Media Room

Cost Containment Press Conference
April 27, 2017


Oregon is at a crossroads.

The state’s budget deficit threatens to defund core services to Oregonians—particularly our children, seniors, and our most vulnerable.

The state’s important obligation to its retirees looms over nearly every decision we make.

And yes, the state is experiencing record economic growth.

But, in much of Oregon it doesn’t feel that way.

The relationship between taxpayers, state government, and public employees is challenged right now. But this relationship – this social compact - is core to our society: people and businesses pay taxes, and they should get good services in return.

For some taxpayers, including the business community, there is not confidence that government is being run efficiently and cost-effectively.

And for many state employees, there’s an impression that there’s always an attack on the horizon, a budget cut around the corner, and a job that still needs to get done, with workloads growing every single day.

Oregonians deserve to know their money is being spent wisely and that state government is accountable.

My vision is for a state where the social compact is clear: the state, through our employees, delivers quality public services efficiently and affordably.

State employees feel respected and taxpayers feel they’re getting their money’s worth.

This is a tall order, but we must strive for it.

I’m dedicating myself to repairing this frayed yet fundamental relationship. We must increase fiscal transparency in state government, rein in spending where needed, and improve our customer service.

I’ve already taken meaningful actions to this end. I signed an executive order last week to immediately cut administrative costs in state government. Including a hiring freeze, a travel expense reduction, and better use of state facilities.

Today, I am announcing three more steps towards a more efficient and more effective state government:

I am signing an executive order that sets key principles for how we fairly handle contract negotiations with employees. I am reinforcing that as a state we bargain compensation on a total cost basis. We will also determine that cost using a market study of comparable employers.

These are things that private employers do. These are things we have done on and off as a state. We must do them consistently.

This is just common sense for both employees and taxpayers.Yet, no Governor has made this common practice.

I will also be signing an executive order to ensure that we are doing the best possible job to make sure money owed to the state is returned to the state.

As Secretary of State I oversaw an audit that identified more than 60 thousand taxpayers that were paying federal taxes but not state taxes. This accounted for the loss of millions of dollars to the state.

As Governor, I want to change this and take an comprehensive approach to collecting debts.

As of June 30, 2016, there was $3.3 billion in uncollected state debt. Of that amount, about $600 to $800 million is owed to the general fund. This is money that could go to schools, to child welfare workers, and to public safety.

We will streamline our debt collection process and we will centralize it at the Department of Revenue to ensure the state isn’t leaving any money on the table. I want to acknowledge Representative David Gomberg who has worked tirelessly to support our efforts to improve debt collection.

Finally, I am announcing a new effort to keep the promise we have made to retirees.

The PERS unfunded liability is an enormous challenge, but it’s one we must meet. The Legislature has looked at a variety of options for reducing the unfunded liability.

My office has looked at a number of ways to take advantage of state assets to buy down the PERS unfunded liability. We’re ready to act and we want to know for sure if our ideas are viable.

So today, I am appointing a task force specifically focused on identifying and ranking options for reducing the PERS liability by 5-billion-dollars.

I expect the task force to examine state assets as well as the assets of other public employers that could be sold, bonded against, or otherwise leveraged.

A few items are off the table – we will not be privatizing prisons or selling state parks or state forests. But otherwise,
we need to evaluate every sizable asset.

This is going to be a bit uncomfortable, but we must do it to provide policymakers with clear options for reducing the unfunded actuarial liability.

These are the steps, combined with some of the cost containment measures developed by the legislature, that will
help cut state government’s overhead costs for this biennia and beyond.

In closing, I want to be very, very clear: spending every taxpayer dollar wisely is job one.

However, to be the state we want to be it’s clear that simply tightening our belt will not be enough.

Reducing our expenses will not be enough to create and sustain a vibrant education system - one that prepares
students to compete in the global economy.

It will not be enough to support healthy communities.

Especially in rural Oregon.

It will not be enough to build a strong infrastructure. A transportation system that enable workers to get to their jobs safely and products to get to market efficiently.

Today I am here to say: we need to manage our expenses, but we also need stable and adequate revenue for essential services.

In the coming weeks I will be visiting communities and boardrooms across the state to show that state government
can be a responsible steward of the revenue it receives.

In return, I am hoping to build consensus around solutions that restore fairness and balance to our tax system.

Solutions that don’t unfairly burden working families struggling to make ends meet.

Solutions that support economic growth in our rural communities.

Our obligation to Oregonians is to come to terms with the needs of the state and working together to address them.

We all must work together.

Thank you.