The forecast driving Oregon’s biennial budget process is in, and the news is as expected – not good! Business as usual cannot continue. As in a personal budget, if your source of income is significantly reduced, there are two immediate questions: 1) How do I prioritize spending? 2) How can I find more income? This is rightly the focus of our current leadership. Less urgent but still important is what are we learning from this economic downturn about Oregon?
Oregon was not initially hit as hard as our sister states to the north and south. Why? Because this was a consumption-driven recession, and both Washington and California are dependent on sales tax – therefore their revenues fell more quickly than ours. The reverse will likely also be true. As economic activity increases, consumption will return faster than jobs. This suggests Oregon will continue to struggle financially long after other states are back on a more sure footing.
Think about the analogy of becoming ill. No matter how sick you get, if you recover quickly, it takes a lot less out of you than if you recover slowly. The truth is that time matters in human affairs. There is real value in minimizing the durations of disruptions. Oregon is often disadvantaged because we are so dependent on employment-based revenues.
As a business person if I had a choice between less or more diversified income, I would always choose more diversified. Why? Because the long-term plans for my business and thus my future are more insulated from disruption, and I have more time to improve my processes for delivery of day-in and day-out value to my customers – thus improving my competitiveness over time. Long, drawn-out disruptions to Oregon’s revenues hurt the state regardless of what you think we should be spending our revenues on.
I listened to the current governor’s speech to the City Club of Portland, responding to criticism that he was providing no leadership on either the budget prioritization or to the rationalization of revenue streams (to your points above). The governor argued passionately that budget challenges, while real, take a back seat to Oregon’s urgent need for jobs. Job creation is a dodgy bit of business as best, with plenty of timing complications. What are the reasonable opportunities for state initiatives (roads and bridges alone)? What’s the compelling integration of budget, revenue and economic wellbeing…that allows Oregonians to address the ‘hairball’ coherently?
It is hard to argue against the importance of jobs – however, the summer jobs plan forwarded by the Governor will have lots of timing complications as you suggest. And likely to provide less benefit than desired. This response to the job issue strikes me as similar to last summer’s suggestion on the national level that we abolish the federal gas tax over the summer when gas prices were soaring. Neither of these two suggestions deals with the core issues of the day.