a tarmac for presidential fundraising. Candidates dart into town, attend a couple of fundraisers and leave. They don’t even bother for media interviews.

California’s decision was met with lots of grumbling from early-voting states that have grown used to the prestige of being power brokers beyond their electoral punch. Party leaders have grumbled, too, because California cutting to the front of the presidential sweepstakes line is disruptive.

The election in 2016 of Donald Trump – and the defeat of Bernie Sanders in the Democratic primary – persuaded progressives that their voice needed to be added to the mix earlier in the process. Oregon doesn’t possess the same electoral clout, so its previous flirtations with an earlier presidential primary mostly evaporated into political thin air. However, with California moving up, Oregon might think it wise to join the party, like a barnacle attaching to a humpback whale.

While an earlier California primary could create major headaches for presidential campaign staffs and consultants – such as, how do candidates keep their messages straight in Georgia and the left Coast in the same news cycle, voters out west will probably be glad to have a more compelling voice in the choice of presidential nominees.

While Oregon’s primary is ahead of California’s, it’s been a long time since Oregon voters helped to decide a presidential nomination in either party. For Republicans, the 1976 presidential election was the last time Oregonians voted before there was a presumptive nominee. For Democrats, you have to go back to 1968 and the insurgent campaign waged by Robert F. Kennedy, who lost in Oregon, but won the California primary a few weeks later and may have gone on to become the nominee if he hadn’t been assassinated at his California victory party.

The timing of primary elections is linked to a drive by progressive forces to move toward direct popular election of presidential candidates and scrapping (or at least bypassing) the electoral college. Oregon has been part of that movement, too, which is tied up with a belief that a popular vote will force candidates to campaign everywhere, not just in early primary states and key swing states.

Trump admitted he shaped his campaign to win the states with the electoral college votes needed to win the presidency. If the election would have been determined by a direct popular vote, he said he would have campaigned more in California.

Candidates in the 2020 presidential, who are already jockeying for position, will have to spend more time in California – or even be from California – because of the state’s earlier primary.  It will be fun to see whether Oregon joins the parade, perhaps assuming it might boost the chances of an Oregon favorite son with presidential stars in his eyes.

Lawmakers Divide Up Work on Cap-and-Invest Legislation

Majority Democrats have set up work groups with the ambitious aim of bringing a cap-and-invest program to the short 2018 Oregon legislative session that starts in February.

Majority Democrats have set up work groups with the ambitious aim of bringing a cap-and-invest program to the short 2018 Oregon legislative session that starts in February.

Oregon legislative Democrats announced this week formation of a series of work groups tasked with creating a cap-and-invest program in Oregon. The work groups stem from a series of hearings near the end of the 2017 legislative session when Senate Bill 1070 was unveiled. While the bill didn’t receive a committee vote, it laid the groundwork for what is expected to be the front-and-center issue of the 2018 session.

At a joint hearing of the Senate Environment and Natural Resources Committee and the House Energy and Environment Committee, chairs Senator Michael Dembrow and Rep. Ken Helm announced four subcommittees that will hold hearings around the state this fall:

  • Agriculture, Forest, Fisheries, Rural Communities and Tribes (chaired by Helm);
  • Utilities and Transportation (chaired by Senator Lee Beyer);
  • Regulated Entities (chaired by Dembrow); and
  • Environmental Justice and Just Transition (co-chaired by Reps. Diego Hernandez and Pam Marsh).

The stated goal of these subcommittees is to redraft SB 1070 for the 2018 session.

A cap-and-invest program is an evolution of a cap-and-trade system, which sets a hard cap on greenhouse gas (GHG) emissions. The regulating entity then sells permits that companies can purchase, allowing them to emit a certain amount of GHG. For example, if a state allows 10 million tons of greenhouse gas emissions annually, the state would sell 10 million one-ton permits, which companies could buy in a marketplace.

Cap-and-invest takes process a step forward, requiring the state to use the funds generated by the sale of permits to fund certain programs. These programs are usually dedicated to reducing GHG emissions.

Both cap-and-invest and a carbon tax set a price that companies pay for GHG emissions. While cap-and-invest sets an emissions limit and allows the market to set the price for the credits, a carbon tax simply sets a price for GHG emissions while neglecting to cap emissions. The cap-and-invest model has several advantages, incuding emission reduction certainty, and revenue to invest in new programs.

Dembrow and Helm are modeling their legislation after a similar program in California. The program was renewed with a bipartisan vote and recently endorsed by the California Chamber of Commerce. According to Dembrow, the program would allow the state to meet its emission reductions goal by 2050.

The work groups – consisting of legislators, advocates and industry representatives – met for the first time last Thursday, with each group meeting for two hours.

In what figures to be a knock-down, drag-out fight during the upcoming session, majority Democrats are driving the process with Republicans in both chambers participating in the opening round of work group meetings. They may have an incentive to participate in crafting of the legislation given that many observers expect Democrats to pick up a seat in both the Senate and House in the 2018 elections, giving them a supermajority in the 2019 session. That would allow Democrats to pass a carbon tax, for example, in the 2019 legislative session without Republican votes.

Democrats are mimicking the process used to sculpt the successful 2017 transportation package – gathering a large group of stakeholders, divide into work groups tackling certain topic areas and crafting legislation that hopefully is bipartisan enough to move through the Capitol and avoid a referral. The inclusion of Republican support, and Republican votes, is key.

However, the transportation package took several years, dozens of statewide meetings and vocal commentary from both parties on the need for investments in Oregon's aging infrastructure prior to a long legislative session where final passage was never guaranteed. The process for cap-and-invest faces a much harder path. A short, one-month legislative session does not provide much room to negotiate or cut deals.

It remains to be seen whether this bill will result in the creation of a large new program in the state, or whether it is simply the start of a longer conversation, but it is one to pay attention to as we move closer to the 2018 short legislative session.

Further information about Dembrow and Helm’s effort can be found here.

Latest ACA Repeal Measure Would Punish Oregon

CNN posted a map showing how the latest Senate GOP effort to repeal and replace the Affordable Care Act would affect states such as Oregon and Washington that expanded their eligibility for Medicaid coverage. Other states that are billion-dollar losers under the GOP proposal include California, Ohio, Pennsylvania and Michigan.

CNN posted a map showing how the latest Senate GOP effort to repeal and replace the Affordable Care Act would affect states such as Oregon and Washington that expanded their eligibility for Medicaid coverage. Other states that are billion-dollar losers under the GOP proposal include California, Ohio, Pennsylvania and Michigan.

The US Senate is taking another stab at repealing and replacing the Affordable Care Act (ACA), this time with a plan that could disproportionately hurt the Medicaid programs in Oregon and Washington. Oregon could be one of the hardest hit states, with more than a $3 billion loss over the next decade.

Along with 18 other states ranging from New York to North Dakota, Oregon and Washington expanded Medicaid eligibility under provisions of the ACA. The latest version of the Cassidy-Graham bill in the Senate would effectively scrap discrete federal funding for the expansion as part of a plan to give states Medicaid block grants.

“The revised version of the Cassidy-Graham plan would disproportionately harm certain states,” according to the Center of Budget and Policy Priorities, a nonpartisan research and policy institute that analyzes how federal budget priorities impact low-income Americans. “The block grant would not only cut overall funding for the Medicaid expansion and marketplace subsidies, but also starting in 2021 redistribute the reduced federal funding across states based on their share of low-income residents rather than their actual spending needs.”

The Center says states that expanded Medicaid eligibility, including Oregon and Washington, could end up receiving 35 to 60 percent below what they get now from the federal government under current law. That would exacerbate Oregon’s budgetary challenge if the Medicaid funding package approved in the 2017 legislative session is referred to and rejected by voters in a special election next January.

After a dramatic Senate floor showdown in August that failed to approve a previous GOP proposal to repeal and replace the ACA, it seemed as if congressional Republicans had decided to move on to other issues, including tax reform. The proposal by GOP Senators Bill Cassidy and Lindsey Graham seemed to come out of nowhere and has sparked speculation it could get enough votes to pass.

Senate Republicans only have until September 30 to approve an ACA repeal and replacement measure with 50 votes under complicated budget reconciliation procedures. That means Senate Republicans, who hold a slim 52-member majority, can only afford to lose two of their members on the repeal vote. A 50-50 tie vote would be broken under Senate rules when Vice President Mike Pence cast a vote. The Trump White House has signaled it would support the Cassidy-Graham bill. GOP Speaker Paul Ryan has indicated he would push for House passage.

Opponents say the Cassidy-Graham measure also would destabilize the individual health insurance market by eliminating ACA subsidies and allowing states the flexibility waive essential benefits and weaken the pre-existing condition provisions in the ACA.

“While insurers would still be required to offer coverage to people with pre-existing conditions,” the Center says, “insurers could charge unaffordable premiums of thousands or tens of thousands of dollars per month, effectively resulting in a coverage denial.”

Insurers also could offer plans with large benefit gaps such as maternity care, substance abuse treatment and mental health services, which a Kaiser Family Foundation analysis was a common pattern in health insurance before passage of the ACA.

The impact could be even greater as the Cassidy-Graham bill reduces the per capita allocations in block grants for all states starting after 2026. “Many states would likely cut home and community-based services, which allow people needing long-term services to remain in their homes rather than moving to a nursing home,” according to the Center.

If Senate Republicans are unable to muster the necessary 50 votes for Cassidy-Graham in the next 10 days, then all the dire predictions will be put aside.

Another casualty of Cassidy-Graham has been the bipartisan effort in the Senate Health Committee to find politically acceptable ways to stabilize the individual health insurance marketplace and reduce pressure on higher premiums. Senator Lamar Alexander, the GOP chairman of the committee who was working with Washington Senator Patty Murray, said no consensus was reached. The effort was undercut when Ryan said the House wouldn’t consider a bipartisan stabilization bill.

A group of 10 governors representing Medicaid expansion states sent a letter to Senate leaders urging a continuation of bipartisan efforts on the ACA, saying that the way to “achieve true, last reforms.” One of the governors is John Bel Edwards of Louisiana, which is the home state of Senator Cassidy.

Louisiana Secretary of Health Dr. Rebekah Gee sent a letter directly to Cassidy that said, “In its current form, the harm to Louisiana from this legislation far outweighs any benefits. Therefore, I must register our deep concerns and hope we can find a better path forward toward fixing the broken parts of our healthcare system.

State Economist Blog: Font of Credible Information

If you have a question about how Oregon is doing, there is no better place to look at the blog posted by State Economist Josh Lehner that covers topics from craft beer sales, natural disaster recovery and what counties are job magnets.

If you have a question about how Oregon is doing, there is no better place to look at the blog posted by State Economist Josh Lehner that covers topics from craft beer sales, natural disaster recovery and what counties are job magnets.

If you want to know what’s really happening in Oregon, a good place to look for information is the blog published by the Oregon Office of Economic Analysis.

Recent blog posts track a slowdown in craft beer sales, what it takes to recover from natural disasters like wildfires and which counties in Oregon are adding jobs – and which are not. State Economist Josh Lehner, who writes the blog, is also trying to get a handle on the pot industry.

As the chart shows, rural counties depend more heavily on public sector wages for teachers and road crews to bolster their local economies.

As the chart shows, rural counties depend more heavily on public sector wages for teachers and road crews to bolster their local economies.

The writing is anything but dull and the data is credible. Sometimes the findings are downright surprising. For example, large swaths of Oregon’s rural areas identify politically as Republican and presumably favor smaller government, even though public sector wages account for 40 percent or more of the local economy in counties such as Gilliam, Wheeler, Grant, Harney, Lake and Jefferson and more than 25 percent in another 12 counties.

Here are a handful of other interesting nuggets unearthed by the state economist:

  • Slowing craft beer sales, at least so far, hasn’t resulted in an unusual number of brewery closures, but does indicate craft brewing may be maturing as an industry. With eager new brewers entering the market, oversaturation is a real possibility, which could signal a higher rate of closures down the line. At the moment, Oregon sees four to five brewery closures per year at a 2 percent rate. The overall closure rate for US manufacturers is around 7 percent.

 

  • If you want to be a brewer, salaries range upward from $30,000 to as much as $76,000 for brewmasters. Jeff Alworth, author of The Beer Bible, is quoted by Lehner as saying, “These are not terrible salaries, but neither are they going to line a person’s garage with Teslas.”

 

  • Lehner notes that natural disasters have a perverse effect on Gross Domestic Product. Burned houses, lost cars and destroyed bridges are not counted, but rebuilding and replacing them is. So, in a sense, natural disasters are pro-growth.

 

  • “Natural disasters not only scar the land, but they also leave lasting impressions in our brain. I’m from the Great Plains and I remember as a kid seeing the aftermath of the Yellowstone fires of 1988 and the Great Flood of 1993 along the Mississippi River even years after the fact. The apocalyptic pictures we are seeing now of the Gorge, and outside of Los Angeles will leave a lasting psychological mark. Our hope is they do not leave a huge lasting societal and economic mark as well.”

 

  • “Climate. Weather forecasting is even more difficult than economic forecasting a year or two into the future. While the severity, duration and timing of catastrophic events like earthquakes and droughts are difficult to predict, we do know they impact regional economies. Droughts in particular impact our agricultural sector and rural economies to a larger degree. Longer-term issues like the potential impact of climate change on domestic migration patterns are likewise hard to predict and outside our office’s forecast horizon. There is a reasonable expectation that migration flows will continue to be strong as the rest of the country becomes less habitable over time.”

 

  • “Just as Oregon’s economic expansion continues, so too does regional growth across the state. While half of the Oregon’s individual counties are currently at all-time highs for employment, nearly all have added jobs in the past year. Given regional variations, industrial mix, and noisy data, not once in the past 20+ years have each of Oregon’s 36 counties added jobs at the same time. In the second quarter 33 did add jobs over the past year, keeping with the typical pattern seen during expansions. Only Curry (barely), Morrow and Sherman counties lost jobs in the past 12 months.”

 

  • “Some of these job gains in rural Oregon are driven in part due to the local industrial structure and nature of the Great Recession. Many rural economies are more reliant upon housing and government than the larger, more diverse urban economies. It is not so much that rural areas love housing and government. Rather it is the rest of the private sector is smaller, thus making the public sector in particular a larger share. As the economy has continued to improve, migration flows have returned and public-sector budgets are growing again, rural economies across Oregon have seen better growth. Even as the public sector remains a steady share over time in Oregon, that steady share varies in magnitude depending which part of the state we are looking at.”

 

  • The marijuana industry in Oregon is still emerging from the shadow economy, which makes projecting its growth and revenue-generating capacity complicated. State economists nevertheless predict marijuana sales will net the state general fund more than $140 million over the next two years. Tax revenues could slip if the price of marijuana drops, as it has since legalization of adult-use pot in Colorado. It could dry up entirely if the federal government curtails the legal sales of marijuana in states such as Oregon.

 

  • Tracking the marijuana industry is further complicated because it still can’t use the banking system in America and has no classification code. As a result, if a pot-infused edible is sold eventually by a bakery, it may not be counted – or taxed. Similar problems make it hard to estimate how many people are employed in the marijuana industry. The Oregon Employment Department estimates that between 7,000 and 8,000 people are employed in the state’s cannabis industry, with an average annual salary of slightly more than $25,000.

State, Federal Health Care Debates Remain in Flux

Oregon legislative leaders Tina Kotek and Peter Courtney want voters to know the fiscal risks of rejecting a tax package to sustain funding for the Oregon Health Plan, as federal lawmakers begin hearings on ways to stabilize coverage and premiums for the individual health insurance market under the Affordable Care Act.

Oregon legislative leaders Tina Kotek and Peter Courtney want voters to know the fiscal risks of rejecting a tax package to sustain funding for the Oregon Health Plan, as federal lawmakers begin hearings on ways to stabilize coverage and premiums for the individual health insurance market under the Affordable Care Act.

On the same day Oregon lawmakers prepared for a January vote on funding to maintain the Oregon Health Plan, a US Senate committee held the first hearing on how to stabilize the individual insurance markets under the Affordable Care Act. Both reflect the unsettled and unsettling condition of key parts of America’s health care system.

Legislators worked Tuesday on a ballot title for a referral sought by GOP Rep. Julie Parrish that could result in voter rejection of a tax package to sustain current spending levels for the Oregon Health Plan, the state’s Medicaid program.  If the tax package is voted down, state officials could face a budget hole of between $300-$500 million to plug during the short 2018 legislative session that starts next February.

An opinion from Legislative Counsel added more potential confusion to the issue that voters could be asked to decide in a January special election. The opinion says the way the referral is written would only eliminate the additional 0.7 percent assessment on hospitals from October 6, 2017 until January 1, 2018. The referral wouldn’t have any effect on the previously approved hospital assessment.

The draft ballot title clearly attempts to raise the specter of the impact of rejecting the tax package on low-income families, children and insurance premiums.

PROVIDES FUNDS CURRENTLY BUDGETED TO PAY FOR HEALTH CARE FOR LOW-INCOME INDIVIDUALS AND FAMILIES AND TO STABILIZE HEALTH INSURANCE PREMIUMS, USING TEMPORARY ASSESSMENTS ON INSURANCE COMPANIES, SOME HOSPITALS, AND OTHER PROVIDERS OF HEALTH CARE COVERAGE.

On Capitol Hill, GOP Senator Lamar Alexander kicked off the first hearing of any kind this year on the Affordable Care Act by declaring, "To get a result, Democrats will have to agree to something – more flexibility for states – that some are reluctant to support. And Republicans will have to agree to something – additional funding through the Affordable Care Act – that some are reluctant to support." Alexander said his priority is on lowering health insurance premiums.

On the day of the hearing, Washington Senator Patty Murray said in an op-ed in The Washington Post that Democrats are willing to work on a bipartisan approach to stabilizing insurance markets. In the op-ed, Murray raised the issue of creating a “public option” to ensure competition to hold down premiums in the individual health insurance market. Capitol Hill observers said that is an unlikely outcome in what already is viewed as a chancy legislative venture in the wake of the Senate’s failed attempts to repeal and replace Obamacare. Conservative groups have already launched a digital ad campaign slamming Alexander’s effort.

A more likely provision may be some kind of reinsurance program to broaden the base to pay for high-cost individuals, which tend to spike overall premium rates.

Alexander expressed hope his committee can produce compromise legislation by the end of September, which is a critical deadline for insurance companies that have to submit plans and prices for individual health insurance markets around the country. Skeptics doubt whether Alexander’s target date is realistic, especially in light of other looming congressional debates to raise the debt limit, approve a disaster relief funding package and approve some kind of FY 2018 appropriation.

For now, the Trump administration is continuing, with reluctance, to make subsidy payments to medical providers as called for by the Affordable Care Act. Insurers have warned that cutting off those subsidies, which essentially compensate for high-cost care for a few individuals, could lead to as much as a 20 percent increase in premiums, effectively forcing some people to drop their policies.

There also isn’t any clear indication how much or perhaps in what form Congress will authorize for Medicaid reimbursement to states in FY 2018. The Obamacare repeal and replacement bill that narrowly cleared the House earlier this year would have slashed $800 billion from federal Medicaid reimbursements over the next 10 years.

Saxton Exit Adds Drama to Medicaid Funding, CCOs

With funding for the Oregon Health Plan facing a referral to voters, the resignation of Lynne Saxton as head of the Oregon Health Authority creates more anxiety for health care stakeholders, including the fate of Coordinated Care Organizations.

With funding for the Oregon Health Plan facing a referral to voters, the resignation of Lynne Saxton as head of the Oregon Health Authority creates more anxiety for health care stakeholders, including the fate of Coordinated Care Organizations.

The departure of Lynne Saxton as head of the Oregon Health Authority adds more drama to the fate of the Oregon Health Plan, the state’s Medicaid program.

Legislatively approved funding for the Oregon Health Plan faces a potential referral by three GOP Oregon House members who claim the funding plan contained in House Bill 2391 amounts to a sales tax on health care. If the referral makes it to the ballot and voters approve it, Oregon lawmakers could face a budget hole greater than $300 million over the next two years.

Saxton’s departure could have implications for the coordinated care organizations created in conjunction with Oregon Health Plan funding to act as transformational models for bending the health care cost curve and integrating physical, mental and dental health services.

“With the most prominent visionaries of the CCO development process long removed from office (including Governor Kitzhaber), Saxton was a tether to the old guard at OHA that built the CCO model,” writes DJ Wilson, organizer of the State of Reform effort, in a blog post this week.

Wilson, who advises on health care policy, says Oregon health care leaders are already antsy because of congressional actions that threatened to slash Medicaid funding and the looming Oregon Health Plan funding referral. “Saxton’s removal exacerbates to their anxiety.”

He links the anxiety to what Wilson says is a widespread view that Governor Brown doesn’t consider health care policy one of her top priorities. He quoted one unnamed stakeholder as wondering “who the advocate will be at the state to take the transformation model into the procurement next year, into the legislative session, and make sure the CCO model continues. We may just be heading back to managed care.”

That could be ironic because Saxton resigned in connection with a running battle with FamilyCare, one of 16 CCOs operating throughout Oregon. Jeff Heatherington, CEO of FamilyCare, once accused OHA of acting like a “bully.”

An even more fundamental problem is OHA, according to Wilson. “Since 2013, OHA has had four leaders, two interim and two permanent. Pat Allen is now the fifth.” Allen was named acting OHA director after serving since 2011 as director of the Department of Consumer & Business Services. Wilson says Allen is respected as an effective agency manager, but some health care stakeholders are unsure of his knowledge about CCOs and Medicaid.

Brown told Allen his “highest priority from day one should be restoring trust with the public, legislators, stakeholders and, most important, the clients OHA serves.” In a statement, Brown said, “I have asked Pat to bring his expertise to the Oregon Health Authority and lead the agency into a forward looking and responsible steward of taxpayer dollars.”

Allen responded to Wilson’s questioning by saying, “I’m committed, as is the governor, to the CCO model as the only realistic way to deliver Oregonians improved health through quality care we can afford.”

Straightening out OHA could take time and energy. Dating back to the Cover Oregon fiasco, OHA’s bureaucracy and culture have been criticized. Rep. Mitch Greenlick, in a recent interview, questioned the agency’s dedication “to making sure the most eligible people have access to care” as opposed to “dotting all their I’s and crossing all their t’s.” In the previous session, Rep. Greenlick was the leading legislative voice on the future of CCOs and will continue that conversation in next year's short February session.

Jokes to Sweeten Morning Coffee and the Eclipse

Earlier generations conjured grave thoughts about planetary doom when they saw a solar eclipse.  We can be a little more relaxed watching with a cup of coffee, solar eclipse eyewear and a few funny jokes for the special, once-in-a-lifetime occasion.

Earlier generations conjured grave thoughts about planetary doom when they saw a solar eclipse.  We can be a little more relaxed watching with a cup of coffee, solar eclipse eyewear and a few funny jokes for the special, once-in-a-lifetime occasion.

Since most Oregonians won’t be working – or working very hard – today because of the once-in-a-lifetime solar eclipse here, we thought it would be useful to share some eclipse jokes to pass the time before the moon shadow occurs.

Here are some of the best we found scrounging around online:

From Boy’s Life – reader submissions:

Liam: What kind of underwear should you wear during an eclipse?
Jesse: No clue.
Liam: Fruit of the Moon!
Joke by Carrington C., Richmond, Va.

John: How do you organize a solar eclipse party?
Tim: How?
John: You planet.
Joke by John M., Norwood, Mass.

Austin: How does the man in the moon cut his hair?
Jaime: How?
Austin: Eclipse it.
Joke by Austin G., Baltimore, Md.

Jacob: Why did the teacher bring solar eclipse glasses to school?
Leonard: Why?
Jacob: She had bright students!
Joke by Jacob B., South Bend, Ind.

From BuzzFeed:

What do you call the moon's online content?
E-clips.

What do you call road-tripping to the eclipse?
Going where the sun don't shine.

What did the moon bring to the beach on Aug. 21?
Sunblock.

Boy: Dad, can you tell me what an eclipse is?
Dad: No sun.

Why did the Earth break up with the moon and make a solo album on Aug. 21?
It couldn't stand being in its shadow.

What do a solar eclipse over the US and an adult anime fan who lives with his mom have in common?
They both waited 38 years to go all the way.

Our personal favorite, which may not actually be a joke:

What do you call it when you fall in love on Aug. 21, 2017?
A total eclipse of the heart.

Don’t forget to don solar eclipse glasses. And make sure you have a long enough selfie stick.

More Fuel for Oregon Revenue Debate

Oregon public schools received a substantial boost in revenue this year, but not enough to avoid teacher cutbacks and larger class sizes in the shadow of rising pension payments, which will add more fuel to the already raging debate over raising corporate taxes and changing the Public Employees Retirement System.

Oregon public schools received a substantial boost in revenue this year, but not enough to avoid teacher cutbacks and larger class sizes in the shadow of rising pension payments, which will add more fuel to the already raging debate over raising corporate taxes and changing the Public Employees Retirement System.

Oregon public schools are receiving more state funding, but a significant chunk of the increase is going to pay for teacher pensions, not teachers in classrooms. The situation will add fuel to both sides of the debate over the need for additional tax revenue.

School advocates will say it is proof more revenue is needed to cover the costs of public education. Business leaders will say it underscores the need to make changes in the Public Employees Retirement System.

The Oregonians’ Gordon Friedman filed a story indicating Oregon’s public schools will receive $400 million more than in previous years. But the bump is not enough, school officials contend, to avoid teacher layoffs, larger class sizes and program cutbacks.

Friedman provides specific examples:

  • Portland Public Schools will receive a $29 million funding boost, but $18 million of that increase will go for pensions and higher salaries. The district will employ 55 fewer teachers in its 77 schools this fall.
  • Salem-Keizer School District will get $31 million more, but its pension costs will rise by $10 million, resulting in 67 teaching positions being axed.
  • Beaverton School District will see a $21 million increase, but its pension cost will balloon by $14 million. Its budget-balancing challenge is aggravated by the opening of a new high schools. The District has elected to trim library staff, professional development and classroom supplies.

School officials expect more of the same in the next school year, even though the legislatively approved $8.2 billion K-12 budget a represents an 11 percent increase over the previous biennium. Legislative fiscal analysts predicted the $8.2 billion budget, which included an estimate of pension costs rising by 45 percent, should have been adequate. School officials disagreed and said $8.4 billion was needed to maintain the status quo in their local district budgets.

Specific numbers aside, the specter of a larger budget for K-12 schools and continuing teacher and programmatic cutbacks is the stuff that will further animate the debate over corporate taxation and PERS spending reductions. You get the flavor of the debate by how school advocates refer to corporate tax reform and business groups demand PERS reform.

There isn’t going to be any respite from having that debate continue before the Oregon legislature convenes for a short session early next year. There are two huge drivers of the conversation:

  • The Oregon Education Association is pushing an initiative to raise corporate taxation – a so-called Measure 97 light. The teacher union was forced to withdraw its initial ballot measure because of a constitutional question, but it has pledged to refile a corrected version. If it qualifies for the ballot, Oregon voters would decide its fate in the November 2018 general election.
  • Rep. Julie Parrish, R-West Linn, is pursuing a referral of the legislatively approved Medicaid funding package, which she calls a sales tax on health care. Because of controversial legislation approved in the 2017 session, voters would decide on whether to toss the tax package in a special election next January, just before lawmakers return to Salem.

The OEA-backed initiative will cause combatants to return to their political trenches and prepare for another expensive campaign. The prospect of a Medicaid tax referral has already splintered the business community, especially in the health care sector.

There have been calls for a legislative special session this fall to work out a compromise. Some school officials say the school funding issue is serious enough to act now, not wait until 2019. Newly declared GOP gubernatorial candidate Knute Buehler urged a special session to ”improve” the state’s Medicaid program, most likely in the form of ensuring that ineligible enrollees are removed.

The stakes are obviously high. If voters strike down the Medicaid tax package, lawmakers will once again face a massive budget hole. The net effect would be to turn the K-12 school budget-corporate tax debate into a three-way slugfest.

Hope isn’t high for a grand bargain to resolve this festering issue. The operating assumption of the moment is that a work group needs to be formed, statewide listening sessions held and compromises considered on corporate tax changes – a model that worked to produce a major transportation funding package that won legislative approval and won’t face a referral, as previous measures have. This process wouldn’t fully unfold until the 2019 legislative session – and after the 2018 general election and potentially a vote on the OEA tax initiative.

Without leaderships and a clear focus on an alternative, Oregonians can expect a lot of shoving and pushing – and apparently more teacher layoffs.

Gritty Issues Teed up for 2018 Election

Hot button issues such as PERS, Medicaid, immigration and taxes are already heating up long before the 2018 Oregon election starts in earnest and are sure to bring into focus questions over who can provide the political leadership to address these issues.

Hot button issues such as PERS, Medicaid, immigration and taxes are already heating up long before the 2018 Oregon election starts in earnest and are sure to bring into focus questions over who can provide the political leadership to address these issues.

The 2018 election is more than a year away, but the issues that will animate campaigns are getting exposure now. As Republicans challenge monolithic Democratic control of the lever of powers in Oregon, the issues center on PERS, Medicaid and immigration. And more will follow.
 
In a news release Monday, the Senate Republican office deplored a “time bomb” decision by the PERS board that had the effect of inflating the unfunded liability of the public employee pension program to $52 million. With breathless prose, the release said, “Taxpayer-funded pension systems are combustible by nature, but Oregon’s ticking time bomb known as PERS is one of the brink of exploding.” Legislative Republicans pushed for steps to corral PERS funding but were unsuccessful.
 
The Oregonian added fuel to the Medicaid debate by reporting over the weekend that more than 37,000 Oregonians were extended health care benefits under the program even though they exceeded the earnings threshold – at a cost to the state of $191 million. The Oregon Health Authority reportedly has another 30,000 enrollees to check, so the number of ineligible Medicaid recipients could grower higher. A bipartisan majority agreed to a tax package in the 2017 session to sustain the core and expanded Medicaid program. Rep. Julie Parrish, R-West Linn, is pursuing a referral of the Medicaid tax package.
 
The potentially most explosive issue could be the call by Republican senators for Governor Brown to veto legislation declaring “sanctuary state” status. Their call follows violent attacks by Sergio Jose Martinez, including a sexual assault on a 65-year-old woman, who has been deported 20 times. Efforts by the Trump administration to step up deportation of undocumented immigrants has sparked public demonstrations both for and against the action.
 
The PERS and Medicaid issues have been stoked by Oregonian reporting. The PERS unfunded liability and sanctuary state issues have been fanned by Jonathan Lockwood on behalf of Oregon Senate Republicans. The Medicaid story’s fuse was lit by Secretary of State Dennis Richardson, who is the leading GOP gubernatorial candidate, largely due to his higher name familiarity.
 
Gubernatorial campaigns serve as referenda on how the state is doing and its most vexing issues. But few campaigns are so issue-centric before the front-running candidates have a chance to chisel out the political debate fault lines.
 
Brown is expected to seek re-election, but there is no consensus GOP challenger and the threat of a third-party bid can’t be ruled out. Political leadership is sure to be a major issue in the campaign. Republicans and even some Democrats will charge that Brown ducked out on leading toward a solution to the state’s $1.6 billion budget deficit. Brown can claim her leadership helped to push through a major transportation package that included funding for public transportation.
 
Oregon has become a reliably blue state, where Democratic statewide victories are pretty much a sure bet. That probably won’t change, but foul winds are blowing. Brown hasn’t alienated many core Democratic constituencies, but she hasn’t necessarily wowed all of them either.
 
Pointing to growing PERS liabilities, ballooning Medicaid costs and an immigrant bad boy may make headlines but aren’t the same as alternative solutions. This also could be a year where the politics of blame isn’t a big winner. But it is undeniable that gritty policy issues will consume oxygen in the 2018 campaign regardless who runs.
 
One final issue likely to emerge is whether to pursue revenue reform next year, despite Democratic leaders indicating it should wait until the 2019 session. Brown, Senate President Peter Courtney and Speaker Tina Kotek released statements arguing that reform wasn't possible until 2019, but a union-backed 2018 initiative similar to Measure 97 may spark interest in trying to head off another divisive and expensive battle at the ballot box. 
 
The question is who will take the lead and convene a working group. Senator Mark Hass, D-Beaverton, attempted compromise legislation in 2017 and may do so again. Brown could build off her transportation win and try to do the same on revenue reform. Brown's new Chief of Staff Nik Blosser showed an aptitude for such negotiations in 2017 and may be the person to do it again next year. A Republican candidate may jump into the fray with a plan and a strategy. The political risks are palpable, but the intensity of the issues may make the risk worth it.

Oregon is a Manufacturing All-Star, And Yet

Oregon is North America’s manufacturing champion, but even the growth here of the manufacturing sector hasn’t resulted in wage gains that many workers and policymakers would like to see.

Oregon is North America’s manufacturing champion, but even the growth here of the manufacturing sector hasn’t resulted in wage gains that many workers and policymakers would like to see.

Oregon is the all-star of states when it comes to growing manufacturing’s share of GDP over the last decade or so, but that growth hasn’t translated into a commensurate increase in manufacturing wages, according to a data analysis published by Quartz.

“From 2003 to 2015, [Oregon’s] manufacturing GDP grow 180 percent, the fastest pace not only in the United States, but in virtually all of North America,” the Quartz article reported. “Yet the news for the workers themselves wasn’t so bright. While they would have expected to earn 10 percent more than the average statewide wage in 2003, that premium today has shrunk to 3 percent. In other words, manufacturing in Oregon is now barely better than the average job as a ladder of social mobility.”

The thrust of the article is to take issue with President Trump’s stated policy of promoting increased US manufacturing, renegotiating trade deals and returning displaced workers to their jobs. “It’s not only Oregon that debunks the view of manufacturing as an engine of growth,” according to the report. “Across the US, Mexico and Canada, the data we analyzed show that building more factories doesn’t lead to as many jobs as it used to, nor to higher wages, and that closing factories doesn’t necessarily lead to a loss of prosperity.”

Data assembled by the three-person Quartz reporting team indicates manufacturing has dwindled as a share of GDP in the United States, Canada and Mexico, the signatories to the North American Free Trade Agreement (NAFTA). They note Mexico has seen a recent manufacturing boomlet, but it hasn’t resulted in a sharp uptick in wages.

While the article’s authors say free trade and automation have played a role in the decline of North American manufacturing and job losses, they pin the biggest blame on industrial non-competitiveness.

“According to the McKinsey Global Institute, which has studied the US manufacturing sector’s ailments in depth, the root cause of the problem is neither robots nor free trade; it’s non-competitivenessWhile some US companies have kept up with international competition and technological change, many are losing out not only to countries with cheap labor, but also to some advanced economies such as Germany and South Korea, where many companies are more productive and profitable. Other experts see a similar problem in Canada and Mexico, too.”

The McKinsey study titled “Manufacturing the future” says, “Manufacturing's role is changing. The way it contributes to the economy shifts as nations mature. In today's advanced economies, manufacturing promotes innovation, productivity and trade more than growth and employment.”

The study adds, “Manufacturing is entering a dynamic new phase. As a new global consuming class emerges in developing nations, and innovations spark additional demand, global manufacturers will have substantial new opportunities, but in a much more uncertain environment.”

The Quartz article attributes the anomaly of higher manufacturing wages in some areas with declining manufacturing rates to developing diversified economies and training workers for those jobs. The authors cite two examples – Ontario, Canada and Arkansas.

  • Ontario has branched out from auto manufacturing to add pharmaceutical, finance, biotech and information technology business sectors. The interaction has created wage competition for jobs, whether union or not.
  • Arkansas experienced a typical drop in manufacturing as a share of state GDP, but that is being reversed as Wal-Mart has pulled in its suppliers to Bentonville, creating an economic boom in the northwest corner of the state. The authors note, “Average wages in Arkansas grew faster than in Oregon, North America’s manufacturing champion.”

US manufacturing can flourish, say the authors, by continuing to export and invest in research and development to remain competitive. The overall US economy also can realize a greater benefit from manufacturing by finding ways to loop in small businesses, especially ones with inventive approaches.

The authors highlight Alberta-based Poppy Barley, which teams with Mexican suppliers to produce made-to-order shoes. Unlike Asian shoe suppliers that produce in high volumes, Poppy Barley and its suppliers are nimbler, work with smaller production lots and can shift to better-selling models based on real-time results. Poppy Barley now works with four factories – up from one as recently as 2012 – where workers earn six times the Mexican minimum wage.

Attempting to promote US manufacturing by restricting foreign trade may have unintended adverse consequences, the reporting team warns. A better approach, they say, is to find innovative ways to engage US small businesses with creative ideas and flexible manufacturing to join multinationals in the stream of international commerce. It’s also imperative, they add, to ensure the workforce has access to the training it needs to fill the jobs in an evolving industrial world.

As Trade Talks Loom, Blood Pressures May Zoom

Negotiations to reshape the North American Free Trade Agreement will begin in about a month. Priorities in negotiations for the Trump administration drew mixed reviews on Capitol Hill, including from a GOP leader who said changes in NAFTA can’t harm existing US business activity that depends on trade with Canada and Mexico.

Negotiations to reshape the North American Free Trade Agreement will begin in about a month. Priorities in negotiations for the Trump administration drew mixed reviews on Capitol Hill, including from a GOP leader who said changes in NAFTA can’t harm existing US business activity that depends on trade with Canada and Mexico.

Oregon exports and US industrial production are increasing, according to state economists, which could raise the stakes and blood pressure for Oregon businesses and workers as the Trump administration begins negotiations on NAFTA with Canada and Mexico in about a month.

Trump administration officials outlined their priorities for NAFTA negotiations, which drew mixed and nervous reviews on Capitol Hill and among trade groups. Trump objectives include improving market access for US manufacturing, agriculture and services, adding a “digital economy chapter” and adding labor and environmental obligations.

Administrative negotiators will seek to eliminate “unfair subsidies and market-distorting practices by state-owned enterprises” and improve intellectual property, says US Trade Representative Robert Lighthizer.

Texas Republican Kevin Brady, who chairs the House Ways and Means Committee, said Trump’s objectives are “ambitious” in seeking “strong, enforceable rules that go beyond any agreement ever negotiated.” Brady also said an updated NAFTA agreement can’t remove trade benefits currently enjoyed by US businesses.

Utah Senator Orrin Hatch, who chairs the Senate Finance Committee, made an underwhelming comment that he hopes Trump’s negotiating objectives will be “further developed” as negotiations proceed.

Democrats were less subdued. Oregon Senator Ron Wyden, the ranking Democrat on Senate Finance, called the Trump priorities “hopelessly vague” in explaining how they will “benefit the United States on key topics ranging from intellectual property rights and investment, to currency manipulation and government procurement.”

Wyden also jabbed Trump’s team for including what he called “watered down versions of [Trans-Pacific Partnership] TPP proposals” that candidate Trump belittled in his presidential campaign and withdrew from when he became President.

“Before sitting down with Canada and Mexico,” Wyden said, “I expect the Administration to update this summary, shine some daylight on its negotiations and set the bar high for American workers, businesses and farmers, as it promised it would."

Michigan Democratic Congressman Sander Levin said Mexico’s low wages and a lack of workers’ rights have cost many US jobs, but he said Trump’s priorities don’t evince “that a new NAFTA will be different than the old [NAFTA].”

A number of economists said trying to negotiate a better deal based on a goal of reducing trade deficits is “misguided” and could backfire.

The complexity of trade considerations that go into negotiations was illustrated by South Bend Mayor Peter Buttigieg, who has transformed abandoned factories into a business park for technology companies in his Indiana city. In an interview today with CBS News, Buttigieg said unionized American autoworkers in his city are assembling German Mercedes Benz vehicles to sell to consumers in China.

In the May economic forecast, Oregon economists said changes to international trade agreements, not to mention a trade war, would have a larger impact on Oregon, which has an economy that depends on exports, than on many other states. Even though job growth in Oregon has cooled off, the state economy continues to expand and is already the third longest upswing since World War II.

Bank Says Market, Not Policy Will Propel Renewables

Despite US withdrawal from the Paris Climate Accords, Morgan Stanley says market forces may drive strong growth in renewable energy, cutting carbon emissions, lowering costs, genereating jobs and creating investment opportunities.

Despite US withdrawal from the Paris Climate Accords, Morgan Stanley says market forces may drive strong growth in renewable energy, cutting carbon emissions, lowering costs, genereating jobs and creating investment opportunities.

Much has been made of President Trump’s decision to withdraw the United States from the Paris Climate Accords. However, a forecast by Morgan Stanley says it won’t matter because the market is moving rapidly and inexorably to less expensive renewable wind and solar energy.

“Numerous key markets recently reached an inflection point where renewables have become the cheapest form of new power generation,” the Morgan Stanley forecast says. A 50 percent drop in the cost of solar panels combined with efficiencies in wind turbine blades could enable the United States to exceed its “Paris commitment of a 26-28 percent reduction in 2005-level carbon emissions by 2025.”

Whether or not you believe in human-caused climate change, it is hard to argue with ineluctable market forces. “By our forecasts, in most cases favorable renewables economics rather than government policy will be the primary driver of changes to utilities’ carbon emissions levels,” Morgan Stanley says. Solar and wind power could be cheaper than their carbon-based counterparts in as little as three years.

The price drop in solar panels is the result of global oversupply and, according to US solar panel manufacturers, foreign dumping of low-priced panels. Wind turbine efficiencies involve using longer blades that can “increase power output exponentially.”

In addition to climate benefits, Morgan Stanley says lower-cost renewable energy sources can benefit electric utilities, consumers and investors.

“First, the ability to lower customer bills from utilizing low-cost renewables can improve utilities' regulatory environment and provide related investment opportunities in grid modernization initiatives,” the bank says. “Second, for utilities with large, competitive renewable development businesses, investment in renewable energy projects can generate attractive risk-adjusted returns.”

Oregon is seeing increasing interest in utility-scale solar projects, according to the Oregon Solar Energy Industries Association. The solar energy trade group says there already is 155 MW of utility-scale solar power installed in Oregon. The addition of new large-scale and rooftop solar installations could push solar power sources, OSEIA says, to 10 percent of Oregon’s overall energy mix within a decade.

That timeline could be affected by the failure of the 2017 Oregon legislature to extend the residential energy tax credit (RETC) that provides an incentive for rooftop solar installations. Lawmakers agreed to an extension for solar, but it didn’t survive the cuts required to achieve a balanced state budget. RETC funding could be resumed in the 2018 short legislative session, which could minimize any slowing of solar momentum in Oregon.

Threatened Medicaid Referral Creates Capitol Shivers

 A serious threat by Rep. Julie Parrish, R-West Linn, to refer legislation to raise funds to sustain Oregon’s Medicaid program from an increase a hospital tax and a new tax on health insurers has sent shivers down the spines of legislative leaders and created shudders for other interest groups that could be targets to patch Oregon’s budget hole.

 A serious threat by Rep. Julie Parrish, R-West Linn, to refer legislation to raise funds to sustain Oregon’s Medicaid program from an increase a hospital tax and a new tax on health insurers has sent shivers down the spines of legislative leaders and created shudders for other interest groups that could be targets to patch Oregon’s budget hole.

A big part of Oregon’s budget fix approved this session could spring a leak if Rep. Julie Parrish, R-West Linn, successfully refers the legislation that increases a hospital provider tax and adds a tax on insurers to sustain funding for Oregon’s Medicaid program.

Parrish followed through on her threat by filing a referendum petition with the Oregon secretary of state this week. She will have 90 days to gather less than 59,000 signatures of registered Oregon voters to refer the Medicaid funding package to the ballot. Parrish reportedly has monied backing to support the referral drive.

The threat by Parrish of a referral of Medicaid legislation has created what could fairly be called a panic in the state Capitol because it could undo the only major step lawmakers took this session to address a projected $1.4 billion budget deficit. The uncertainty caused by a referral would add to anxiety caused by congressional consideration of an Obamacare replacement that would reduce Medicaid funding sharply over the next decade.

Parrish says her goal is not to gut Medicaid, but “hold it accountable.” She wants to apply voter pressure to ensure Oregonians receiving Medicaid benefits are actually eligible and to address state mismanagement such as expensive IT failures. Parrish calls the hospital provider and insurer taxes amount to a sales tax on health care services and private health insurance, which are simply passed along to consumers. Coordinated Care Organizations also would face a tax in this legislation. A broad coalition of health care providers, insurers and CCOs supported the revenue-raising to maintain Oregon’s expanded Medicaid coverage. Parrish claims there were three other bills introduced this session that would have reduced the Medicaid funding gap without taxing hospitals and health insurers.

If a possible referral isn’t contentious enough, Democratic legislative leaders may have sparked an even wider partisan wildfire over a bill that would schedule a referral vote next January 23 and allow lawmakers to write the referral ballot title, which is sometimes all voters ever read about a measure.

Democrats defended the earlier vote as a way to prevent a deeper budget hole. If Oregonians rejected the Medicaid tax measure in a January special election, then lawmakers would have time to find an alternative during the 2018 short legislative session. Republicans charged Democrats with ambushing Oregon’s referral process and trying to suppress voting by scheduling a special election on a date with an anticipated lower voter turnout.

Parrish isn’t alone in threatening a referral. In fact, she finds herself a strange bedfellow with an entity she rarely agrees with – SEIU 503.  The largest union in the state made headlines earlier in session when it held a rally on the steps of the Capitol and threatened to refer any transportation package bill unless lawmakers secured new revenue for schools and other vital services. 

She and some Democrats also have threatened to refer the $5.2 billion transportation funding package. The threat from Democrats differs from Parrish. They want to hold the transportation bill, which has fairly broad bipartisan support, hostage to try to force legislative action this session on a corporate tax measure. After the transportation package passed out of committee Saturday evening, 16 House Democrats sent a letter to Speaker Tina Kotek urging her to “re-focus on the all-important task of identifying addition revenue.”  The implied threat hanging over the letter doesn’t go as far as SEIU’s saber-rattling, but it does raise concerns among stakeholders as we enter the final days of session.

Democratic leaders, including Governor Brown, threw in the towel on a corporate tax bill a week or so ago after it became clear there wasn’t consensus on a replacement for the current corporate income tax – and not enough votes to pass anything in the Senate. Nothing would be done to change the corporate tax, they said, until the 2019 legislative session.

The Oregon legislature is expected to wrap up remaining budgets and head home before its constitutionally mandated July 10 adjournment deadline, unlike at least four other states – Washington, Illinois, Maine New Jersey. It took three special sessions before Washington lawmakers reached a budget deal. New Jersey’s budget stalemate resulted in a partial government shutdown, but a solution was suddenly found after social media exploded with pictures of Governor Chris Christie lounging on an empty beach that was closed to the public because of the shutdown. Illinois has been in budget gridlock for three consecutive years.

Referral of the Medicaid funding package could bring Oregon back to the brink of a deep budget hole and put more pressure on legislative leaders to look at other tax hikes. Some education advocates are already urging lawmakers to resume work on a corporate tax measure earlier than the 2019 session, and perhaps as early as a special session later this year. If the Medicaid referral is successful, pressure would grow to look at cuts, not just in Medicaid, but also in the Public Employees Retirement Fund.

As noted in a previous Oregon Insider, adjournment can’t come soon enough, but even when it does it will seem more like an intermission than the end of the play. The animating issues of the 2017 session – the budget hole, Medicaid spending, corporate taxation and transportation funding – may still be anything but resolved.

Adjournment May Seem Like Only an Intermission

The Oregon legislature is on track to adjourn by July 10, but adjournment this time around may seem more like an intermission as corporation taxation, PERS, Medicaid, education funding and political leadership remain as hot griddle issues that won’t wait until the next election or next legislative session.

The Oregon legislature is on track to adjourn by July 10, but adjournment this time around may seem more like an intermission as corporation taxation, PERS, Medicaid, education funding and political leadership remain as hot griddle issues that won’t wait until the next election or next legislative session.

Oregon lawmakers appear on the road to adjournment by July 10, but with an air that the journey is just beginning, not ending on big issues such as taxes, transportation and long-term cost containment.
 
Last week, Governor Brown, Senate President Peter Courtney and House Speaker Tina Kotek hoisted the white flag on an attempt this session to revise Oregon’s corporation taxation and raise additional revenue. They said corporate tax changes would have to wait until the 2019 session. However, public employee unions want to move up the schedule. They are already airing TV ads saying “big corporations” should pay their fair share of the tax burden in Oregon, which appears to be a bombing run to soften the ground for another revenue-raising ballot measure.
 
The Senate and House approved an $8.2 billion K-12 funding bill, which Republicans and Democrats said was not enough, even though it represents 11 percent increase over the current biennium. Republicans blamed Democrats for trying to ram through a tax hike without cost containment. Democrats blamed Republicans for refusing to budge on revenue, even though it meant serious budget cuts. Education advocates are furious and may push state leaders to do something before the 2018 general election or the 2019 legislative session.
 
The Oregonian published an editorial lambasting the lack of leadership in Salem, pointing a particular finger at Brown, who faces another re-election battle next year, with GOP candidates already salivating at the chance to unseat her. More than one Capitol wag suggested that Beaverton Democratic Senator Mark Hass showed more leadership on a corporate tax compromise and a more substantial cost containment proposal that included the Public Employees Retirement System. Hass and others have pointed to a growing fiscal crisis in Illinois that is faltering under the weight of huge underfunding of its public employee retirement fund.
 
There is still time for lawmakers to act on a transportation funding package, which was a bipartisan priority before the session started. However, its fate continued to hang in the balance, despite an announcement by Brown that a deal has been struck. Key players are still working hard to tie down final details, which could surface today.
 
But the major hiccup is an 11th-hour threat by Rep. Julie Parrish, R-West Linn, to refer the transportation package and Medicaid tax measure to voters. Democratic leaders scrambled to write legislative language in Senate Bill 229 that would allow legislators to write ballot titles for the referrals and schedule them for a vote at a special election January 23.
 
While the legislature cleared a tax increase on hospitals and a new tax on health insurers to patch the state’s Medicaid budget hole for the next two years, stomachs are still churning while Congress considers health insurance legislation that, in versions so far, make drastic cuts in federal support for the program vital to low-income Oregonians, children and the elderly housed in nursing homes. Whatever Congress does, it probably won’t have much of an effect on the 2017-2019 biennium, but its shadow will cast a pall over the program moving forward into subsequent biennia. Voter approval of a referral of the tax increases would turn the shadow into a serious rain cloud.
 
In fact, the issue of health care could be at the center of policy and political debates for the foreseeable future. Congressional Republicans seem hell-bent on reining in a fast-growing entitlement program and lowering insurance premiums, even at the expense of reducing what’s covered in health insurance policies. Democrats are defending the Affordable Care Act, while conceding it could use some repairs to remain viable. Meanwhile. Voices such as Providence St. Joseph Health CEO Rod Hochman deplore GOP legislation that slashes federal support for Medicaid when states have little financial ability to pick up the slack. Hochman said he and others in the health care industry hoped federal legislation would address some of the issues making health care delivery unaffordable for many Americans, including households with health insurance.
 
The interim – the time between legislative adjournment and the next session – is usually fairly quiet, with a few hearings, some work groups and early stirring for ballot measures. The looming interim may be anything but quiet and may make it seem like adjournment was just an intermission before the final acts.

Medicaid Bill Clears; Tax and Transportation Bills in Limbo

Oregon lawmakers have passed a Medicaid funding measure, but appear stuck on a corporate tax increase and a transportation funding package with only three weeks left before the deadline to adjourn. Things are starting to get wild in Salem.

Oregon lawmakers have passed a Medicaid funding measure, but appear stuck on a corporate tax increase and a transportation funding package with only three weeks left before the deadline to adjourn. Things are starting to get wild in Salem.

Oregon lawmakers have cleared a bill to raise $550 million to prevent cuts in the state’s Medicaid program, but have no clear path on a corporation tax increase or funding for a major transportation package. Time is running out as the legislature faces a July 10 deadline to adjourn.

The House and Senate approved legislation that increases an existing hospital tax and adds a new tax to health insurance plans to pay for Oregon’s Medicaid program that covers more than 1 million Oregonians, 40 percent of them children from low-income households. Reduced federal funding for Medicaid was a contributing factor to Oregon’s projected $1.4 billion hole in the 2017-2019 biennium, which begins July 1.

House passage of the Medicaid funding measure came after Democrats defeated a Republican alternative with a smaller tax increase that would have funded the program for one year at current spending levels, but allow time to confirm the eligibility of Medicaid enrollees before funding the second year of the biennium.

After some backroom negotiations, Rep. Sal Esquivel, R-Medford, provided the necessary 36th House vote for a three-fifths supermajority to pass the Democratic Medicaid funding measure in the House. The Senate voted for the Medicaid funding bill by a 20-10 margin.

Lack of consensus on a general revenue increase sparked a variety of actions so far this week:

  • House Democrats voted along party lines to stall a vote on an $8.2 billion K-12 school budget until June 27. The Senate has already approved the public school budget, but House Democratic leaders believe delaying a vote in the lower chamber could be leverage to swing a deal on a revenue measure. One House Democrat called the maneuver a “Hail Mary pass."
  • The Oregon Education Association took the first steps to place two corporate tax measures on the November 2018 ballot that would seek to generate $1.75 billion annually for K-12 and higher education. One measure would impose a corporate gross receipts tax. The second measure would make it easier for the legislature to raise corporate taxes to pay for education.
  • The joint committee looking at a revenue measure entertained a passel of amendments to a compromise reached by Senator Mark Hass and Speaker Tina Kotek to raise $900 million in the next biennium. The compromise would initially increase the current corporate income tax rate, then phase in a commercial activities tax based on sales in Oregon, which would function like a gross receipts tax, but contains different rates for different kinds and sizes of corporations. At least one House Republican has signaled his potential support for this approach – if it can pass in the Senate. For now, Senate Republicans are reportedly locked up in opposition.

Frustrated by inaction on the joint committee’s bill, House Revenue Chair Phil Barnhart, presumably with Kotek’s approval, said he will pursue a separate revenue-raising bill, possibly one that makes it harder to qualify for lower rates on pass-through income. Even though this measure would generate only $200 million – far less than the $900 million in the compromise corporate tax bill, it has the procedural advantage of requiring only a simple majority, not a three-fifths majority to pass. House Democrats may force a floor vote on a larger corporate tax hike before the postponed voting next week on the K-12 school budget to put Republicans on the record. If it fails, they then can pass the smaller measure.

Also looming in the legislative bill stack is a cost-saving measure estimated to trim the projected budget deficit by $270 million.