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Sunday, August 22, 2010 10:00 PM


Dysfunctional Oregon


OregonLive continues to put out excellent articles on the sad state of affairs in Oregon. The question of the day is Can Oregon downsize state government?

Despite years of talk by Democrats and Republicans about the need to control spending, farm out work to private businesses and make government finances more transparent, the opposite has occurred.

Rather than becoming leaner, the state work force increased by 7.1 percent since 2005 -- outpacing Oregon's population growth.

The number of top state employees earning more than $100,000 a year more than doubled during the past decade. Lawmakers took no action on an urgent call by the governor to start paring government by eliminating dozens of boards.

This Thursday, Oregon leaders will get an update of the state's revenue outlook. State economists have already alerted Gov. Ted Kulongoski that the news isn't good, with projected revenues down by as much as $1 billion since the Legislature finished writing the 2009-11 budget in June 2009. The shortfall for 2011-13 is expected to be at least $2.7 billion.

In June 2009, with Oregon's unemployment rate among the nation's highest and the depth of the recession becoming alarmingly clear, the governor put his worries in a letter to Senate President Peter Courtney and House Speaker Dave Hunt, both Democrats: "We must accept that state government can no longer be all things to all people."

Attached to that letter was a list of 64 state boards, commissions and agencies Kulongoski wanted lawmakers to consider consolidating, suspending or eliminating.

That letter caused an uproar among people who sit on those boards or do business with them. They called the governor, wrote their legislators, put their lobbyists to work.

"When you create a new program, you create a new constituency along with it," says Mike Greenfield, who served as director of the Department of Administrative Services and in other state government posts. "What you have are a lot of constituencies for the status quo and very few constituencies for dramatic change."

Oregonians support about 100 state agencies, boards and commissions. Many have overlapping purposes. For example, the legislative fiscal office puts four state departments under the heading "Economic and Community Development," 13 agencies, boards and departments under "Natural Resources" and five under "Education" -- not to mention Oregon's 197 school districts.

During the 2009 legislative session, the Service Employees International Union lobbied for stiffer requirements for outsourcing state work. Over Republican objections, lawmakers approved, and Kulongoski signed, a bill that requires an extensive analysis on any contract job worth more than $250,000 to determine whether it could be done as cheaply in-house.

"I saw this as entrenching government jobs," says Sen. Rick Metsger of Welches, the only Democrat to vote against the bill. "It makes it harder to wheel back the government agency's size."
Vote Buying, Lobbying, Political Bribes

There is much more in the comprehensive article by Michelle Cole and Harry Esteve, including many paragraphs on how difficult it is to know who is spending what because of overlaps and accounting deficiencies.

The key idea is "When you create a new program, you create a new constituency along with it."

Add lobbying, political bribes, and union vote buying to the mix and you have a very toxic brew.

Tip of the Hat to senator Rick Metsger

A tip of the hat to state senator Rick Metsger for having the courage to vote against the wishes of the Service Employees International Union. No doubt the union will pour money to his opponent.

Please note that governor Kulongoski brought much of this mess upon himself. Only someone brain dead or beholden to the unions would have signed such nonsensical legislation.

The state desperately needs to dump unions and their bloated pension plans.

Oregon's Liquor Control Commission

Just to show you how silly things are in Oregon, please consider Oregon's money crisis: Should the Oregon Liquor Control Commission be eliminated?
The Oregon Liquor Control Commission warehouse stocks 1,700 different products and supplies 244 stores throughout Oregon. The state selects what private agents can own liquor stores as well as determines what can be sold in them.

2009-2011 budget: $134 million, generated by sales, fees and fines. Here's the breakdown: $9.7 million, 67 employees for purchasing, wholesale and support; $18.3 million, 104 employees for public safety; $14.9 million, 59 employees for support services, which includes administration; $82.3 million agents' compensation and $8.9 million merchant fees. OLCC returned $172 million in proceeds to state and local government for the 2009-2010 fiscal year.

Against privatizing:

Opponents argue that there's a public interest in regulating liquor sales. Diane Paulson, an Ashland microdistiller who makes and sells gin, vodka and whiskey under the Organic Nation label, says Oregon liquor stores have better selection because the OLCC makes room for small Oregon brands. Not so in California, she says, where Organic Nation has to compete for a distributor and shelf space.
How is this a question?

Excuse me for asking but how the hell is this even a question? Why can't stores decide what they want to sell?

Diane Paulson's argument for the commission amounts to begging for favoritism. If her product was any good (and perhaps it is) people would buy it. If she needs a liquor commission forcing stores to stock her product then she gets an unfair advantage over some unsponsored manufacturer that makes better products.

The whole setup has the potential for massive bribe taking to become sponsored.

Regardless, what right is it for some commission to decide what products anyone should carry? There is no right, thus the idea is lunacy.

Sight unseen, I am willing to state that Oregon should get rid of all 64 state boards, no matter what they are supposed to do. Sight seen, it's time Oregonian voters relegate Gov. Ted Kulongoski to the ash heap of history.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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