When the economy is humming along, government coffers tend to be full.
The relationship could fairly be described as symbiotic.
Businesses pay employees to produce goods and services that customers buy. The government takes a piece of the action, in the form of income and other taxes, and uses the money to maintain roads and emergency services and schools that make efficient and profitable commerce possible.
Trouble can arise, though, when the economy stagnates.
When tax revenues decline, government agencies sometimes look for new sources.
The danger comes when the government, by imposing a new fee or tax, discourages economic activity and thus prolongs the financial doldrums, ultimately hurting both the private and public sectors.
A real estate transfer tax is an example.
And although there is only one such tax in effect in Oregon now — in Washington County — the Legislature and the governor could create a statewide tax and change the law to allow local governments to do the same. A statewide tax has been proposed several times, in fact.
Voters, though, can take away that authority by voting “yes” on Measure 79. We think they should.
There’s no legitimate reason for government at any level to tax the transfer of real estate. Imposing such a tax now, with the housing market barely beginning to recover from the recession, would be particularly ill-timed.
Fortunately, voters can get rid of a similarly onerous and unnecessary tax by voting “yes” on Measure 84. It would initially reduce, then eliminate altogether, the state’s inheritance tax. Currently, estates worth up to $1 million are exempt, but amounts above that are subject to taxes.
Although the tax system includes credits for farms and ranches that can exempt from taxes operations worth as much as $7.5 million, there are plenty of farms and ranches in Oregon, including in Baker County, that exceed that value. Inheritance tax revenues are barely a blip in the state budget — 1.5 percent of the general fund — but the tax can be an insurmountable burden for people who want only to keep a business in the family.
The Oregon Legislature referred two matters to voters in the Nov. 6 election, and we recommend “yes” votes on both Measure 77 and 78. Both amount to little more than housekeeping.
Measure 77 would amend the state constitution to allow the governor to declare a catastrophic disaster — in the case of a massive earthquake, for instance. Currently, the governor has only statutory authority in such cases, which could make it difficult to direct state dollars to emergency services and other critical needs.
Measure 78 makes minor wording changes to the constitution, clarifying the separation of the legislative, executive and judicial branches. It replaces masculine pronouns in referring to the Secretary of State with gender-neutral ones. The current office holder, by the way, is Kate Brown.
Whether you like or you abhor gambling, Oregon’s public services are hooked on it.
The state lottery, which voters approved in 1984, is Oregon’s second-largest source of revenue (behind only income taxes).
Oregon also has nine tribal casinos. Although exempt from certain taxes, some of their profits also benefit Oregonians, both tribal members and, through philanthropic programs, people who don’t live on reservations.
But this current system, which supplies a relatively reliable source of money for public schools, state parks and other functions, could be changed substantially if the backers of The Grange, a casino that would be built in Wood Village, an east Portland suburb, get their way in the Nov. 6 election.
They are promoting two measures, 82 and 83, that would make The Grange possible.
The potential harm this non-tribal casino could cause to state services, and to the tribes, is too severe to justify our supporting either measure.
Measure 82 would change the state constitution to allow non-tribal casinos.
Measure 83 would specifically authorize only one such casino — The Grange.
Supporters argue that the new casino would help rather than hurt state government. The Grange would be legally required to give the Lottery Commission 25 percent of the adjusted gross revenue from gambling (The Grange’s other operations, such as a restaurant and hotel, would not have to pay the 25 percent).
The 25-percent share, backers insist, would help to offset the revenue that The Grange would siphon from tribal casinos and the Lottery.
But some experts, including University of Oregon economics professor Tim Duy, disagree.
The Grange would of course create construction jobs. But those would be temporary.
The hit to the Lottery, which would have a direct effect on public schools, likely would be more lasting.
With schools already scrimping, that’s a risk we’re not willing to take. We recommend “no” votes on Measure 82 and 83.
By Baker City Herald Editorial Board
We don’t think college football fans’ zeal for supporting their team should ever supersede good taste, but Oregon State University’s definition of the latter left a sour taste in our mouths when the university canceled a promotion urging fans to “wear black” at a couple of home football games this fall.
University President Ed Ray apparently had the same reaction and had the good sense to reinstate the “Wear Black” campaign on Thursday.
The original decision was made for fear that students would respond as they did in 2007 when some of them came to the game wearing black face paint and, allegedly, Afro wigs.
But here’s the thing: Black is one of OSU’s school colors (orange is the other). The players wear black helmets and black jerseys and pants. The logo painted on the field at Reser Stadium has a lot of black in it.
Ray was right to reverse the decision. He encouraged fans to wear black to an upcoming game against Utah to show the progress OSU has made since 2007.
The Ninth U.S. Circuit of Appeals handed down an intriguing ruling recently in a case that involves closing roads to motor vehicles on the Eldorado National Forest in California.
This, obviously, is of more than passing interest to many local residents, as the Wallowa-Whitman National Forest’s controversial Travel Management Plan (TMP) is pending.
The Eldorado National Forest case involves a lawsuit brought against the Forest Service by Public Lands For the People, a nonprofit organization in California, and by several miners.
The plaintiffs contend that the Eldorado National Forest lacked the authority to require miners to file a Notice of Intent or Plan of Operations if they want to continue to drive motor vehicles on roads otherwise closed to such vehicles by that forest’s TMP.
The Appeals Court disagreed.
In her written opinion, Judge M. Margaret McKeown cited a previous federal case which concluded that “there can be no doubt that the Department of Agriculture (of which the Forest Service is part) possesses statutory authority to regulate activities related to mining — even in non-wilderness areas — in order to preserve the national forests.”
McKeown also wrote that the Eldorado forest’s TMP “is not an indirect prohibition on mining operations masquerading as an access regulation, and its access restrictions aren’t unreasonable.”
The judge noted that the TMP doesn’t prohibit miners from accessing their claims — it requires that they get written permission first.
This seems to us an unnecessary layer of bureaucracy, but the judge’s conclusion is logical.
The more troubling aspect of her ruling, though, is her endorsement of the Forest Service’s claim that roads closed to motor vehicles by the TMP “are no longer public roads.”
So what are they?
Not private roads, certainly, because they still run across public land.
We understand that the Forest Service, if it can legally decide that a road is no longer public, can also reverse that designation.
Yet we’re disturbed that the second highest court in the land would conclude that, in effect, deleting “public” from any piece of public land is acceptable. A road that’s not public could, in theory, be closed to more than just motor vehicles. The public, for instance.
It’s no secret that Oregon’s public employees retirement system has an unhealthy appetite for the tax dollars that feed state government as well as our cities, counties and school districts.
But the level of PERS gluttony is becoming as painful as, well, a stomachache.
Or a bleeding ulcer.
Last week the PERS board announced that public agencies, starting July 1, 2013, will have to divert an even larger chunk of their budgets to the retirement system.
On average, PERS will account for 21.4 percent of public agency payrolls.
The average figure is higher for school districts — 26.7 percent — and higher still for Baker School District.
Starting in July, the district will spend 29 percent of its payroll dollars on PERS.
To put it another way, almost 3 of every 10 payroll dollars won’t be available to benefit students, whether by hiring new teachers or buying new textbooks.
There is no magical cure to the PERS woes.
Oregon courts have concluded — and rightly so — that pensions negotiated in legally binding contracts with employees must be paid as promised.
We’re not chastising public employees. They worked for their pensions and they earned the money.
The villains are the lawmakers and other officials who created a system that reads more like the Christmas gift list written by a 6-year-old than a reasonable retirement program. Worse yet, many of its authors, including lawmakers and judges, were then allowed to join the system.
The most egregious aspects of PERS — who wouldn’t like a guaranteed 8 percent return on their pension investments regardless of what happens on Wall Street? — were done away with more than a decade ago. The current system, though still more generous than many private sector workers get, is not ridiculously so.
Unfortunately, with tens of thousands of current and retired public employees still covered by the old rules, public agencies will continue to pay for the follies of the past.
Friday’s announcement by the PERS board is merely the latest example.
But the PERS debacle is not absolutely a lost cause.
The Legislature has over the past few sessions considered bills that would reduce the cost of PERS without violating contractual obligations.
A couple examples: trimming cost of living increases, and getting rid of a benefit for retirees who move to another state.
Lawmakers, though, have done nothing of consequence.
With school districts such as Baker’s forced to take ever more dollars out of classrooms to satiate PERS, inaction is not acceptable.
At a minimum, the state should create a committee that has one task: List all the potential options for reforming PERS and hand over the findings to the Legislature when it convenes early next year.
Then public employers, as well as the public in general, should demand that lawmakers do something to reverse the unsustainable trend in government budgets.
By The Baker City Herald Editorial Board
The situation with the Baker School Board, after a brief period of apparent tranquility during the summer, is today worse than ever.
Board member Kyle Knight, who was censured by three of his four colleagues in April, this week filed a civil rights lawsuit in which he seeks at least $700,000 in damages.
The defendants are the Baker School District, its superintendent, Walt Wegener, and board members Lynne Burroughs and Mark Henderson, two of the three members who voted to censure Knight (Andrew Bryan is the third; he is not a defendant).
We don’t doubt that there’s still gold in them thar hills of Baker County.
But whether the precious metal, the quest for which fueled Baker County’s founding, exists in anything approaching abundance in the rock tailing piles of Sumpter Valley is a less certain proposition.
That said, we urge the county’s Planning Commission, which meets Thursday, to amend development rules so the tailings can be tested and that question answered.
The current code allows mining within 2,000 yards of the center of Highway 7.
The amendment the planners will consider Thursday would allow miners to sample other parts of the county’s holdings in the area, which total almost 1,600 acres.
Sumpter Valley’s gravels have been extensively mined, to be sure.
Those tailing piles, which spread over several miles of the valley west of Phillips Reservoir, are the detritus left by gold-mining dredges that churned through the area for the first half of the 20th century.
The dredges — the last of which operated until 1954 and today is the centerpiece of Sumpter Valley Dredge State Park on the south side of Sumpter — were effective but also relatively crude.
Some miners believe the dredges either missed or left behind a significant quantity of gold, and that reprocessing the tailings could yield a financial windfall.
Although a 1982 survey concluded that re-mining the tailings wasn’t worthwhile, the current value of gold — about $1,770 an ounce, compared with 1982’s average of $376 — makes the prospect of finding a readily available source rather more enticing.
The Planning Commission’s decision Thursday is only the first of several steps necessary before digging could commence.
The County Commissioners would also have to endorse the idea, and then issue a request for proposals from miners interested in testing the tailings.
Various environmental studies and permits would be needed, too.
Yet we’re not dealing here with an open pit mine or similar operation that would dramatically alter the landscape. In Sumpter Valley, the landscape was dramatically altered decades ago.
We’re intrigued by the possibility of reworking the tailings in an environmentally responsible way, creating jobs and, potentially, putting money into county coffers through royalties or other fees.
We don’t object to Oregon Trail Electric Cooperative replacing its customers’ analog power meters with digital “smart” meters.
But neither are we convinced that OTEC, the Baker City-based cooperative that has about 30,000 customers in Baker, Union, Grant and Harney counties, couldn’t design a feasible system by which people could, probably for a fee, choose to keep their old meter.
The controversy over smart meters has grown exponentially over the past couple years as tens of millions of dollars in grants from the 2009 federal stimulus bill have enticed utilities to install hundreds of thousands of the devices nationwide.
(OTEC didn’t use any public dollars to put in its smart meters.)
By the Baker City Herald Editorial Board
We suspect it’s a lot easier to like the Leo Adler Memorial Parkway (LAMP) if you don’t live next to it.
John Harmer would no doubt agree.
Harmer sent us an email this week. He lives on Madison Street, and his home is beside LAMP, the paved path that parallels the Powder River through much of Baker City.