By Rep. Michael Dembrow (D-Portland).
Well, the lousy weather this week served as an ominous precursor to the revenue forecast released Tuesday morning by the State Economist.
The latest projections show a gap of more than $570 million between the funds that have been budgeted for the 09-11 biennium and the revenue that the state expects to bring in. So, what does that really mean?
As much as this is a forecast, it could also be considered a “backcast” (i.e., a lookback), as this is the first forecast since the 2009 state income tax returns came in. As the Department of Revenue has processed these 2009 returns, it has become clear that 2009 was a worse year than we initially realized. As a result, revenue over the 09-11 period is lower than expected and there will need to be cuts in order to balance the budget over the remaining year of the biennium (fiscal year 2010-2011).
In response to this news, Governor Kulongoski held a press conference Tuesday afternoon to announce that he is exercising his “allotment authority” under state law to require across-the-board budget cuts to state services. Under this process, state agencies will have two weeks to prepare a plan to trim their budget by 9% for the coming fiscal year. This requirement is equally applied across every agency that receives General Fund dollars – all agencies will take the same 9% cut.
This 9% cut will have a devastating impact on many of the services that Oregonians rely on. The numbers are staggering:
- $252 million in cuts to the Department of Education (mainly borne by the K-12 school districts)
- $154 million from Human Services
- $50 million from Corrections
- $30 million from the Oregon University System, and $20 million from community colleges
- $10 million from the State Police
We legislators will most likely start the cutting process with our own budgets. It’s important for us to recognize that we need to reduce our costs as we ask state agencies to reduce theirs. While the allotment process does not require cuts to the Legislative Branch, I expect that we legislators will reduce our individual budgets by around 9% for the coming year.
Since Governor Kulongoski has exercised his executive authority to reduce the budget across the board, there will most likely not be a special session of the legislature to vote on the budget cuts—across-the-board cuts can be implemented without Legislative approval. If we chose to do so, we could still call ourselves back into an emergency session to make differential cuts to the budget. At this point, though, I’m not inclined to go that way. I see that process as leading to further uncertainty and unproductive political posturing. If, on the other hand, you think I should reconsider and vote to initiate an emergency session, I’d appreciate getting your thoughts ASAP.
Amidst the gloomy forecast, there is reason for hope. There appears to be a good chance that the federal government will be temporarily extending two key aspects of the recovery program: the current higher level of Medicaid payments and the current payments to help public education. If extended, these will be enormously helpful for us over the next couple of years and may allow us to scale back this next round of cuts somewhat. Stay tuned for news on that front.
Moreover, looking down the road, we do continue to see promising signs for the economy moving forward, both nationally and here in Oregon. Revenue from corporate taxes and the lottery are up, and we added more jobs last month in Oregon than in any month since October 2007.
However, we are trying to dig ourselves out of a pretty serious hole. We’re still feeling the effects of the recession and it’s important to realize that it will take some time for the state’s revenue picture to fully recover.
As we look forward to the 2011 session, it will remain my priority to protect those areas of the budget that serve our most vulnerable citizens—children, seniors, low income families and people with mental and physical disabilities. I’m committed to doing what I can to preserve funding for the critical services that Oregonians depend on, as well as to preserve and create jobs wherever possible.