Governor, Legislature must choose between state’s realities, wants list

Dennis Richardson

Oregon’s 90 state legislators were sworn in on Monday, Jan. 12.

Meanwhile, the process to craft, refine, and adopt Oregon’s 2015-2017 State Budget has been under way for months.

Oregon’s budget process begins with dozens of state agencies presenting budget requests to the governor in September. The governor and Oregon’s Chief Financial Office consider these requests and set forth the chief executive’s priorities in the Governor’s Recommended Budget, released in December.

Then, working with the Legislative Fiscal Office, the co-chairs of the Joint House-Senate Committee on Ways and Means, Sen. Richard Devlin and Rep. Peter Buckley, craft the Co-Chairs Budget that is presented to the Ways and Means Committee and the entire Legislature. This budget is broken down into dozens of individual bills, tweaked and refined, and then passed in a succession of votes that can take months to complete.

Unlike most household budgets, which run with the calendar from Jan. 1 through Dec. 31, Oregon’s budget covers two fiscal years (a “biennium”). This means it runs from July 1 of an odd-numbered year to June 30 of the next odd-numbered year – for example, July 1, 2013 to June 30, 2015.

And unlike the federal budget, Article IX, Section 2 of the Oregon Constitution requires the Legislature to pass a balanced budget. The General Fund revenues for the 2015-17 bienium are expected to total $17.615 billion, an increase of $1.776 billion (11.2%) from the 2013-15 biennium. Lottery funds are expected to total $870.3 million. Together, the General Fund and Lottery Fund will provide Oregon with approximately $18.7 billion in essentially discretionary funds (although Lottery funds do have to be used in specific allocations for education, economic development, state parks, and other purposes).

How does our governor propose to spend your taxpayer money?

Governorís Recommended Budget

The Oregonian Editorial Board summarized Governor Kitzhaber’s budget well: “The governor has taken advantage of an upswing in the economy to propose heavy spending on new programs, which he justifies with rosy assumptions about future savings that may or may not occur. Meanwhile, the possibility of an income tax kicker hangs in the air, a reminder of the state’s gorge-or-starve revenue swings and the budgetary crises they inevitably create.”

The governor’s budget also assumes significant savings from health care reforms, changes to the Public Employee Retirement System (PERS), and criminal justices reforms.

Education

Oregon recently ranked 41st in the nation in education. Much of the discussion on the budget proposal surrounds education, which typically makes up about half of the General Fund/Lottery Fund budget. While spending for grades 1 through 12 is “essentially flat,” the governor’s budget includes $130 million in new spending for early childhood education, $220 million for full-day kindergarten, $85 million for a new K-3 reading initiative, and about $130 million more for colleges and financial aid.

Some education groups and public universities are crying foul, because the overall increase in education funding doesn’t even match the overall budget increase, while at the same time proposing new programs that will increase the strain on the current system’s resources. As former Rep. Scott Bruun noted, “How will new funds for full-day kindergarten and new public preschools get back lost school days for Oregon’s 490,000-or-so students who aren’t in kindergarten?”

As always, the education budget will remain the primary point of debate in the 2015 Legislative Session.

Economy, Transportation and Infrastructure

Gov. Kitzhaber proposes a new $21 million “Working Family Addition” tax credit to help smooth out the benefit cliff for those who are moving up the income ladder and experience a loss in subsidies and benefits on the way up. He proposes $55 million in new dollars for subsidized daycare for low-income working families. The governor also proposes a 39.6 percent increase in funding for Business Oregon ($648.9 million total funds) to focus on economic development in the state.

The budget makes little mention of reducing regulations – in fact, the only mention of regulation is increasing them (in the form of a statewide mandatory sick leave policy) and paying more bureaucrats to help serve as “quick response problem solvers.”

For Transportation and Infrastructure, most spending focuses on maintaining our current transportation network, including funding for new ODOT maintenance stations, sustaining passenger rail between Eugene and Portland, and upgrading DMV’s computer systems. The governor proposes $58.6 million in ConnectOregon VI spending, which funds non-highway transportation projects such as ports, public transit, and the rail network in Oregon. Nothing in the governor’s budget suggests a significant, long-term investment in alleviating congestion or moving freight.

Social Safety Net

The governor also wants to spend more on Oregon’s social system and safety net. Highlights include $53.2 million for community mental health and addiction services and $100 million for housing for the homeless.

Reserving Judgment

In light of an economy that can swing state revenues up or down very quickly, we note the relative lack of reserves in this budget proposal. However, we recognize that the governor’s budget is a step in a nearly year-long process to create and pass the biennial budget for Oregon.

It is an inevitably difficult project due to two competing forces – one, the constitutional requirement to balance the budget, and second, the desire by politicians to spend money on well-intended projects. Saving money for the next downturn is never sexy, and never garners headlines or votes at the next election.

The governor has spoken. Now begins the legislature’s opportunity.

Now-former Rep. Dennis Richardson ran against John Kitzhaber for governor in the last election and completed his sixth and final term in the Oregon House of Representatives on Jan. 12. He resides in Central Point.

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