Rainy Day Fund falls short

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.