DHS Budget Woes—The Genie Is Out Of The Bottle

As Chair of the Oregon Legislature’s Emergency Board Sub-Committee on Human Services, I had intended to delay discussing the storm clouds on the Department of Human Services (DHS) budget’s horizon until the revised forecasts were submitted. But, since the December 7^th Oregonian article by Michele Cole has let the genie out of the bottle, it is appropriate to discuss what is presently known.

The public’s trust for DHS is at an all-time low, yet the agency continues to dig itself into a deeper hole. As you may recall, last year Oregon voters were threatened with dire cuts to human services if the Measure 30 tax increases were not approved. Only two months after voters soundly rejected the tax increases, the agency “discovered” $117 million due to a “miscalculation.”

Last April, DHS told the Legislature it required a “loan” of $77 million to make it through the final quarter of the 2003-05 biennium, and gave the promise to repay the loan from revenues that were expected in the following quarter.

When DHS came back to the Emergency Board on October 27, 2005, the agency reported that it could only repay $22 million of the $77 million loan. Although some of the shortfall was understandable, DHS admitted it had miscalculated its revenue streams by some $37 million. It was during that October E-Board Human Services Subcommittee meeting that DHS admitted it was spending $27,000 per month to rent an empty floor of a Portland medical facility. After further questioning DHS representatives admitted the agency had been paying rent on the unoccupied floor since 1995″”failing to utilize the sixth floor of the building for more than a decade.

DHS’s present conundrum can be summarized in a single question. Since DHS proposed its 2005-07 biennial budget using the same erroneous revenue forecasts that resulted in the $37 million shortfall for the final quarter of the 2003-05 biennium, what does that portend for revenue shortfalls during the eight quarters of the 2005-07 biennium? By next month we should know the answer to this question, but one thing is for sure, there are dark clouds forming over Oregon’s Department of Human Services. The Oregonian article indicates DHS expects the shortfall to exceed $55 million. In truth it may be double that amount or even multiples of that amount.

Like any family suffering from a loss of expected income there are only two options, decrease expenditures or increase income. For DHS it is the same principle, only with more zeros in the numbers. DHS must have a balanced budget, so the consequences of such a dramatic reduction in DHS revenues would be either substantial cuts in services or a special session of the legislature to infuse more money into the DHS budget. For now all we can do is wait for the revised revenue and caseload figures, evaluate alternatives and then work to do what is best for Oregon and her citizens.

Dennis Richardson

State Representative