Oregon state govt spending has tripled in 20 years

Sen Doug Whitsett

by Sen. Doug Whitsett

Oregon desperately needs to establish a constitutional limit on the growth of state government spending. The need is made painfully clear by a comparison of what the growth of state budgets would have been with a spending cap in place over the past twenty years, and the increase that actually occurred without a limit on spending growth.

Our Legislative Fiscal Office proposed a spending growth cap for the purpose of comparison. That cap would limit budget growth to the rate of population growth plus the rate of inflation as measured by the Consumer Price Index.

Oregon spent about twenty billion dollars in all-funds budgets twenty years ago. The all-funds budgets would have grown to about twenty seven billion dollars during the current budget period with the spending limit in place, according to LFO calculations. That would have been an increase in spending of about seven billion dollars over twenty years.

Oregon all-fund spending actually grew to sixty billion dollars over that twenty year period. State government spending has in fact tripled during the last twenty years. The actual increase in spending was forty billion dollars. The rate of spending increase that actually occurred was nearly six times what it would have been with the proposed limit on spending growth in place.

To put that gigantic amount into perspective, state all-fund spending for the current budget period exceeds fifteen thousand dollars for each man women and child now living in Oregon. We might ask if the average Oregon family-of-four received sixty thousand dollars in benefits from all that state spending.

Virtually the entire sixty billion dollars that the State spends is produced from taxes, fees, charges, licenses, registrations and other charges to enforce compliance with regulations from the private sector economy. Even the taxes and fees paid by public employees come largely from revenue that originates in the private sector. We might also ask what negative influence on private sector economic growth and job creation results from the extraction of sixty billion dollars in working capital to fund that level of state government spending.

Those stark figures would be bad enough if all that spending was actually paid for during each budget cycle. It is not! During the same twenty year period, taxpayer supported debt has increased from about two hundred twenty million dollars to well more than two billion dollars ($2,000,000,000).

That is nearly a ten-fold increase in taxpayer supported debt. Much of the money owed by the State and its taxpayers has terms of repayment that stretch out for more than twenty years.

The principle and interest payment on the debt has also grown. Twenty years ago the total debt service would calculate to around thirty million dollars per budget cycle. The cost to service the debt in the current budget period is more than four hundred million dollars. Nearly five percent of our General Fund, twenty five percent of our lottery revenue, and nearly thirty percent of our state highway revenue are now required to pay the principle and interest on Oregon’s accumulated taxpayer supported debt. The total principle and interest payments accumulated over the next twenty years will likely exceed three billion dollars.

Even these stark figures do not appear to have swayed the majority party’s determination to increase spending. Governor Kitzhaber’s recommended budget would increase general fund and lottery fund spending by about two billion three hundred million dollars ($2,300,000,000). That calculates to nearly a sixteen percent increase in discretionary spending for the next budget period.

Our Legislative Fiscal Office calculates a projected increase in General Fund and Lottery revenue of about ten percent. Most businessmen would be pleased with a ten percent increase in revenue growth during these difficult economic times.

However, that increase is not nearly enough to satisfy the spending appetite of Oregon government. Legislative Fiscal Office calculations estimate that we are projected to have about seven hundred and fifty million dollars ($750,000,000) less combined general fund and lottery fund income than the Governor proposes to spend. That deficit could easily grow to one and a half billion dollars in the event that the Legislature fails to enact the Governor’s proposed reforms to the Public Employment Retirement System.

That deficit leaves three choices to balance the budget.

  1. We could responsibly reduce the growth of spending to meet our revenue projections. This option would still allow for about ten percent growth in discretionary state government spending without further raising taxes and fees.
  2. Another alternative is to continue to borrow more money to fill the budget holes. Of course, this option serves to allow the next generation to pay for our profligate spending habits.
  3. A third alternative is to raise taxes and fees to make up the shortfall. This option would continue, and serve to escalate, the drain on private sector resources that already has our state economy in disarray.

More than twenty years of history tells us that the majority party will not voluntarily choose to reduce spending. Only dissent from the people, loud and long, will likely deter their resolve.

We often look aghast at the spending deficits in Washington D.C. We make fun of the profligate spending in our neighbor state to the south. In reality, on a per capita basis, Oregon practices are little better.

Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls

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Posted by at 05:00 | Posted in Oregon Senate, State Budget | 53 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    It would be nice to find one Democrat sitting Oregon Senator to adopt some fiscal conservativeness, and block the tax and fee ballot bills that are about to flow out of pro public employee union Democrats like Jules-Bailey and Rosenbaum. Jules-Bailey is taking aim at measure 5 and 50, wanting to lift away the property tax limits of $5 per $1k in property value for education and $10 for city and local government. Not surprising, the spendthrift, public waste machine City of Portland is already up against these limits. (It is appalling what Senator Rosenbaum said last night about Measure 5, saying effectively the electorate was conned by some suspect individuals, namely Bill Sizemore and Don McIntire, into voting for measure 5; and then she uttered in the follow-on sentence: “some of them went to jail.” She seemed to imply Don McIntire was an unscrupulous snake oil like salesman who was put in jail for his activities. This she spouted in front of an audience of largely teachers and public school administrators with a few of us selfish taxpaying commoners in attendance.) Then there’s Ginnie “the Nanny” Burdick who is scheming on bringing forth a sales tax proposal, coupled with some seeming sweetners, but with the intent of increasing sharply overall state tax bills/costs.
    Rudy Crew, Oregon Czar of Education, tried to walk the fence on education and tax increases by stating public administrators first need to demonstrate they can use more money wisely, before asking for higher tax rates.
    If we get real lucky, maybe Kitzhaber can use Crew’s multiyear task and goal to defer tax rate spikes until 2015, but most probably Kitzhaber will sign any bill referring a tax rate increase to voters this November.
    Prepare for battle against a major tax hike measure on this November’s ballot.
    Somehow, we taxpaying commoners don’t have the same pull as a Nike in getting tax rate certainty. We are told effectively instead to just hand it over.

  • DavidAppell

    A deep economic crisis like 2008 brings the need for more government spending. Better conditions are already starting to unwind this. I don’t have figures for Oregon state government, but nationwide total government spending (federal, state, and local) is already decreasing:

    As a share of potential GDP, it’s down 2.5 pct points in the last nine quarters.

    On a per capita basis adjusted for inflation, it’s down by 5.9% in the last nine quarters.

    The increase in the federal debt since 2007 is almost entirely due to (1) lower federal receipts, and (2) higher unemployment spending. Both are starting to reverse.

    Nevertheless, when health care costs increase as they have, the government is going to have to step in to make up the difference. Maybe Sen. Whitsett should focus his attention on controlling costs there. (Hint: it will require something like single payer insurance.)

    • Ms. Nomer

      DA, focused on becoming a gnu BHO cabinet posterior nominee for SOS (Secretary of Schlep).

  • valley person

    Oregon spends more because there are more Oregonians. We have had only 1 tax raise in the last 20 years, and that was on a very few of us, so I don’t understand your complaint exactly. If you want to cut school spending or kick grandma out of her nursing home, then say so. Don”t just rail against “spending” as if it has no purpose.

    • DavidAppell

      Except there aren’t that many more Oregonians. Oregon’s population in Jan 1993 was about 2.65 M, whereas today it is 3.55 M:

      That’s a factor of 1.34. Inflation (the national CPI) gives you a factor of 1.61. They multiply, so the result in a ‘do-nothing increase’ factor of 2.16.

      Assuming Senator Whitsett’s claim of a tripling is correct (and it’d be nice to easily get that data somewhere, i.e for him to provide links), there’s still some additional spending in the last 20 years beyond population increase and inflation.

      • DavidAppell

        P.S.: Inflation and population don’t *exactly* multiply, but it’s a small difference (thought not over the long term, ~many decades).

      • valley person

        Just a guess, but that additional “spending” may be federal funds funneled through states, and/or it may simply reflect a larger economy. in addition to population growth, we have had income growth (at least up until 2007) and this would result in more revenue and ability to spend.

        • David from Mill City

          The other factor is that State Senator Whitsett is using the “All Funds Budget” number in his calculations. Because the State of Oregon practices internal billing an “All Funds Budget” a single expenditure can be reported in multiple department budgets. The budget of the Oregon Department of Administrative Services is almost entirely made up of internal billings.

          For this reason and the others already cited, the use of the All Funds Budget as an indicator or measure is of limited to no value.

  • Mike

    We must spend money to help those unwilling to work. Simple as that.

  • Michael Ames Connor

    What’s state spending as a share of the economy over time? These big scary numbers mean very little without context — welcome to econ 101. Anyone care to provide that chart?

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