Oregon state budget
From Sunshine Review
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Oregon faced a $850 million deficit for the FY 2007-09 biennium and was expected to grow to $3 billion for FY 2009-11. The once estimated $17 billion budget for the 2009-2011 budget fell to $14 billion.[1]
Tom Potiowsky, the state economist, called the deficit "the perfect storm" and said that he didn think the state would see relief until "we get to the second half of 2010."[2]
Early in the budget process, state lawmakers prepared $800 million in budget cuts and on Friday, February 20, state officials said that another $50 million in budget cuts would likely be added. Although budget cuts are very likely for the state of Oregon Senate president Peter Courtney said,"You can't just cut your way out of this thing, and you can't just tax your way out of this thing. We're going to have to do a little of both."[1]But even with tough budget times ahead Gov. Ted Kulongoski said that he will veto any raid on state reserve accounts[1] and in late June the governor did exactly that.[3]
[edit] Finalized budget
- On July 29, 2009 Gov. Kulongoski announced that he may veto a budget cut passed by the Oregon Legislature; a $6 million cut to the state court system.[4]
- On July 20, 2009 the governor signed a three new tax bills that will raise the state’s corporate minimum tax, raise taxes on the state’s wealthiest individuals and raise income taxes on businesses. Kulongoski said that the tax bills are necessary to "stabilize local communities and preserve jobs" during the national recession.[5] However, tax hike opponents are already working on an Oregon Tax Hike Referendum to reverse the tax bills.[6]
[edit] Impact of budget woes
- Main article: State budget crisis, 2009-2010
- In February the Oregon Department of Consumer and Business Services seized Silver Falls Bank, the 14th U.S. bank to be closed this year. Pinnacle Bank of Beaverton, Oregon, was closed in early February.[7] According to David Tatman, director of Oregon's Division of Finance and Corporate Securities the Silver Falls Bank had low levels of capital and depended heavily on construction loans, which were not being repaid.[8]
- The Medford School Disrict is facing a $7.3 million cut that would force the school administration to cut nearly 13 days from the calendar year. In December the district experienced a $1.3 million cut. Superintendent Dr. Phil Long said, "It's excrutiating to be fighting a war on two fronts--the immediate one in front of us and then planning for next year." [9]
- The proposed budget estimates $19 million cut for social services and nearly $60 million to public safety.[10]
- In October 2008 Oregon's unemployment rate was 7.3 percent, compared to the national rate of 6.5 percent. In October 2006 Oregon experienced a job growth rate of 3 percent. Unemployment at the time was recorded at 5.1 percent. [11]
- In February officials from Oregon's biggest public employee union, SEIU Local 503 agreed to take eight unpaid days between now and the end of the next two-year budget cycle. They also agreed to freeze salaries for the next two-years. The union represents 23,000 state employees.[12][13]
[edit] Budget background
Unlike most states, Oregon uses a biennial schedule for it's budget. The fiscal year begins on July 1st of an odd year and ends June 30th of the next odd year. For example, July 1, 2009 to June 30, 2011.[14] Prior to the adoption of the new fiscal year's budget the Governor issues his recommended budget that includes each agency's requests, information on each agency's budget and data on the state's revenues and expenditures. The legislature reviews the recommended budget along with any requests made beginning January of the next fiscal year, for example January 2009. After a series of public hearings with individual agencies a decision is made by the legislature. The Emergency Board has the authority to make changes to the budget between legislative sessions however, special sessions to discuss budget issues can still be called.[15]
[edit] Budget figures
The following table provides a history of Oregon's expenditures and gross domestic product (GDP).
| Fiscal Year | Expenditures (billions) | GDP (billions) |
|---|---|---|
| 2000 | $24.1 [16] | $112.4 [16] |
| 2001 | $25.9 [16] | $110.9[16] |
| 2002 | $27.7 [16] | $117.1 [16] |
| 2003 | $28.0 [16] | $121.6 [16] |
| 2004 | $28.2 [16] | $132.8 [16] |
| 2005 | $29.1 [16] | $138.1 [16] |
| 2006 | $30.5 [16] | $151.0[16] |
| 2007 | $32.0 [16] | $165.1 [16] |
| 2008 | $33.6 [16] | $165.8 [16] |
| 2009 | $35.3* [16] | $173.8* [16] |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
[edit] Ideas about why the crisis exists
- Anticipated revenue from state tax collections and lottery proceeds used to pay for state services and public schools over the next two years are expected to fall short by approximately $3 billion. The fall, said state economist Tom Potiowsky is because of Oregon's failing economy. [17]
- Oregon, like many states, experienced a boost in it's economy during the housing boom but like the recent decline in the real estate market Oregon's economy has also taken a fall.[11] From 2007 to 2008 the number of homes in default doubled. According to RealtyTrac 1 of every 357 homes in Oregon is in some stage of foreclosure. [18]
- Oregon ranks 45th in the U.S. on per capita local and state's taxes. Oregon is one of the few states that does not have a sales tax and draws its revenue only from property and income tax. This, said Rep. Mitch Greenlick is one of the reasons why Oregon has insufficient funds. [19]
[edit] Proposed actions
[edit] Governor Ted Kulongoski
On February 19 the Governor announced that he is taking a 5 percent cut and plans to implement salary freezes for state managers, affecting several thousand employees throughout the state. The cuts won't affect union-represented employees however if they were to be included in the cut, the state would say approximately $120 million for the upcoming 2009-11 biennium. [20] In February the Governor signed into law Senate Bill 338, the “Go Oregon” state stimulus plan. The plan authorizes $175 million in bonds to projects throughout the state. The projects, he said, are meant to address repairs to schools, colleges, transportation infrastructure and address deferred maintenance projects across the state. The projects are anticipated to create and maintain jobs.[21]
[edit] Republicans
Republican lawmakers are calling for Democrats to use the money from the school reserve fund to prevent early closures of schools across the state.[1] Sen. David Nelson and Rep. Greg Smith said that they both favor tapping into the state's reserves because the budget has to be balanced. However, Nelson said that raising taxes is highly unlikely because raising taxes in a recession can cause other problems, he said. [22] In February Oregon Republicans suggested several proposals for creating over 25,000 jobs, which they said is the key to stabilizing the economy. According to Sen. Ted Ferrioli proposals included: adjust tax withholding tables so families have more take-home pay, leverage federal money to construct airport improvement projects and broaden the tax brackets so more Oregonians get taxed at a lower rate.[23]
[edit] Democrats
Democrats are hesitant at using the state's reserve funds. Democratic Gov. Ted Kulongoski has even said that he will veto any attempts at using the state's reserve funds.[1] However, lawmakers suggest that now is the time to find "new sources of revenue." For example,Oregon House Bill 2641 would raise the state's beer tax. Since 1977 the state's beer tax has remained at less than a penny per pint of beer. The proposed tax hike will raise the tax to 15 cents more per glass.[24] [25] Senate President Peter Courtney said that with the "serious issue" of balancing the budget "You can't just cut your way out of these things, and you can't just tax your way out of these things. You have to do both." [22]
[edit] Newspapers
Some newspapers are calling for a reduction in education budget cuts. The Oregonian editorial board suggested,"The Legislature and Oregon's school districts should all start with the premise that this state can keep its schools open." According to Legislator's recent proposals, public schools will have approximately $167 million in cuts, forcing officials to reduce the number of days in the calendar year. Instead The Oregonian suggests that schools take a $40 million cut and use any reserve funds they hold. They also suggest that schools use money from the federal stimulus to prevent cutting any days from the calendar year.[26]
According to the Governor's budget proposal for 2009-11, education accounts for approximately 54 percent of the General Fund.[27]
[edit] Economic Stimulus Package
Oregon is expected to receive approximately $2.3 billion of the $787 billion economic stimulus package. According to White House officials the stimulus bill is estimated to create or save 44,000 Oregon jobs.[28]
[29]
According to preliminary reports Oregon is expected to receive:[29][30]
- $569 million in stabilization funds
- $466.5 million for Kindergarten through post-secondary education
- $7 million for Head Start programs
- $130 million for Title 1 schools
- $135 million for students with disabilities
- $196 million Pell grants for college students
- $190 million in food stamp assistance
- $22 million in child care assistance
- $830 million in Medicare reimbursements
- $103.8 million for all other state agencies
- $300 million for electric grid modernization
- $70 million for energy efficiency grants
- $224 million for state transportation projects
- $65 million for urban transit district projects
[edit] Budget transparency
Oregon currently has no statewide, official spending database online. However in February, a group of 27 legislators said they are sponsoring a bill, the "Open Books Oregon Project," that would require the state to create a searchable website by Jan. 1, 2010, listing revenue and expenditures for all state agencies.[31]
- On June 27, 2009 the Oregon state senate unanimously passed House Bill 2500 which will lead to the creation of a website that tracks state spending. On June 30, 2009 the bill was unanimously adopted by the House and will now move to the Governor’s Desk. The non-partisan bill was written by State Representatives on both sides of the aisle, including: Arnie Roblan, Jefferson Smith, Kim Thatcher, and Gene Whisnant. The passing of HB 2500 marks the largest step towards government transparency in Oregon history.[32]
- Oregon House Bill 2500: states that "taxpayers should be able to easily access the details on how the state is spending their tax dollars and what performance results are achieved for those expenditures."
- The bill calls for an easily accessible and interactive website. The site would be developed and maintained by the Oregon Department of Administrative Services. The site will provide: the location, purpose, and results of Oregon taxpayer investments; agency budget figures; contracting information; and audit reports issued by the state secretary of state.
[edit] Legislation
Oregon House Bill 2500 (2009) would direct the "Oregon Department of Administrative Services to develop and make available [an] Oregon transparency website for [the] purpose of allowing people to view information that is public record and not exempt from disclosure."[33] The bill passed in the Senate and the House by June 29, 2009.[33]
[edit] Government tools
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
| State Database | Searchability | Grants | Contracts | Line Item Expenditures | Dept/Agency Budgets | Public Employee Salary |
|---|---|---|---|---|---|---|
| None | n/a | n/a | n/a | n/a | n/a | n/a |
[edit] Limitations and Suggestions
[edit] Public employee salary information
The Statesmen Journal has a database of state employee salary information available here.
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[34]
- Oregon will receive an estimated $1,686,263,846.[35]
- The economic recovery website to show how legislators and government officials in Oregon are spending Federal funds is available here.
[edit] See Also
Oregon taxpayer-funded lobbying
[edit] External links
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Cascade Policy Institute
- Oregon Budget and Management Division
- Oregon State Legislature, Budget and Taxation
[edit] Additional Reading
- Salem-News,Governor Delivers 2009-2011 Recommended Budget to the Legislature, December 2,2008
- Statesman Journal,"Lawmakers alter off-session scheduling for panels," July 30, 2009
- Statesman Journal,"Budget will haunt 2010 session," July 6, 2009
[edit] References
- ↑ 1.0 1.1 1.2 1.3 1.4 The Oregonian,"Oregon's economy heading 'into a pit'," February 21,2009
- ↑ Associated Press,"Buddy, can you spare $850 million," February 20,2009
- ↑ All American Patriots,"Oregon Governor Vetoes Budget Legislation," June 23, 2009
- ↑ Oregon Public Broadcasting,"Kulongoski Threatens Two More Vetoes," July 29, 2009
- ↑ Portland Business Jouranl,"Kulongoski signs tax bills," July 20, 2009
- ↑ The Oregonian,"Tax opponents ready to launch signature drive," July 20, 2009
- ↑ The Oregonian,"Silver Falls Bank of Silverton next in crisis to close," February 20,2009
- ↑ Bloomberg,"Oregon Regulators Shut Silver Falls Bank, 14th Seized in 2009," February 21, 2009
- ↑ KTVL,"Budget deficit hits schools even harder," February 20,2009
- ↑ Associated Press,"Oregon budget committee unveils proposed cuts," February 18,2009
- ↑ 11.0 11.1 The State of Oregon,"Budget 2009-11," retrieved February 23,2009
- ↑ Northwest Public Radio,"Oregon Employees Union Agrees to Furlough Days," February 12,2009
- ↑ The Oregonian,"State union offers budget lifeline," February 13,2009
- ↑ The State of Oregon,"Biennial budget kickoff," January 9,2007
- ↑ The State of Oregon,"Budget process overview," retrieved February 23,2009
- ↑ 16.00 16.01 16.02 16.03 16.04 16.05 16.06 16.07 16.08 16.09 16.10 16.11 16.12 16.13 16.14 16.15 16.16 16.17 16.18 16.19 ,"Oregon state and local spending," retrieved February 23,2009
- ↑ Statesman Journal,"Lottery, tax revenue leave $3 billion hole," February 21,2009
- ↑ OPB,"Foreclosure's weaken Oregon's real estate market," February 13,2009
- ↑ The Oregonian,"The root of Oregon's insufficient funding," February 14,2009
- ↑ KGW,"State pay freezes among budget solutions," February 19,2009
- ↑ The State of Oregon,"Governor Signs Oregon Stimulus Legislation," February 5,2009
- ↑ 22.0 22.1 The East Oregonian,"Legislators grapple with grim totals," February 21,2009
- ↑ Statesman Journal,"Job creation is key to ending recession," February 22,2009
- ↑ OPB News,"Oregon beer tax will be debated," February 23,2009
- ↑ The Oregonian,"Oregon revenue hunt comes to a head: beer," February 15,2009
- ↑ The Oregonian,"This Oregon school year can be saved," February 23,2009
- ↑ The State of Oregon,"2009-11 Governor's recommended budget," retrieved February 23,2009
- ↑ Statesman Journal,"Workers, governments await fruits of the stimulus," February 22,2009
- ↑ 29.0 29.1 The Portland Tribune,"Stimulus estimates for Oregon still ‘iffy’," February 17,2009
- ↑ The Oregonian,"Stimulus plan offers immediate help to Oregon," February 17,2009
- ↑ USA Today,"States put spending details online," February 23,2009
- ↑ "Source", New Website for State Budget Transparency Gets Final Approval, June 30, 2009
- ↑ 33.0 33.1 The Oregonian, Bill Status: House Bill 2500
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ Wall Street Journal,"Stimulus Spending by State," March 12,2009
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