Budget reserve protects Oregon against revenue forecast swings

by Dan Lucas

In the 2011 legislative session, Rep. Dennis Richardson (R-Central Point), along with his two Democratic Co-Chairs, took the very fiscally responsible stance that around $450 million needed to be kept as a budget cushion (Ending Balance).

The budget cushion, or reserve, was intended to prevent what the Oregonian described as “Oregon schools scrambling to make emergency cuts, even shortening school years, after the state failed to deliver on money that it promised.”

Rep. Richardson’s contested budget reserve has provided the stability and predictability that the school superintendents and other state service providers have said are needed more than additional money. It has given schools and other services “the ability to count on a state allocation rather than plan for and budget for money that is later jerked away because of falling revenues.”

The budget cushion has been enough to cover even the worst quarterly Revenue Forecast in this budget cycle. At one point, when the Revenue Forecasts were down significantly, the Oregonian Editorial Board was betting “that Oregon will need even more than the $450 million or so lawmakers left in reserve.” Fortunately, that hasn’t happened. This week’s quarterly Revenue Forecast was about $30 million better than last quarter’s, continuing a favorable trend from the last few forecasts.