State
Blue Mountain Eagle
Wednesday, January 6, 2016
A9
Lawmaker wants $120M in bonds for transportation
By Hillary Borrud
Capital Bureau
SALEM — A state law-
maker from Wilsonville wants
Oregon to issue as much as
$120 million in bonds to pay
for transportation projects
starting in 2016.
Rep. John Davis, R-Wil-
sonville, said he plans this
month to introduce an inter-
im bill, to start tackling the
state’s backlog of highway,
bridge and other transporta-
tion projects ahead of a larger
transportation funding pack-
age that lawmakers could pass
in 2017.
Oregon needs the money
in order to compete for a share
of the $800 million in feder-
al grants for freight projects,
which will be available this
year as a result of the trans-
portation funding bill Con-
gress passed in December,
Davis said. He hopes to moti-
vate other lawmakers and the
governor to start working now
on a larger state transportation
funding bill they could pass
next year.
“The (federal) funding
starts immediately in 2016 for
this,” Davis said of the freight
project grant program. “We’re
in a tenuous spot because
Older
generation
rules state
famous for
its youth
By Paris Achen
Capital Bureau
In the state where
“young people go to re-
tire” — as depicted in IFC’s
comedy Portlandia — baby
boomers hold the power.
Millennials, ages 18-34,
represent only 3 percent of
seats in the Oregon Legis-
lature, while they make up
29 percent of the voting-el-
igible population, according
to a survey by Pew Charita-
ble Trusts’ Stateline and the
National Conference of State
Legislature.
Baby boomers, ages 51-
69, make up less than one-
third of Oregon’s potential
voters yet hold more than
half of legislative seats.
The survey found a sim-
ilar disparity in state legisla-
tures around the nation.
The imbalance might be
“tilting policymaking to-
ward the interests of seniors
and away from the country’s
largest living generation:
millennials,” wrote State-
line’s Rebecca Beitsch.
Oregon’s handful of
legislators who are 35 and
younger think the political
tilt toward seniors is a reality.
“Young people simply
don’t vote as frequently as
senior citizens, and that is
what skews political out-
comes far more than the age
of legislators,” said Rep.
Brent Barton, a 35-year-
old Democrat from Oregon
City.
Climate change and
higher education are “two
examples of issues where
seniors and millennials
weigh issues differently,”
Barton said. “I am certain
that climate change and
higher education would
receive more policy atten-
tion if young people voted
more.”
At age 30, Rep. Dallas
Heard, R-Roseburg, is the
youngest legislator serving
in Salem.
Heard sought election
after struggling with state
regulations to kick off his
landscape consulting busi-
ness in Douglas County. He
said policymakers often en-
act regulations that make it
harder for young people to
start businesses and careers.
“The older generation
is already in place in their
businesses or endeavors so
when they vote for more
policy that hinders young
people, they don’t under-
stand that regulation is get-
ting so thick and heavy and
onerous that it is shutting
down my generation and
people younger than me
from even getting started,”
Heard said.
EO Media Group
Rep. John Davis, R-Wilsonville, says he plans
this month to introduce an interim bill, to start
tackling the state’s backlog of highway, bridge and
other transportation projects ahead of a larger
transportation funding package that lawmakers
could pass in 2017.
Washington passed a transpor-
tation package, Idaho passed
a transportation package, and
California always has money
... That’s a signi¿cant thing
that’s shifted since the (2015
legislative) session.”
Davis said an example of
a project that might qualify
for a federal freight grant is
the Oregon Department of
Transportation plan to widen
Interstate Highway 5 to three
lanes through Portland’s Rose
Quarter and improve high-
way ramps. He is waiting for
ODOT to produce a list of el-
igible projects. Davis expects
to unveil the bill by early to
mid-January so that people can
critique it and offer sugges-
tions for improvement.
Any transportation fund-
ing bill faces long odds in the
short 2016 legislation session,
which starts in February. Gov.
Kate Brown, Senate President
Peter Courtney, D-Salem, and
House Speaker Tina Kotek,
D-Portland, have all said it is
unlikely they will pass a trans-
portation bill this year. Davis
could also run into opposition
because his proposal would
eliminate part of the state’s
low-carbon fuel program,
although he is discussing
the plan with environmental
groups.
Davis was a member of the
bi-partisan group of state law-
makers that Gov. Kate Brown
dubbed the “gang of eight,”
who met secretly toward the
end of the 2015 legislative
session to negotiate a trans-
portation funding package.
The legislation lost support
after the Oregon Department
of Transportation revealed
the plan would not achieve
the promised reductions in
greenhouse gas emissions,
which was a sticking point
for environmentalists because
the deal would have repealed
the state’s low-carbon fuel
standard. Republicans had re-
fused to support any increase
in the state gas tax, a crucial
funding source for transpor-
tation, while the fuel standard
remained in place.
Davis’ proposal would
modify the low-carbon fuel
standard, so that fuel pro-
ducers and importers would
only be required to reduce
greenhouse gases by blending
biofuels with lower carbon
content into gasoline and die-
sel. Fuel companies would no
longer have to purchase car-
bon credits generated by elec-
tric vehicle charging stations
and other businesses in order
to meet the fuel standard. The
cost of the carbon credits fu-
eled much of the opposition to
the standard, Davis said.
The Oregon Environmen-
tal Commission voted in De-
cember to delay enforcement
of the fuel standard until
2018, and commissioners said
they wanted frequent updates
on the supply and cost of al-
ternative fuels and carbon
credits.
Oregon’s low-carbon fuel
standard is supposed to re-
duce emissions from trans-
portation fuels by 10 percent
over a decade. So far, carbon
credits sales under a similar
program in California have in-
creased the cost of gas by ap-
proximately 1 cent per gallon,
Oregon Department of Envi-
ronmental Quality Air Quality
Planner Cory-Ann Wind told
the commission in Decem-
ber. At this point, California
has reduced carbon emissions
from fuels by 1 percent.
Oregon has $167 million
in available bonding capacity
from the general fund during
the current two-year budget
cycle, Davis said. That bond-
ing capacity remained unal-
located at the end of the 2015
legislative session, when law-
makers decided against using
it to overhaul the Capitol.
The Capitol project, which
would upgrade the 1938 build-
ing to withstand earthquakes,
is a top priority for Courtney.
However, Courtney’s plan
ran into opposition from both
parties after the Willamette
Week newspaper reported that
Courtney had not informed
other lawmakers that the price
tag increased to $337 million
and the project included extras
such as an expanded cafe and
gathering place for lobbyists,
along with a 3,000-square-foot
“legislative lounge.”
Courtney was unavailable
to comment Monday on Davis’
proposed use of the bonding
capacity.
“We’ve got the capacity
right now, at very, very low
interest rates that will only go
up,” Davis said.
Finally, Davis said he
wants to increase oversight of
ODOT’s spending. His legisla-
tion will create a special legis-
lative committee to review the
agency’s spending and call for
“some pretty robust audits.”
The Capital Bureau is a
collaboration between EO
Media Group and Pamplin
Media Group.
2UHJRQJDPHVQRWLPSOLFDWHGLQORWWHU\¿[LQJVFDQGDO
By Paris Achen
Capital Bureau
SALEM — The likelihood
of winning a lottery jackpot
is less than dying in a plane
crash, catching a Àesh-eating
bacteria or being duped by a
corrupt lottery employee.
The integrity of lottery
games nationwide are in ques-
tion amid an investigation into
jackpot ¿xing that started in
Iowa and has spread to at
least four other states, Colo-
rado, Wisconsin, Oklahoma
and Kansas, according to The
Associated Press.
There is no information
that games offered in Oregon
have been compromised, said
Oregon Lottery spokesman
Chuck Baumann.
The investigation stems
from accusations that a for-
mer security director at
the Urbandale, Iowa-based
Multi-State Lottery Associ-
ation installed root kit soft-
ware on the association’s
random number generators
to ¿nd out winning numbers
EO Media Group
There is no information
that games offered
in Oregon have been
compromised by a
lottery fixing scandal
involving the Multi-State
Lottery Association.
in advance, The Associated
Press reported.
Former security director
Eddie Tipton, who worked
for MUSL for 11 years, was
convicted in July of fraud
for working with associates
to try to claim a $16.5 mil-
lion Hot Lotto jackpot he had
rigged in Iowa. He has since
been charged with criminal
conduct and money laundering
involving lotteries in Colora-
do, Wisconsin and Oklahoma,
The Associated Press reported.
The nonpro¿t lottery asso-
ciation administers a variety of
lottery games in 44 states, in-
cluding Hot Lotto, Wild Card,
Powerball and Mega Millions.
The only MUSL-admin-
istered games Oregon partic-
ipates in are Powerball and
Mega Millions, Baumann
said. The winning numbers for
those games are selected in a
live televised drawing. The
Powerball drawing is held at
Universal Studios in Orlando,
Fla. The process is the same
for Mega Millions except that
the drawing takes place in At-
lanta, Ga.
Idaho Lottery Director Jeff
Anderson, chairman of the
MUSL board, did not imme-
diately respond to messages
inquiring whether Tipton had
access to lottery equipment
or computers outside of Iowa,
where MUSL is based.
Oregon’s Game Mega-
bucks uses an International
Game Technology random
number generator to yield win-
ning combinations. That com-
puter is housed at the Oregon
Lottery headquarters in Salem.
The random number generator
is a stand-alone computer un-
der 24-hour video surveillance
and is not part of the Oregon
Lottery’s central computer
system, Baumann said.
International Game Tech-
nology and Oregon State Po-
lice Lottery Security Section
evaluate and monitor the secu-
rity controls, he said.
The random number gener-
ator “has no knowledge of the
ticket number combinations
that have been purchased for
any of the drawings,” Bau-
mann said.
At draw time, the lottery’s
central computer system, with
no human involvement “asks”
the random number generator
for the set of winning num-
bers, he said.
An independent testing labo-
ratory also certi¿es the numbers
generator at random, he said.
He did not immediately
have information about how
many people have access to
the random number genera-
tor.
Geoff
Greenwood,
spokesman for the Iowa At-
torney General, said that of¿ce
would notify proper authori-
ties of any alleged illegal activ-
ity in other states that might be
discovered during the course
of its investigation.
What are the odds of win-
ning the lottery in Oregon?
The odds of winning the jack-
pot in any of the three games
offered in Oregon are dismal,
but players have better chances
winning at the state’s home-
grown game, Oregon’s Game
Megabucks. According to the
Oregon Lottery, the odds of
winning that is 1-in-6.1 mil-
lion compared with winning
Powerball, 1-in-292 million,
and Mega Millions, 1-in-258
million.
The Capital Bureau is a
collaboration between EO Me-
dia Group and Pamplin Media
Group.
Oregon investment of¿cials stick with hedge funds
By Hillary Borrud
Capital Bureau
Oregon of¿cials searching
for ways to blunt the impact of
future stock market crashes on
the state’s $70 billion pension
fund have increasingly looked
at hedge funds as part of the
solution.
The state started to buy into
the funds in 2011, and now has
more than $300 million in-
vested in them. That’s a small
portion — roughly 0.5 percent
— of the pension fund’s as-
sets. But under its investment
policy, the amount could grow.
The policy calls up to 45 per-
cent of the alternatives port-
folio, or roughly 6 percent of
the entire pension fund, to be
invested in a category that in-
cludes hedge funds.
Pension of¿cials are stick-
ing with the strategy, in spite
of recent critiques of pension
systems’ investments in the
funds and the 2014 decision
by the nation’s largest pension
fund, Calpers, to divest from
hedge funds.
State Treasurer Ted Wheel-
er and other members of the
Oregon Investment Council
hope hedge funds and other
alternative investments will
help the state avoid a repeat of
what happened in the 2008 ¿-
nancial crash, when the public
employees’ pension fund lost a
third of its value in six months.
The fund has largely re-
covered from the effects of the
crash, but for a variety of other
reasons the state now faces an
$18 billion unfunded pension
liability over the next two
decades. The shortfall could
grow if the state’s investment
returns continue to fall short of
the 7.5 percent assumed rate of
return or if there is an econom-
ic downturn.
Oregon pension of¿cials
are most interested in hedge
funds’ promise of uncorrelated
returns, meaning that the funds
will lose less — or perhaps
even produce returns — in a
down economy. Although re-
search has shown hedge fund
performance is correlated to
the stock market, Oregon has
invested in funds with “truly
uncorrelated returns,” accord-
ing to Oregon State Treasury
Communications
Director
James Sinks.
“Currently, about 70 cents
of every $1 in (pension) ben-
e¿ts comes from investment
gains, so sustainable and
strong performance is key,”
Sinks wrote in an email.
In late November, research-
ers at the Roosevelt Institute
released a report that exam-
ined hedge fund investments
by 11 other states. The re-
searchers, who also received
support from the American
Federation of Teachers and the
Haas Institute for a Fair and
Inclusive Society at the Uni-
versity of California, Berkeley,
found “signi¿cant correlation”
between hedge fund returns
and overall pension fund in-
vestment performance. The
researchers also cited market
data that showed hedge fund
performance was “highly cor-
related” with the stock market.
As it turns out other state
pension funds have not fol-
lowed Calpers’ decision to di-
vest. The California pension
system cited costs and com-
plexity as reasons for its 2014
decision to exit from hedge
funds.
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