OPINION
Wallowa.com
Wednesday, July 27, 2022
The rising tide of inflation threatens
to swamp Oregon’s public budgets
OTHER
VIEWS
Tim Nesbitt
G
as prices and grocery bills have
headlined the immediate effects
of rising inflation on household
budgets. But inflation has downstream
effects that will swamp public budgets
as well, eroding the capacity of state
and local revenues to sustain support
for vital services.
In Oregon and neighboring states,
consumer prices rose 8.8% year over
year in June, according to the U.S.
Bureau of Labor Statistics. Gas prices
increased a whopping 52%. The price
of food at home rose 13%. Those are
the volatile components of the con-
sumer price index, which are prone to
ups and down over the course of a year.
The cost of other items, like medical
care and housing, are harder to reverse.
Those were up about 6%, embedding
a new and higher trend line of cost
increases in sectors of the economy that
are heavily dependent on public spend-
ing (health care) and public policy
interventions (homelessness).
Almost all of the political responses
to inflation have focused on short-term
mitigations, like gas tax holidays, or
mid-term strategies to repair the sup-
ply side of the economy. A thoughtful
compilation of the best responses was
recently posted by Gary Conkling on
the Oregon Way website.
But not enough attention has been
paid to the consequences for govern-
ment budgets and public services as we
move from a decade of steady growth,
low inflation and easy money, to a
period in which
costs rise faster
than revenues,
money tightens
and demands
for govern-
ment services
and responses
increase.
This is not a
problem unique
to Oregon by
any means.
But the struc-
ture of Oregon’s
government
finances creates
unique vulner-
abilities for our
state.
First, we
have con-
strained local
property tax
revenues with
a hard cap of
3% on year-to-
year increases,
thanks to
the combined effects of Measure 5
(1990), Measure 47 (1996) and Mea-
sure 50 (1997). As wages rise to keep
up with the rising cost of living in the
labor-intensive operations of schools,
cities and counties, revenues will
fail to keep pace, and the purchasing
power of local budgets will shrink.
This effect was highlighted as a
major concern by the state’s Task
Force on Comprehensive Revenue
Restructuring in 2009. It’s a problem
that will first affect schools and local
governments in Oregon; but it will
also put more
pressure on the
state to backfill
school budgets
and come to the
aid of cities and
counties to main-
tain public safety
and health.
Second, both
state and local
governments will
feel the infla-
tionary effects
of higher bor-
rowing costs,
higher health
care costs and,
most tellingly,
the costs of the
still massively
underfunded
Public Employ-
ees Retirement
System.
Legislation
enacted in 2019
stemmed the rise
of PERS pen-
sion costs for government workers in
Oregon at an average of roughly 25%
of payroll, paid in full by their public
employers. But this year’s inflation-in-
duced stock market declines have
again decimated the fund’s reserves to
pay future benefits. And if salaries rise
above the system’s assumed trend line
of 3.5%, the cost of benefits, which
“INFLATION RARELY
RAISES BOATS;
MORE OFTEN IT
SWAMPS THE
MOST VULNERABLE
HOUSEHOLDS AND
STOPS DEAD IN
THE WATER THE
FORWARD PROGRESS
OF GOVERNMENT
PROGRAMS.”
are keyed to salaries, will rise in tan-
dem. This is a double whammy that,
absent further corrections, will almost
certainly force the system’s claims on
public budgets to 30% of payroll or
more by 2025 and beyond.
Oregon has some advantages to deal
with the tsunami-like effects of infla-
tion. Its income tax system only par-
tially offsets the effects of inflation
on its top brackets. So as wages and
incomes rise, even if they lag inflation,
state revenues will rise as well.
Also, there are record levels of
reserves in state coffers. But the
state will need those reserves to help
schools maintain their staffing lev-
els, adjust to higher costs for Ore-
gon Health Plan providers, protect
service levels for public safety and
maintain its own level of services for
Oregonians.
Inflation rarely raises boats; more
often it swamps the most vulnerable
households and stops dead in the water
the forward progress of government
programs. That’s the new challenge for
our elected leaders, especially the new
generation of legislators who came of
age in the kinder fiscal climate of the
last dozen years.
An era of rising revenues and the
expansion of public services may be
approaching an end, and an era of
retrenchment and bailing out budgets
may be just beginning.
———
Tim Nesbitt, a former union leader in
Oregon, served as an adviser to Gover-
nors Ted Kulongoski and John Kitzhaber
and later helped to design Measure 98
in 2016, which provided extra, targeted
funding for Oregon’s high schools.
KRUSE
POST 72
Maria D. Tye
Greetings
from
the new
commander
M
y name is Maria D.
Tye and I am the com-
mander for Kruse Post
72 in Wallowa. I’ve been with
the American Legion for 26
years.
I hail from the Houston-Gal-
veston area in Texas. I am
researching our American
Legion post’s history in Wal-
lowa County. Please join me
twice a month and you will
learn with me. History buffs you
will enjoy it, and there might be
some of ya’lls ancestors in our
column.
The American Legion held
its first meeting on March
15-17, 1919 in Paris, France.
This was the year it officially
began, and our American
Legion held the first caucus in
St. Louis on May 8-10, 1919.
American Legion posts sprung
up all over the United States.
The national convention was
held in November 1919, and
the American Legion Kruse
Post 72 held its first meeting
on Dec. 1, 1919.
We have been reading a
lot of Kruse Post 72’s his-
tory through the meeting min-
utes books. The nominations
for temporary officers were as
follows: W.D. Butler for com-
mander, John E. Schaut for vice
commander and John H. Bratton
for adjutant. These where tem-
porary positions until the char-
ter was received. The annual
dues were $1.50, and the post
was to keep $1.50 from each of
the dues.
This is a tiny bit of insight on
Kruse Post 72 in Wallowa. We
have had three posts in Wallowa
County. I will let ya’ll know
more so keep reading this col-
umn and you will learn more
of our American Legion his-
tory in relation to our county
and our veterans as well. Wal-
lowa County is a highly patri-
otic place.
———
Maria D. Tye is the new com-
mander for Kruse Post 72 in
Wallowa.
Sounds of the rude world
OTHER
VIEWS
Roger Hockett
I
n 1862, American songwriter Ste-
phen Foster wrote “Beautiful
Dreamer,” the first two lines are:
”Beautiful dreamer, wake unto me, Star-
light and dewdrops are waiting for thee;
Sounds of the rude world, heard in the
day, Lull’d by the moonlight have all
passed away!”
Sounds of the rude world? In 1862?
How utterly shocked Foster would
be to hear the sounds of the 21st cen-
tury. We are way beyond rude in 2022.
Recently I biked over a small bridge at
Mercer Slough (near Seattle), an abun-
dant, beautiful clean wetland sparkling
with florescent green water plants. As
I paused on the arched bridge to take
in the beauty of the slough, the angry,
deafening roar of the freeway behind
me made me think about the stress of
modern living compared to the pas-
toral rural life of 18th century North
America.
Generally, mankind lived quietly with
nature before the Industrial Revolution
of the 19th century. Now, as Neil Young
has written, “Mother Nature is on the
run” from the assault by human indus-
trial development. All the shootings and
conflict in the news today leads me to
speculate that the stress of living in a
hyper developed and connected world is
not good for human happiness. I suspect
we are losing it, going bonkers.
As a comparative life experience to
my now city life, I had the luck of grow-
ing up on a ranch along Tenderfoot Val-
ley Road in the ‘50s and ‘60s which was
certainly part of the unfolding industrial
revolution (John Deere tractors, etc.),
and yet it was not oppressive.
After lunch, around 2 p.m., I always
got sleepy so I would stop the tractor,
turn it off, put my feet up on the engine
cowling, pull my beat-up cowboy hat
over by eyes and nod off for 15 minutes.
No noise, quiet, peaceful, another world.
Rounding up the cattle on The Divide
was even better, no noise for as far as the
ear can hear. Just spacing out and pre-
tending a Nez Perce hunting party is tra-
versing the top of the butte.
Spending a summer in the Upper
Imnaha basin on horseback for the Forest
Service was the same, just the clip-clop
sound of pet and the pack horse. Again,
a quiet nap after lunch in the shade of a
tree below Hawkins Pass while the hob-
bled horses had lunch.
When Jefferson, Adams and Frank-
lin lived in Europe, they all remarked on
the woeful state of their cities. Europe’s
cities were filthy, smelly, noisy and
crowded. However, most folks lived in
the country, which was generally quiet.
Humans have spent many thousands
of years living at a modest, low-pres-
sure pace and not under the oppressive,
relentless, hour-by-hour assault of mod-
ern technological living.
Perhaps humans evolved to need a
slower pace of life with quiet respites
easily at hand. Perhaps our ancient DNA
is rebelling and unwilling to change to
accept the modern industrial world. Well,
at least my DNA is rebelling.
———
Roger Hockett grew up in Wallowa
County and is retired in Newcastle, Was-
ington. He is a Navy veteran, a graduate of
both the University of Oregon and Oregon
State University, and spent a life designing
and manufacturing commercial furniture.
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