Press release from Senator Bruce Starr
Following a September Revenue Forecast that reveals the anemic reality of Oregon’s current rainy day fund, Senator Bruce Starr (R-Hillsboro) is again calling for a robust savings account that will protect Oregonians during tough economic times.
“Heading into a budget cycle that could be upside down by as much as a billion dollars, Oregonians need a strong rainy day fund that will protect our classrooms, police and elderly,” said Starr. “Unfortunately, the rainy day fund adopted last session seems to be full of holes, and this budget cycle’s contribution has dwindled to a paltry $23.8 million. Oregonians deserve a stronger safety net.”
Starr proposed a rainy day fund last session that would have started saving before spending began, ensuring that money was always put away for a rainy day. The plan put 3% of a cycle’s revenue into a savings account. Only 2/3rds of the fund could be spent in a given biennium and in order to access the savings the legislature would have to approve it by 3/5s vote. The fund would also have been protected by economic triggers to ensure that it was only accessed in a true recession. Thursday’s revenue forecast predicts that only $23.8 million will be set aside in the state’s rainy day fund this cycle, while Starr’s plan would have saved $294.7 million, according to the Legislative Revenue Office.
“A principle of smart personal finance says “˜pay yourself first,’ meaning put money into savings for emergencies when you get paid, before you start paying bills and buying flat screen TVs,” said Starr. “Unfortunately for Oregonians, Democrats decided we should spend first and save for our future last. Now we are looking at empty pocketbooks and hefty bills.”
The current rainy day fund only takes what money is available at the end of a budget cycle, known as the ending fund balance. Often, the ending fund balance is spent down throughout the biennium or a declining economy reduces projections. This biennium the rainy day fund contribution was projected to be $139 million but has dwindled to a dismal $23.8 million.