State
Blue Mountain Eagle
Wednesday, November 30, 2016
A9
Brown plans bill to maximize
state investment returns
By Claire Withycombe
Capital Bureau
Eagle file photo
Fifth-graders from Humbolt Elementary School
observe an Oregon Department of Fish and Wildlife
biologist spray a mark on a chinook salmon at a
science station in 2014. The agency, which has a
biennial budget of about $370 million, is looking
for more money for conservation programs,
maintenance and outreach.
Task force eyes tax
hikes for fish and
wildlife funding
By Claire Withycombe
Capital Bureau
A task force convened to
find ways to raise revenue for
the Oregon Department of
Fish and Wildlife Monday will
recommend two tax increases
to add $86 million to the de-
partment’s budget.
The next challenge will
be selling them to the Oregon
Legislature.
The agency, which has a bi-
ennial budget of about $370 mil-
lion, is looking for more money
for conservation programs,
maintenance and outreach. It
gets about a third of its revenue
from hunting and fishing license
fees, and the remainder from
state and federal sources.
After evaluating dozens
of options to raise revenue,
the task force recommends an
income tax surcharge and a
surcharge on beverages at the
wholesale level.
Task force members ac-
knowledged Monday that the
roughly $86 million ask every
biennium will be politically
challenging.
The state faces a $1.7 billion
shortfall going into the next bi-
ennium, according to the Gov-
ernor’s Office.
Oregon Gov. Kate Brown
is expected to release her bal-
anced budget Thursday.
The tax force’s recommen-
dations will come in a legisla-
tive session that will likely be
characterized by attempts to
both cut costs and raise funds
across the board.
Much of the discussion at
Monday’s meeting revolved
around gaining traction for
the additional ask — both in
terms of support from mem-
bers of the legislature and
from the state’s hunting, fish-
ing, outdoor recreation and
conservation communities.
Many at Monday’s meeting
pointed to the success of Mea-
sure 99 — which passed at the
ballot box earlier this month to
allocate state lottery funding
for outdoor education — as an
example of an initiative that
leveraged the support of those
Oregonians who value outdoor
recreation such as cycling or
hiking, but don’t hunt or fish.
Oregon State Rep. Ken
Helm, a nonvoting member of
the task force, advised the task
force to meet with all members
of the Legislature and to gain
the support not only of conser-
vation groups, but also of Ore-
gon businesses.
Task force members also
met with Rep. Phil Barnhart,
D-Eugene, and Rep. Brad Witt,
D-Clatskanie, last week.
Barnhart is chairman of the
House Interim Revenue Com-
mittee, while Witt is chairman
of the House Interim Commit-
tee on Agriculture and Natural
Resources.
According to task force
members, Barnhart and Witt
discouraged them from em-
phasizing either tax and instead
were advised to “lead with” the
mission of ODFW and what it
plans to do with the additional
money.
That money, according to
task force recommendations, is
to be allocated toward addition-
al conservation activities, im-
proved hunting and fishing op-
portunities, increasing outreach
and education efforts, and the
cost of needed maintenance to
department infrastructure that
has been put off in prior budget
years.
The largest chunk of the
approximately $86 million tar-
get — about $46.7 million —
would be dedicated to conser-
vation efforts.
SALEM — Oregon Gov. Kate Brown
plans to advance a bill in the upcoming
legislative session aimed at maximizing
returns on the state’s investments, ac-
cording to her office.
The Oregon State Treasury over-
sees the state’s investments, although
it outsources some investment work to
outside firms. It appears Brown would
bring some of that work back to Salem
to reduce costs.
Kristen Grainger, a spokeswoman for
the governor, said in an email Tuesday
that the treasury “needs to be resourced
adequately to expand the amount of
funds they manage internally.”
In previous legislative sessions,
Treasurer Ted Wheeler — who will be
replaced by state Rep. Tobias Read,
D-Beaverton, come January — intro-
duced similar legislation aimed at re-
ducing the cost of investing by bringing
more outsourced functions in-house.
The gist of both proposals is that re-
ducing costs could increase the state’s
net returns.
Wheeler’s effort, referred to as the
EO Media Group
Gov. Kate Brown’s office says
she will propose legislation
to maximize state investment
returns, including reducing costs
by ending the outsourcing of
some investment management.
Investment Modernization Act, stalled
out several times after meeting opposi-
tion from lawmakers on both sides of
the aisle who voiced trepidation about
the proposal.
Read, in an interview Tuesday, said
that he would support the Governor’s
Office in its efforts and emphasized
communication with the public and the
Oregon Legislature about the state’s in-
vesting.
“...I expect we will be supportive and
helpful to the extent that we are asked,
but I’m also cognizant of the fact that
Treasurer Wheeler and the Treasury
have made specific efforts a number of
times,” Read said.
Reducing investment costs might be
one small way to address the $22 billion
unfunded liability facing the state’s pub-
lic employee retirement system.
PERS is managed independently
and has its own board, but the Oregon
Public Employees Retirement Fund
is managed by the treasurer, under the
direction of the Oregon Investment
Council, according to the treasury. The
investment council is required by state
law to get the highest possible return on
its investments.
In 2015, the Oregon Supreme Court
struck down most of the legislature’s re-
cent PERS reform efforts. A bipartisan
legislative work group is now looking at
other ways to address the PERS issue.
The governor is expected to release
her balanced budget Dec. 1.
Audit plan excludes examinations of conflicts of interest
By Paris Achen
Capital Bureau
A $1 million management
audit of the Oregon Depart-
ment of Transportation may
not address how well the
agency avoids conflicts of
interest in awarding project
contracts.
Gov. Kate Brown ordered
the audit at the request of state
legislators who want to ensure
ODOT is operating effective-
ly before they approve costly
transportation funding next
year.
That legislation — one of
Brown’s priorities as gover-
nor — could hike gas taxes
and fees on drivers and funnel
hundreds of millions of dol-
lars in additional funding to
the agency. Among lawmak-
ers’ concerns were instances
when ODOT hired or kept
contractors who appeared to
have conflicts of interest.
While state officials who
designed the scope of work
for the audit included a ques-
tion about how conflicts are
identified, they did not ask for
an assessment of how much
weight ODOT employees
give conflicts in the process
of recommending contractors
to the Oregon Transportation
Commission, which officially
hires the contractors.
It’s unclear whether the
omission was an oversight or
was discussed and then reject-
ed, said Bret West, acting
chief administrative officer
at the Department of Ad-
ministrative Services. West,
who has overseen the ODOT
audit for the state since May,
said he was not involved in
shaping the original work
plan for the audit.
Other questions in the
work plan dealing with
communication processes
EO Media Group
Lawmakers have raised concerns about how
ODOT handles conflicts of interests.
and transparency may help to
reveal whether there are prob-
lems with conflicts of interest,
West said.
In September, the state
awarded a nearly $1 million
contract to New York-based
McKinsey & Company to
conduct the audit.
Before McKinsey won the
contract, state officials had
hired John L. Craig, a former
ODOT contractor, to perform
the audit. Ironically, the state
later revoked Craig’s con-
tract after revelations about
his close ties with ODOT and
an unearthed email showing
he had sought to replace the
agency’s director, Matt Gar-
rett.
Addressing the weight
ODOT gives conflicts in hir-
ing contractors should have
been part of the plan, said
Mike Hollern, a member of
an oversight committee that
helped shape the audit’s scope
of work.
“In one of the early drafts,
there was some discussion,
and I think some of the con-
cerns from some of the legis-
lators perhaps had to do with
conflicts of interest being a
seriously-investigated, dealt-
with issue,” said Hollern, who
also is a former state transpor-
tation commissioner.
In another example of
conflicts at ODOT, an agency
trucking official Gregg Dal
Ponte took a job with a firm
that sells products to the in-
dustry he regulates, according
to a report in June by the Port-
land Tribune.
Dal Ponte headed the
agency’s motor carrier divi-
sion while working for a New
Zealand corporation called
ERoad. ODOT officials in-
sisted the arrangement com-
plied with state ethics law,
but the practice has raised
questions about the agency’s
credibility, the Portland Tri-
bune reported.
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