Sen. Bruce Starr: Save-before-you-spend rainy day fund

Oregon Senate Republicans

State needs forced fiscal discipline and safety net for core services

Salem, OR – Senator Bruce Starr (R-Hillsboro) has again introduced a simple, save-before-you-spend rainy day fund proposal.  Senate Joint Resolution 28 would set aside 3% of income tax collections and lottery revenues at the beginning of every budget cycle to be saved in a reserve fund for use in an economic downturn.

“Funding for schools and state services should be stable, not a roller-coaster that dives or climbs with every twist of the economy,” said Starr. “This bill is elegant and simple, and would safeguard core services while enforcing a common-sense level of fiscal responsibility.”

Oregon’s revenue volatility is well-documented. Those served by core state functions like K-12 classrooms and low-income healthcare are deeply affected when the economy and state revenues decline. Senate Joint Resolution 28 would provide a funding foundation for basic government services by setting aside excess money in the good times. When revenues declined, a safety-net would be in place to keep funding to classrooms and other services stable.

“Deep cuts or tax increases are inadequate solutions to Oregon’s bumpy revenue stream,” said Starr. “The beauty of this proposal is that it helps control government’s appetite to spend while smoothing out the state’s revenue stream. This is the way Oregon families save, and it is the way government should save too.”

A historic simulation based on the parameters of SJR 28 predicts that $2.24 billion would have been saved over the last 30 years.  The savings would have been available at five points to help offset cuts and maintain stability for key services in numerous recessions since 1980.