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Friday Financial Five – August 7th, 2015

Friday, August 07, 2015


Senate considering package of tax breaks

The Senate Finance Committee overwhelmingly approved 52 tax extenders. It will move to the Senate floor while the House works on a separate version. If recent history serves as a guide, the bill won’t get resolved until December, but both sides of Congress would like to avoid that this year. The measures touch on a variety of initiatives, including tax-free IRA contributions to charity, renewable energy breaks, and research and development credit. Why these particular breaks need to be reviewed and extended periodically instead of being made permanent remains a mystery.

Healthcare spending will grow over the next decade

For the years leading up to 2024, healthcare spending is expected to grow to 19.6% of GDP, according to a report from government actuaries. From 2014 to 2014, healthcare spending is expected to increase at an average rate of 5.8% and governments are expected to finance almost half of the cost, largely due to the expansion of Medicaid. Private health cost increases are anticipated to settle at 5.4% by 2016 as bigger companies move to high deductible health plans.  

Parents concerned about children’s financial wellness

Part of the parenting job description is to create a pathway for children to surpass the parents’ financial success. Overwhelming student debt and tough job market for graduates have created an environment where parents no longer have confidence that this is attainable. According to Haven Life, only 13% of parents surveyed expect their children to be better off financially at their career peak. This concern may lead to parents assuming more school loans in an effort to open up more opportunities. There may be longer periods of financial dependence on the parent. In the end, these factors may mean extending the parents projected retirement date.

CFPB releases insights from eClosing study

The Consumer Financial Protection Bureau introduced a pilot technology study of “E-closing," intended to make the mortgage process less cumbersome and more transparent. The CFPB came away with some important points of emphasis. Borrowers should review as much of their closing package as possible before the actual closing date. Those using a checklist were much more comfortable with the process than those who didn’t know what to expect. 

$70k minimum wage has unintended consequences

Gravity Payments, a Seattle-based credit card processing company, made headlines when their CEO decided to raise wages in stages until everyone was paid at least $70,000. While the intent may have been noble, it’s taken only a matter of months for things to go wrong as a result of the increase. The CEO’s brother filed suit against him, alleging the move breached his rights as a minority shareholder. More predictably, important members of the staff moved on to other opportunities, feeling it was unjust to overcompensate employees with less talent or responsibility. It appears to be a case of basic economics trumping good intentions.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].


Related Slideshow: Slideshow: The 20 Biggest Bills Coming Before the Legislature in 2015

Check out the 20 biggest bills coming before the legislature in 2015:

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Identification Cards for Undocumented People

Voters decisively defeated a ballot measure last month that would have allowed undocumented immigrants to obtain a state issued identification cards and drivers licenses without providing proof that they were legally residing in the U.S.

Despite two-thirds of voters voting against the measure in 2014, a similar bill is likely to surface in the coming session, pundits said.

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Closing Loopholes in Gun Purchases (like guns as gifts)

At the conclusion of the previous session, gun rights groups celebrated the fact that the legislature didn’t pass any laws restricting the access of firearms.

Many political minds suspect this session to be significantly different, with Democrats looking to cut redundancies and close loopholes in when it comes to gun sales.

“There will be a little bit more mathematics by the people who want to see the loopholes closed,” Bergstein said.

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Having Law Enforcement Follow-up Failed Background Check

The Oregon State Police approved of 261,128 gun transfers in 2013 and denied 2,215 due to felony convictions.

Another reason an Oregonian may fail their background check, besides having a felony conviction, is having a restraining order against them. A new law may be introduced in 2015 that would require law enforcement agencies to follow-up after some failed background check to ensure that the person who filed a restraining order isn’t in danger.

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Marijuana DUIs

Voters approved Measure 90 in November, legalizing marijuana for recreational use in 2015.

Unlike the Washington law, which included attached regulations concerning driving impairment, Oregon’s law has more room for interpretation.

Driving under the influence of marijuana is currently classified as a class b traffic violation, which carries a presumptive fine of $260 and is not to exceed maximum fine of $2,000.

The Oregon Liquor Control Commission has been tasked with researching the subject of drugged driving and presenting its finding to the Oregon Legislative Assembly.

After reviewing the OLCC report, the state legislative assembly will decide whether passing more extensive driving regulations will be necessary.

Although the Commission was given a deadline of 2017, there’s a strong chance legislation on the matter may come sooner.

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Cracking Down on Excessive Student Loan Fees

One of House Speaker Tina Kotek’s highest priorities is cracking down on companies like Higher One, who issue financial aid disbursements to college students.

When the federal government issues loans and grants to students, a third party is tasked with delivering that money to the student — and often costs the student a significant amount of money.

In some cases, a student’s financial aid is issued to them on a debit card that charges a fee for every transactions, sometimes costing  a student several hundred dollars of a $1,500 disbursement.

Although technically legal, such practices have received scorn over the years from students and politicians alike.

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Tax Deductions for Interest Payments on Federal Student Loans

One of the biggest strains of the state economy is student debt, which in recent years has surpassed other forms of debt, including credit cards. In fact, student debt eclipsed $1.2 trillion nationally last year.

Expect the legislature to pass a bill that will make interest payments on federal student loans tax deductible to help alleviate the economic burden associated with getting an education.

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Capping Costs of Bachelor’s Degrees

During the 2014 Legislative Assembly, Rep. Mark Johnson from Hood River introduced House Bill 4076, that would have directed Oregon Institute of Technology and Southern, Eastern, and Western Oregon Universities to start a pilot program for offering bachelors degrees at a fixed cost.

With Kotek & Co. looking to significantly reduce the cost of the post-secondary education, look for a similar bill to resurface in 2015, even though the previous bill failed to materialize.

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Free Community College Tuition

Such a law has been in the works ever since Gov. Kitzhaber first announced his 40-40-20 goal that by 2020, 20 percent of Oregonians will have earned a high school diploma or equivalency, 40 percent will have earned at least a bachelor’s degree and 40 percent will have earned an associate’s degree or two year career certification.

A bill that ensures that anyone who graduated Grade 12 in Oregon has the right to attend community community college without paying any tuition or fees for a set period of time may be passed by the legislature this year.

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Increased Funding for Research

With so much cutting edge research being conducted at Oregon’s universities, pundits are saying it would make sense to fund it at a higher level.

Projects at Oregon State University to research robotic, thought-controlled prosthetic limbs and exoskeletons, in addition to research being done by Oregon Health and Sciences University into treating everything from Cancer to mental illnesses, may be plenty of reason to earmark more funding for investment into the future of science.

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Increasing Incentives For Veterans to Study in Oregon

Last year, the legislature passed a bill that allowed members of the military from out of state to attend graduate school in Oregon while still paying the in-state tuition rate.

Look for this year’s legislature to expand that initiative to more members of the military who are pursuing degrees with pay well or degrees that allow for economic innovation.

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Changes to Class Action Lawsuits

Oregon is one of the few states that allows money from a class action lawsuit that goes unclaimed to be returned to the company that was sued.

In the interest of alleviating the budget, a number of legislators are looking to enact a new law in 2015 that will allow unclaimed money from these suits to go into a separate fund to be used by the state.

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Prohibiting License Plate Tagging

In Congress, the fight against government surveillance is being led by Sen. Ron Wyden (D-OR).

In Wyden’s home state of Oregon, some legislators have also taken up his cause.

In 2015, pundits are expecting a bill outlawing ‘license plate tagging—’ the act of taking a photo of a license plate whenever a vehicle stops at a stop sign or passes through a traffic camera.

Authorities have been rumored to use the method to track drivers crossing between Oregon and Washington after the latter state legalized marijuana for recreational use.

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Capital Construction Projects

Pundits are expecting more capital construction projects in 2015.

“Although infrastructure is getting better, it’s still a source of concern for Oregonians,” Bergstein said.

Improvements to roads and bridges are always needed, so expect some additional funding to be allocated towards improving the state’s infrastructure in 2015.

The $200 million in state bonds issued to Oregon Health and Sciences University is a classic example of how an allocation of funds can improve a whole area of the city, Bergstein said.

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Clean Fuels

Gov. Kitzhaber has announce a Clean Fuels Work Advisory Committee last Spring to help with the implementation of his Clean Fuels Initiative.

Look for legislation having to do with cleaner fuels, and possible restrictions of carbon emissions, in the coming year.

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Increased Funding for Early Education

“The Governor has certainly set the education agenda early with his budget,” Bergstein said.

The governor’s proposed budget calls for more support at the early end of education, with more support for early part of K-12 education and less for the later years of K-12.

Pundits are expecting some teaching organizations to fight for the latter part of k-12 education getting its fair share of state funding

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Requiring State Investments to Be Managed by Oregon Firms

A law requiring the state’s in house investments to be managed by firms in Oregon instead of Wall Street bankers could potentially save big money, according to Kotek.

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Labeling of GMOs

Voters in Oregon narrowly rejected Measure 92 last month. The statewide ballot measure would have required the labeling of foods containing genetically modified ingredients just finished its recount last week.

With so many Democrats in the legislature, a bill requiring the labeling of GMOs may be an easy law for Oregon lawmakers to pass.

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Tax Debts and Private Collection Companies

A number of Oregonians have received erroneous phone calls over the past year claiming that they owed an unpaid tax debt to the government. So many of these calls occurred, in fact, that it prompted Oregon Attorney General Ellen Rosenblum to issue a warning on the matter.

A new bill prohibiting assigning tax debts to private companies could be on the way to protect citizens from financial crime.

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Minimum Wage Increase

Income inequality is a growing problem for Oregon. It’s not happening because the rich are getting richer — but because the poor are actually getting poorer.

An increase in minimum wage often creates an impact for mid-level workers, who make a few dollars above the minimum wage. A large number of ‘middle wage’ employers use the state minimum as a point of reference for their own pay scale.

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Disclosure of Toxic Chemicals in Children’s Products

A House Bill requiring the state to maintain a list of children’s products toxic chemicals was left at the table in 2014. House Speaker Tina Kotek stated that she expects this initiative to resurface during the next assembly.


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