Oregon confronts its earthquake risks

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Oregon Gov. Kate Brown unveiled a plan to pay for infrastructure improvements to protect against a major earthquake just weeks before a close gubernatorial race.

Brown, the Democratic incumbent, was only five points ahead of Republican physician Knute Buehler in a poll conducted in mid-October by DHM Research for Oregon Public Broadcasting.

No one disputes that the state needs to prepare for an earthquake that could be as massive a magnitude 9.0, which combined with a tsunami, could cause a direct economic loss of $12 billion, more than 7,800 deaths and injuries, and displace more than 17,300 households, according to Brown’s plan.

Her plan includes links to many reports outlining the devastation that could strike the state, noting that the next massive earthquake is about 50 years overdue and could strike at any time.

"When the next Cascadia subduction zone earthquake strikes the Pacific Northwest, Oregon will face the greatest challenge of our lifetimes. Oregon’s buildings, transportation network, utilities, and population are not as ready as they should be and we must accelerate our preparations," Brown said in a prepared statement. "My priority is to get Oregonians ready to survive while ensuring our state government and economy are able to weather such a devastating event."

Oregon’s buildings and lifelines, which include transportation, energy, telecommunications, and water/wastewater systems, would be damaged so severely that it would take three months to a year to restore full service in the western valleys, more than a year in the hardest hit coastal areas, and many years in the coastal communities inundated by a tsunami, according to Brown's plan.

Brown ascended to the governor's office from the position of secretary of state when Gov. John Kitzhaber resigned in February 2015 amid a criminal investigation into his wife’s role in the administration. Brown, 58, has also been state Senate majority leader.

She has been criticized for not following through with plans to reduce the state’s $22 billion pension liability, which is crippling the state’s school districts. In contrast, economists and the rating agencies have largely positive things to say about the double-A rated state.

“Oregon will remain at the vanguard of the U.S. expansion,” wrote Paul Matsiras, an analyst with Moody’s Analytics in July. “Robust gains in high-wage industries such as tech will boost per capita income, and strong population trends bode well for housing and consumer analytics … Oregon will remain an above average performer in the long term.”

When Treasurer Tobias Read released the state’s debt report in February he lauded state lawmakers and the governor for “their measured approach to borrowing in recent years and also for creating deep budget reserves, which has strengthened the state’s overall financial position.”

The debt report said the strong economy and strong financial management had increased the state’s capacity to borrow significantly.

“Wise use of debt means Oregon can prudently make targeted new investments in schools, bridges and other critical facilities, and also perform badly needed repairs,” Read said. “Addressing deferred maintenance extends the lives of existing facilities, and is a bargain compared to building replacements.”

Brown has made infrastructure a priority, signing a $5.3 billion transportation package in July 2017.

Read's debt commission based its projections on a spectrum of variables including long-term revenue and interest rate projections, and existing outstanding debt. Oregon’s combined long-term debt totaled $11.9 billion at the end of June 2017.

The 2018 debt commission report is an off-year update to policymakers and highlights budget and debt capacity-related changes that have occurred since the beginning of the 2017-19 biennium.

Significant general obligation debt capacity will come available over the next three biennia, estimated at $3.72 billion in addition to the $1.1 billion in capacity already allocated by the 2017 Legislature and remain within the 5% threshold for this type of debt, according to the commission's report.

There is also more projected future capacity for lottery-backed debt. The capacity to repay bonds with public gambling proceeds will climb by $81 million per biennium to $290 million, starting in 2019-21.

The state's general obligation bond ratings of AA-plus from S&P Global Ratings and Fitch Ratings and Aa1 from Moody’s Investors Service are also a testament to the state's strong fiscal management, according to Read.

Brown’s earthquake proposal focuses on state investments in seismic upgrades to schools and emergency service buildings, developing a plan for critical energy infrastructure, implementing an early warning system for earthquakes and fires by 2023 and working with the Red Cross to ensure the 250,000 most vulnerable homes have two weeks of emergency supplies.

The Cascadia Subduction Zone is 50 to 75 miles off the Oregon coast where two plates meet. Scientists have estimated there is a 7% to 12% chance that a powerful earthquake and tsunami will impact the entire Pacific Northwest within the next 50 years, and a 37% chance that a very large earthquake will impact southern Oregon and northern California in that time frame, according to the Brown's plan.

Brown’s plan served as both a progress report on what has been accomplished since Oregon’s Resilience Plan was first established in 2013 and promises for the next biennium’s budget for 2019-2020.

Among the accomplishments highlighted in Brown's plan was Senate Bill 447, which established the Oregon School Capital Improvement Matching Program. School district voters have to approve a local general obligation bond measure to qualify for matching funds.

“The program operates as an incentive and funds are committed to districts ahead of the election,” the report said. “Districts can use this information to let their community know about the possibility of receiving some matching funds from the state should their local bond pass. Once awarded, the district may use the funds to support capital construction projects, and in some cases, do seismic upgrades at the same time. This program has been funded at $225 million since 2015."

Voters will decide Nov. 6 if the budget will be crafted by Brown, or Republican challenger Buehler.

Brown, a Democrat in a blue state, is being hammered by Buehler for the state’s budget deficit, estimated to hit between $500 million and $1 billion during the next biennium, and an underfunded public employee pension system that he says is crippling local school districts.

Buehler, 54, has highlighted the state’s finances, educational issues and medical care.

“No governor in Oregon history has had more money to fund and fix our schools than Governor Brown. Instead, we have a classroom funding crisis, more teachers getting pink slips instead of promoted and larger class sizes,” Buehler tweeted Tuesday.

Brown unveiled a plan in August to improve the state’s public school system, but she hasn’t explained how the state would pay for it. The state has one of the worst high school graduation rates in the country and the shortest school year.

Facing criticism, this week the governor reversed a plan to delay the release of a report card on the state’s schools until after the election.

Even with record spending on the K-12 system, school districts are shrinking teacher positions and cutting programs in an attempt to keep up with growth in pension and health care costs.

In March, the state legislature passed a bill aimed at reducing the unfunded liability of the Oregon Public Employees Retirement Fund. Brown championed the legislation that redirects some proceeds from debt collection, capital gains taxes, estate taxes, marijuana taxes, alcohol taxes, lawsuit settlements and lottery revenues to lowering the liability.

The bill also tasked the state treasurer with studying the whether it would be wise to borrow from the Oregon Short Term Fund, a $15.7 billion cash investment pool in which a number of local governments and state agencies participate to be redeployed into investments.

Buehler and other detractors have questioned whether Brown is the right person to close the deficit and deal with its struggling education system. The Oregonian, the state’s largest newspaper, endorsed Buehler.

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Infrastructure Public pensions Public school funding Kate Brown State of Oregon Oregon