OUR LEGISLATIVE SCHEDULE

My appointments as vice-Chair of the Judiciary Committee, to the Ways and Means Committee and the Emergency Board, as well as to the Task Force on Tort Liability will continue to keep Gail and me on the road to Salem. Those appointments, in addition to the Office of Administrative Hearings Oversight Committee and the Committees on Court Facilities and Court Technologies are keeping us immersed in legislative action during this legislative interim. In fact, the trip to Salem is beginning to feel like a commute.

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CARBON CAP AND TRADE LEGISLATION

Last week the Warner Lieberman carbon cap and trade bill died a quiet and deserving death in the United States Senate. Thankfully, the Senate democrat leadership was unable to secure a majority vote, in support of what would have been, the greatest scheme to redistribute wealth since the federal income tax.
 

The Warner Lieberman bill was designed to place a top limit on the total amount of carbon allowed to be emitted each year in the United States. That limit would be reduced, become more restrictive, with each successive year over the next several decades.
 

This cap on carbon emissions was supposed to have been an incentive to encourage investments in conservation and alternative sources of energy that would have resulted in reduced carbon emissions.
Under this bill, United States companies would have been required to purchase the right to emit carbon into the atmosphere. These carbon emission credits could then be traded among companies. Those companies that emitted less carbon could trade their credits to companies that emitted more carbon. The scheme was supposed to be an incentive to emit less carbon by giving those companies that reduce their emissions a competitive advantage.
 

The certain outcome of the cap and trade bill would have been to unilaterally increase energy prices in the United State, each year, sequentially, for decades. Moreover, the bill would have authorized Congress to sell nearly three and one half trillion dollars worth of carbon credits. Further, it would have authorized the distribution of an additional nearly three and one half trillion dollars worth of carbon credits to states that are recognized as leaders in greenhouse gas control, potentially to some Indian Tribes, and to other favored political allies.
These favored entities, selected by political leaders, could then sell their windfall of carbon credits for as much as three and one half trillion dollars in cold hard cash.
 

These sales of carbon credits would have amounted to a direct tax on the cost of doing business in the United States. The recipients of the nearly seven trillion dollars in cost of doing business tax revenue would have been the federal government, certain state governments, and certain favored political allies.
 

Obviously, this scheme would have put the United States at a terrible competitive disadvantage with other nations, such as China and India, who make little effort to control carbon emissions. It would have significantly increased the cost of doing business in the United States, and because all businesses must pass their costs on to their consumers in order to stay in business, the end result of the scheme would have been to create huge inflationary pressures on our U.S. economy.
 

The irony of this scheme is that the federal government and the states would not be required to offset existing taxes or fees with this seven trillion dollar revenue windfall. Other favored political allies would have no restriction on how their windfall of revenue would be spent either. Instead, they would be allowed to spend the money on additional and expanded social programs. Ultimately, the Warner Lieberman bill would have resulted in around seven trillion dollars in wealth redistribution.
 

As the Wall Street journal editorialized, the cap and trade policy sounds more like a tax and spend policy.
 

Unfortunately, in politics no bad bill is ever dead. Governor Kulongoski has now unveiled his own carbon cap and trade plan that he plans to introduce in the 2009 Legislative session. His scheme appears to have many of the same bells and whistles that were found in the failed Warner Lieberman bill.
 

As I understand his scheme, the carbon cap and trade bill will create a windfall of revenue for Oregon politicians. It will certainly result in significant redistribution of wealth. It will unilaterally inflate the cost of doing business within Oregon. This artificial cost increase will put Oregon businesses at a terrible competitive disadvantage with other states and other nations.  Watch for a mass exodus of businesses from our state if this proposed legislation should be enacted into law.

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 THE E-BOARD AND THE ECONOMIC FORECAST

The Ways and Means Committee does not have authority to make changes in the state budget. That authority requires the majority vote of both legislative chambers. For that reason, the Oregon Legislature created the Emergency Board to authorize needed budget changes when the Legislature is not in session. Prior to the creation of this very powerful E-Board, the Legislature had to be called into special session to authorize such changes.
 

The 2007 economic forecast predicted that the Legislature would have at least $2.5 billion dollars more revenue available to spend than any previous legislature. That economic forecast was admittedly only accurate within plus or minus one billion dollars. As a specific example of previous accuracy in predictions, the 2005 economic forecast predicted $1.2 billion less revenue than actually was available. This huge error in forecast resulted in the largest kicker refund in Oregon history.
 

In our Oregon legislature, spending bills only require a majority vote. The Democrat party held the majority in both legislative chambers during the 2007 and 2008 sessions. Unfortunately, the majority leadership chose to authorize spending virtually all of that predicted $2.5 billion excess plus another $600 million in increased fees charges and licenses.
 

Those of us who cautioned fiscal responsibility, because that money might not actually be available, were simply outvoted. Our pleas to put some of that money into savings, and retain more in our ending balance, were ignored. Instead, the leadership voted to keep the corporate kicker credit and use that purloined money to establish a “rainy day fund”. To their credit they did add significant money to the education reserve fund. However, their promise to put any money left unspent at the end of the budget cycle into the rainy day fund was as empty as a family’s savings account who plan to save only the money the choose not to spend.
 

The legislature’s unprecedented spending spree amounted to an increase of nearly $1,000 in government spending for every man woman and child in the state of Oregon. On average, every state agency was provided at least a 20% increase in spending authority resulting in one of the largest expansions in public employment in state history. Now it appears, that due to the current economic downturn, some of that predicted additional revenue may not be available to spend.
 

The problem is that the spending of the money has already been authorized even though it very likely may not be available to spend. For that reason, it appears that the E-Board may be very busy during the remainder of this interim between legislative sessions.
 

For instance, the legislature authorized $125 million to increase compensation for public employees, but charged the E-Board with the responsibility of not releasing the funds until the revenue was collected.
Governor Kulongoski authorized labor contracts to be negotiated and signed as though the money was already in the bank. Kulongoski also promised about 60 agency directors a 24% pay raise on average. Moreover, he promised nearly 5,000 middle level managers a 16% increase in pay on average.
 

These signed contracts, and governor’s promises, total more than $350 million in public employee pay raises for this budget cycle. The roll up costs, what those pay raises will cost in the 2009-2011 budget cycle, exceed $650 million. To put those pay increases into perspective, in the next budget cycle they will cost the average Oregon family of four about $350 per year in additional increased taxes, fees, charges, or licenses.
 

During the most recent Ways and Means Committee meeting our Legislative Fiscal Office predicted that estimated expenses for the next budget cycle would exceed estimated revenues even if our economy doesn’t sink into deeper recession. The E-Board is now presented with the dilemma of how to honor these grandiose promises and contracts without benefit of sufficient revenue. The choices appear to be to either reduce government spending to stay within budget, or to go ahead and spend the money knowing that the next legislature will have to pass new taxes to cover the deficit.
 

As a member of the E-Board, I receive at least one letter, e-mail, or phone call every day from representatives of the public employees’ and their unions urging me to support the pay increase. Even some of the traditional business lobby is urging the release of these funds to increase public employee compensation, urging me to support spending money that it appears we may not have to spend.
 

Our governor and legislative leadership is telling the media that our financial position is strong and that citizens should not worry. But our financial forecasts tell a different story. In fact, our projected ending balance for the entire 2007-2009 biennium would be virtually wiped out without the one time revenue windfall that resulted from a massive sale of Nike stock.
 

My most serious concern is that in this election year the Democrat majority on the E-Board will bow to the public employees unions, and give them all they ask for, at the expense of the Oregon taxpayers.

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 OREGON’S EDUCATION PERFORMANCE

One third of Oregon high school sophomores are unable to read at minimal state standards. Moreover, nearly half of our sophomore students are unable to meet minimal standards in math and writing skills. In an attempt to compel improvement on these abysmal teaching outcomes, the Oregon Board of Education is attempting to create minimal testing requirements for high school graduation in Oregon. Twenty six other states currently require that their senior students pass tests that demonstrate minimal learning achievement in order to earn a high school diploma.
 

The old axiom “What does not get measured does not get done” is certainly true of education. The testing requirements proposed by the Oregon Board of Education are anything but draconian. Under the Boards proposal, senior students could earn their high school diploma following any of three paths.
 

First the seniors could receive their diploma by passing currently existing 10th grade benchmarks for math, reading and writing proficiency. You read that correctly, in order to graduate, seniors would only be required to do sophomore level work. What is more, the students would have NINE attempts to pass these exams, three in each the sophomore, junior and senior years.
 

Second, they could earn a diploma by achieving a certain score on either of the SAT or ACT national standardized tests that are required for enrollment in most colleges and universities. These tests can also be taken more than one time in each the junior and senior years.
 

Third, they could achieve a diploma by passing a locally written assessment in key subjects such as term papers, work samples or portfolios graded on a statewide standard.
 

Incredibly, superintendents and teachers across the state have made it plain that they oppose even these minimal education achievement standards. The Oregon Education Association has written their concerns to the Board’s proposal, stating their strong opposition including that the testing requirements would likely lower graduation rates. In addition, members of the Confederation of School Administrators have joined the opposition stating concerns that students who struggle in one or more subjects might not be allowed to graduate.
 

The question that begs asking is “How can we expect students to be held accountable for their learning achievement, when their teachers and administrators refuse to be held accountable for their teaching performance outcomes”? How can professional educators be satisfied with their teaching performance standards, when nearly half of their students fail to achieve minimal math and writing skills, and over one third cannot even read to grade level? How can professional educators seriously oppose a graduation standard that only asks graduating seniors to be able to perform sophomore grade work?    
 

We have many fine and talented teachers and administrators in Oregon. But their statewide organizations refuse to either accept, or address, accountability for unacceptable education outcomes. They are able to maintain the abysmal status quo through the actions of their well heeled lobby efforts, and by their ability to place their own members into offices at the highest level of state government.
 

All monopolies have certain characteristics, including lack of performance accountability, poor standard of service, uncompetitive costs, lack of innovation, and a morbid fear of competition. In my opinion, the Oregon K-12 education enterprise represents a monopoly in every respect.
 

I do not see that sad reality changing until the people, the parents, recognize it for what it is, and demand change. That change will not occur until parents have a choice where their children will attend school.
 

Oregon desperately needs open enrollment, where a child may attend any public school of the parents’ choice. Oregon desperately needs a system of vouchers, where the tax money provided for the student’s education follows the child to the school chosen by the students’ parent. Oregon desperately needs a system of education tax credits that allow the parent to select the course of their children’s education.
 

Public education in Oregon currently costs about three times as much, on average, as it costs for a parent to send their child to a private school. Yet the education outcomes at most private schools greatly exceed those of our public schools. The fact of the matter is that the education outcomes of most home schooling exceed those of our public schools.
 

Isn’t it time to ask why? Isn’t it past time to demand that we measure the outcomes of our public education enterprise?

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 KINGSLEY FIELD CHANGE OF COMMAND

On a more upbeat note, Gail and I were invited to attend the May 17th Change of Command at Kingsley Field where Colonel James Miller was assigned to take command of the 173rd Fighter Wing from Colonel Thomas Scheiss. We are confident that Colonel Miller will carry on the legacy of excellence of the 173rd Fighter Wing.
 

Under the command of Colonel Tom Scheiss the 173rd Fighter Wing grew by 1/3rd  more F-15’s, by more than 100 personnel, and his command earned the top ranking of all fighter pilot training missions. The 173rd at Kingsley Field is simply the best of the best. Tom has been instrumental in positioning Kingsley Field as a likely base for training pilots for future generations of fighter aircraft. Eventually, that transition to newer generation fighters will be required to maintain the mission in Klamath Falls. We thank Tom for his career of service to this community, to our military and to our nation.
 

I apologize for the length of this newsletter but I do want for you to have the information.

Remember, if we do not stand up for our rights no one will.

     Best regards,
     Doug