2/26/10

The 2010 Legislature adjourned Sine Die yesterday at about 2:00P.M. The Democrat majority alleged the legislative session would be all about job creation. Their action did not match their rhetoric. Mercifully, this ill advised and quasi-legal session has ended before any more harm can be done to the Oregon business community and the state economy.

           The session was filled with bills that will further regulate the businesses that create and sustain Oregon jobs. It was filled with measures that provide for more spending, including the establishment of several new and enlarged programs that will increase the number of public employees. It provided at least two new methods to make it easier to borrow money and to grow Oregon’s already over-extended debt.  It simply failed to address the promised private sector job growth that is the key to economic recovery and to sustainable state revenue. 

Two bills that were passed on the last day of the session are symptomatic of what was so especially wrong with this very special emergency special session. 

Currently the Oregon Constitution requires that the Legislature meet every two years. House Joint Resolution 41 resolves to refer a proposal to the voters to amend the Oregon Constitution to require the Legislature to meet annually. The bill proposes that the legislature should meet for 160 days in odd numbered years and for 35 days in even numbered years. It allows for the extension of each legislative session by five days with the affirmative vote of two-thirds of the members of each chamber. The five day extensions may be sequential. It also allows the Legislature to hold pre-session organizational meetings that are not subject to limits or calendar days. 

SJR 41 lost virtually all of its bipartisan support as the result of a last minute melt down between Senate and House Democrat leadership. That major spat among the Democrats created amendments to SJR 41 that were simply unacceptable to most Republicans. The final vote had only one House Republican and two Senate Republicans voting in favor of the resolution. 

Five years ago I was firmly in favor of annual legislative sessions. I have changed my mind after experiencing five sessions in the Oregon Capitol. More specifically, my observations of the many shortcomings and the palpable partisan control experienced during the 2008 and 2010 short sessions convinced me that a constitutionally mandated 35 day session in even numbered years would be an ongoing disaster.  

Public input in the law making process during those two short sessions was virtually eliminated. The opportunity to be heard in public hearings was minimized. Too often we “simply did not have enough time” to even hold a public hearing on a bill in the second chamber. In my opinion, the integrity of the legislative process was routinely breached. 

The session began with 24 hour posting schedule meaning that a hearing could be held on the day following notice of the hearing. At the beginning of the third session week that notice was advanced to one hour. Members of the public who live and work outside of the immediate area of the capitol had virtually no chance of having their ideas and concerns either heard or incorporated in the law making process. 

Major amendments were routinely made to bills without a public hearing. In fact, major amendments were routinely made that minority party committee members had no chance to read, or even see, prior to the committee meeting where they were introduced and adopted. These amendments too often completely replaced the text of the original bill. 

A grievous example of such an amendment was when HB 3698 was amended to include the ballot titles, summaries and the arguments in favor of the several ballot measures that are to be referred to the people to decide. No public hearing was held on these major amendments. These amendments were adopted without opportunity for either public or minority party input or debate. Not surprisingly, the ballot titles actually represent advocacy statements. The wording encourages the people to pass the referrals that the majority party wants enacted into the constitution. 

For instance, the ballot title for SJR 48 states: 

AMENDS CONSTITUTION: AUTHORIZES LOWEST COST BORROWING FOR STATE’S REAL AND PERSONAL PROPERTY PROJECTS.         

What SJR 48 really does is to create a new constitutional bonding authority by adding a new Article XI-P mechanism to guarantee the full faith and credit of the state of Oregon. Money could be borrowed through XI-P bonds to acquire, construct, remodel, repair, equip, or furnish real or personal property that is or will be owned or operated by the State of Oregon.

Series XI-P bonds are designed to replace the quasi-legal Certificates of Deposits. The COP’s were created through statute to circumvent the constitutional requirement that the people of Oregon must vote to amend the constitution before the state can borrow money for new or different purposes. COP’s allow the state to borrow money long term for just about any capitol project without pledging the full faith and credit of the state. The debt service on COP’s is to be paid out of current revenue and must be reauthorized by each Legislature. COP’s are structured more like a corporate bond that establishes a lien on whatever is financed. That lien can be foreclosed by the lender if the state fails to pay the debt obligation. It is callable after a certain period of time allowing the state to refinance the debt. For these reasons COP’s are usually sold paying higher rates of interest.

Currently the state is obligated to pay debt service on more than

$1, 350,000,000 in COP debt.  Moreover, the Legislature has already authorized the state to sell about $200,000,000 more COP debt.

Replacing the COP’s with full faith and credit Series XI-P bonds may save the state as much as $5 million in total debt service for each $100 million in long term debt. It also may encourage the state to borrow even more money.

However, the language of the ballot title does not explain any of this to the voting public. In my opinion, both the ballot title and ballot summary are blatant advocacy statements for SJR 41.

The ballot title for HJR 101 states:

AMENDS CONSTITUTION: CONTINUES AND MODERNIZES AUTHROTIY FOR LOWEST COST BORROWING FOR COMMUNITY COLLEGES AND PUBLIC UNIVERSITIES.

          What HJR 101 actually does is to expand the current Constitutional

Series XI-g bonding authority to borrow money to “acquire, construct, improve, repair, equip, and furnish buildings, structures, land, and other projects that the legislative Assembly determines will benefit higher education institutions or activities or community colleges authorized by law to receive state aid”. It will allow Oregon universities and community colleges to build or purchase structures like parking garages, apartment buildings, and office buildings that may compete with the private sector if it “benefits” higher education.

          Once again, thoughtful arguments can be made for or against this proposal. However, the ballot title and the ballot summary do not address what HJR 101 actually asks the people to authorize. In my opinion, they are nothing more than advocacy statements for HJR 101.

          It is my firm belief that both of these ballot titles should be challenged in the Supreme Court where they should be disallowed. That action would allow the Attorney General to follow current law and compose germane ballot titles that fairly describe the intent of the resolutions.

Please remember, if we do not stand up for rural Oregon no one will.

Best regards,

Doug