Rainy Day Funds Should Be Protected

Now that the county and one of its unions have settled their labor dispute, can we shove one little canard down a dark and deserted mine shaft?

Pointing to county reserves and contingencies totaling $184.3 million, AFSCME representative Jim Steiner made this argument. “They have the ability to pay, but I’d argue they don’t have the willingness,” he said. “They’re definitely not cash-strapped.”

My point is not against the union or its workers. They settled their dispute and all agree it’s time to move on.

What I’d like is to put this and every other fiscal controversy behind us by agreeing to new ground rules. It takes courage and foresight (some would argue they are the same thing) to put money away in a strategic reserve, especially when there are always people who are happy to spend whatever money you have available here and now.

It should be labeled “strategic reserves” only when putting the money in. When it’s being taken out, it should be labeled “political cowardice.” Elected officials might think twice about balancing their budget by dipping into the “Political Cowardice Fund.”

It’s too late to effectively punish the lawmakers who guaranteed exorbitant returns on PERS retirement funds, but that’s the gripe citizens have with every remedy that’s been proffered. The people who will suffer are either the new government employees or the taxpayers or the recipients of government services.

PERS retirees are entitled to their contractually guaranteed benefits, but what about the lawmakers who signed off on each “Wimpy” resolution that created the debacle? They promised the state “would gladly pay you Tuesday, for a hamburger today.” But by the time Tuesday came, they were retired (often with their own PERS retirement) and safely removed from the consequences of their cowardly concessions.

If we didn’t have the money to pay state workers in the 1980s because Oregon was hit particularly hard by a recession, how dare our elected officials agree to pay for services with tomorrow’s dollars and then walk away? Hard choices are what the public expects its leaders to make. Choices have consequences. Unpopular choices might result in electoral losses. It’s all part of the job.

That’s water under the bridge, but we can stand on that bridge and see water that’s still coming. Every time a board of commissioners or city council or school board decides to spend less than every penny available, they incur a risk that future inhabitants of their seats will not understand, respect or emulate the courage of their choices.

Identifying profligacy as political cowardice would be nice, but it’s not that simple. Situations do occur that previous decision-makers foresaw. Spending reserve funds in those cases is appropriate. The trouble is that the contingencies that prompted the foresight of saving have not been well articulated and documented for the future.

Sure, somebody could go back to the minutes to see what discussion swayed certain decision-makers to set aside certain funds. On rare occasions, funds have been restricted in the way a will or an endowment can define an investment’s direction. Land trusts are used to limit future uses all the time.

But more often than not, a reserve fund is simply a line item in the budget or balance sheet — a candy drawer without a lock. Sooner or later, the temptation is likely to become too great.

Creating “internal endowments” to direct future uses for reserved funds would be cumbersome and legally dubious. The same body that inserted the restrictions could (with new inhabitants) remove them.

So how about this? Some (literally) forward-thinking civic leaders could establish a non-profit organization, whose sole purpose is to collect and store the intentions of certain civic leaders whenever they choose to set money aside. (They might even collect and manage the funds.) That organization would promote those original intentions whenever those funds were being spent — with public testimony, press releases, or even paid advertising.

If our current leaders felt confident their courageous choices would be articulated and protected in the future, how much more courage would emerge? Oregon, of all places, should embrace Rainy Day Funds.

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Don Kahle (fridays@dksez.com) writes a column each Friday for The Register-Guard and blogs at www.dksez.com.