State Representative Bruce Hanna on budget shortfall

By Oregon House Republicans

SALEM””House Republican Leader Bruce Hanna (R-Roseburg) had the following to say regarding the shortfall in the 2007-09 budget:”The shortfall in the current budget is a product of the Legislature’s massive overspending in 2007. If Democrats had made the tough decisions and spent our tax dollars at sustainable levels, we would have avoided the painful cuts that are being proposed today.

“Oregonians can’t afford to send any more of their hard-earned dollars to Salem. That’s why the Legislature must proceed to balance the budget through appropriate agency reductions. We must prioritize these spending decisions and ensure that services to vulnerable Oregonians are spared as much as possible. House Republicans are not supportive of raiding the Rainy Day Fund or further increasing the state’s debt to balance this budget. Because the state’s economy shows little sign of bottoming out, we must continue to save money for the future.”

  • ikeonic

    Bravo, Mr. Hanna, Bravo.

    This is exactly the kind of language Republicans across the country need to be using each and every day in combating the wasteful spending at the local, state and federal level.

  • eagle eye

    Of course, he doesn’t mention that if the kicker money (flush years) had been put in the rainy day fund, there would be less need to cut back in the lean years.

    So go ahead, Bruce and all you Oregon Repbulicans, cut away at the state budget! You’ll deserve all the credit that comes your way.

    • The People of Oregon.

      The Kicker is OUR money. It belongs to us.

      Go to hell, eagle eye.

      • eagle eye

        Fine, as I say, just hack away at the state budget, stop whining about how it’s the Democrats’ fault, have at it, and take all the credit you’ll get.

      • David from Eugene

        Actually the Kicker is a prize that tax payers get whenever the State Economist underestimates the amount of Income Tax Revenue the state will receive in a future biennium.

    • Rupert in Springfield

      Had the legislature exercised restraint in good years and not grown government, there would be reason to see some hope in this approach. However we have seen nothing of the sort. The legislature has grown government in good years and in bad, having an extra pot of money around would hardly change the math on that. It simply is not credible to believe that a government agency or government as a whole would spend less than the funds available given that we never see this sort of behaviour from them

      Do people see a pattern of government projects that tend to come out under budget? Do we generally see a new program start up and turn out to be less than the projected cost? Do most agencies of government request more each year or less? Do we ever hear any representative of a government agency say that his agency is fully funded?

      No, we don’t, in fact we see the exact opposite behaviour. Good times or bad, the tune most people hear is “not fully funded” and government projects that turn out to be whoppers in cost over runs.

      Fact is Oregonians just don’t believe that the legislature could keep its hands off the money. Given past history, there is little reason not to agree.

      This is yet another problem that cannot be solved simply by flinging money at it.

      • eagle eye

        I agree that Oregon is not very capable of handling its affairs.

        There is plenty of blame to share, Democrats as well as Republicans. I blame the Kulongoskis as much as the Hannas.

  • Scottiebill

    Never underestimate the power of stupid people in large groups. Those groups include the Oregon and Washington State legislatures.

    P. J. O’Rourke wrote, “When buying and selling are legislated, the first things bought and sold are the legislators.”

  • davidg

    “Shortfall” is the new buzzword in government spending circles. It does not mean what you think it means. It does NOT mean that the government entity has less money to spend.

    What “shortfall” means is that the government entity will not have as much money to spend as it hoped to have. In absolute terms, it means that the government entity’s budget is actually INCREASING, but just not at the rate that the government entity hoped.

    Whenever you hear the word “shortfall” from government people, check carefully. They really mean a reduction in the rate of increase in spending. They are not talking about a reduction in their budget.

    • eagle eye

      Most people understand inflation and the meaning of economic growth and recession, even if you don’t.

    • Rupert in Springfield

      That’s exactly right. Its known as baseline budgeting. Basically any government entity is never subject to a cut in its budget. It is always assumed that entity will grow larger. The key here is that no matter what, current budget levels along with inflation, population growth and projected increase in participation in whatever program the agency runs are considered etched in stone. Essentially its a way of tilting budget priorities always in favour of increased growth.

      Consider how often you have heard of revenue shortfalls in Salem. Remember the phrase “in the wake of measure 5”? Yep, government was moaning and groaning about revenue shortfalls. The dirty little secret? government spending, even taking into account population growth, was growing far faster than inflation. But it wasn’t growing as fast as they wanted. So, revenue shortfall.

      Understanding baseline budgeting is key to understanding how government accounting works. It also solves a few mysteries, like how Ted can indulge in those technology projects that fascinate his mind so much while at the same time whining about revenue shortfalls.

  • lw

    Eagle eye, are you saying that we had 20% inflation in 08 because the state budget increased by 20%? I am sure you have the numbers to explain this.

    • eagle eye

      Have a look at what I wrote: “inflation and the meaning of economic growth and recession”.

      The budget grew by 20% in the last biennium (not in 2008 alone) by 20% because of the growth of state revenue, which was due to three things: inflation, population growth, and economic growth/recovery.

      Do I have the numbers to explain 20%? Well, pretty much automatically yes, because the state can pretty much only spend revenue that it has, and that depends on tax receipts and fees, and those indeed were up a lot in the last biennium.

      Personally, I would have preferred in the last bienniium that spending had increased less, that a much larger reserve fund had been built up, from the increased revenue (including the beloved kicker, which I think is ridiculous.)

      But Oregon is what it is. The Bruce Hannas didn’t want to do what I think they should have done. So, Bruce, have at it, hack away at the budget, and I hope your Republicans continue to reap their just rewards from the citizenry. I really do!

  • Bono

    Hanna makes a point that I think everyone is missing. If you do what was done in the last session and overspedn you will have thsi sessions shortfall for the next session.

    • eagle eye

      I don’t think I’ve overlooked this, exactly:

      “Personally, I would have preferred in the last bienniium that spending had increased less, that a much larger reserve fund had been built up, from the increased revenue (including the beloved kicker, which I think is ridiculous.)”

      But Hanna doesn’t include the part about the kicker.

  • davidg

    I suppose there will always be diehards who blame all the state’s present fiscal problems on the kicker. If there had been no kicker refund, the legislature would have spent all that money. Then the present “shortfall” would be even bigger.

    If I had to choose between letting me and my fellow citizens spend an increase in our personal income, or letting the legislature do it, that choice is a no-brainer. The legislature went on a spending orgy with the last budget. Giving them the kicker funds would only have made it worse.

  • lw

    Eagle eye, I hope I didn’t trap you in your logic. Yes, the 20% growth was for the 07/08 biennium. That can simply be stated as a 10% annual inflation rate of government that exceeded state inflation rate by over three times. The State could have set a budget that reflected the state’s economist projection of 2.7% per year for the biennium and be more fair to the taxpayers.

    Government did grow considerably beyond projected or actual inflation rate. That is what fiscal conservative people consider bad policy, especially when a downturn was suspected, predicted by many, and it was in the cards.

    There is nothing in the state’s constitution that says all of the state’s revenue must be spent.

    • eagle eye

      As I said elsewhere here:

      “Personally, I would have preferred in the last bienniium that spending had increased less, that a much larger reserve fund had been built up, from the increased revenue (including the beloved kicker, which I think is ridiculous.)”

      Oregon is not very good at managing its government finances. Now the government — Gov, legislature, including the Dems and Hanna and the Repbulicans — will have the fun of figuring out how to deal with the deficit.

  • John in Oregon

    Bruce Hannas’ comments are true. They don’t however go near far enough. Not near far enough in content or distribution. Few Oregonians will see what he said and fewer still understand the depth of the current problem. Hannas’ statement gets little coverage in the media. While we do see Gov. Ted Kulongoski, Senate President Peter Courtney, the Mayor of Portland, and Oregon legislative leaders planing to ratchet up borrowing for public works projects around the state in the name of ”stimulus”.

    During the 2007 legislature one brave Democrat, I don’t at the moment recall who, made the observation that the 07 budget spending had already placed the 09 budget a billion in the red and that was without the present downturn. My own guess is that by June Oregon will be looking at 3 billion in red ink if not more.

    Go back to the 2005 biennium, there also we see near 20 percent growth in spending. The simple fact is that stacking double digit growth in Government upon double digit growth, geometric growth in spending. In the face of 5 percent Oregon Gross Domestic Product such spending growth is not sustainable.

    One only has to look a few hundred miles south to see Oregon’s future. In the late 1980s the California State GDP ranked in the top ten of all countries in the world. Today California is 40 billion in the red and the red tide is rising. Business, particularly the high technology sector is fleeing the state in droves. Simply put, California has put a hold on state payments to fend off bankruptcy.

    And California is the model that Kulongoski, Courtney, and the Mayor of Portland look up to!

    I am reminded of a compare and contrast. In 1968 Paul Ehrlich wrote the world was doomed by geometric population growth. Mass starvation by 1980. India could not be saved. Obviously India survived and Ehrlich was just wrong and all the while the myth of evil population growth persists.

    Consider this contradiction, the conventional wisdom, geometric growth of population is bad, geometric growth of government is good.

    Ehrlich’s doom and gloom is wrong because wealth is not limited, free people create new wealth. Government cannot create wealth, Government can only move wealth from place to place.

    South Carolina Governor Mark Sanford hit the nail on the head.

    ” First, the idea that more “stimulus” is the answer is approaching the point of flat-out unbelievable. We were told by leaders in Washington last spring that if we just sent the $150 billion in stimulus checks things would get better, and we were told the same as we reached $2.3 trillion spent and committed to various stimuli and bailouts for the year. The tab for what’s been committed has now crossed $7 trillion — half of the yearly U.S. economy. A group of Democratic governors recently promised that spending just $1 trillion more would be the answer.”

    “In short, if government spending was the key to preventing recessions, then we’d never have one since increasing spending is often the default response from Washington when times are tough.”

    “The bottom line is this — issuing debt on top of debt to solve a problem created by too much debt threatens both the financial strength and the sustainability of our country. If we want to build infrastructure projects, that’s fine – just don’t do it with borrowed money.”

    In the coming months we will hear in Salem and Washington DC the call to arms for infrastructure, the new America of the green economy. (See the above post ” Weekly Quote: Karl Rove dismantles Obama budget numbers”)

    As Francis Cianfrocca observed “If we come up with solid (and unforeseen) technological breakthroughs in battery, solar and wind technology, they will only be worth implementing on a grand scale if they make the total economic cost of driving vehicles far less than it is today. Not the same or a little better or a little worse. They will need to be much better.”

    “If we can achieve that, then the dream of a green/hybrid economy actually will rise up to the claims being made for it, which amount to nothing less than an economic renaissance for American industry. But if we don’t produce those grand breakthroughs, then the green/hybrid economy will impoverish America for a generation.”