Republicans unveil budget plan

Republicans unveil budget plan
GOP says it kills need for tax hikes; Dems say it’s flawed

By Nick Budnick / The Bulletin
Published: December 23, 2009

SALEM “” State Senate Republicans have issued their latest budget proposal, which they say proves that tax hikes are not necessary to balance the budget. Democrats, however, say the plan is filled with holes and flawed thinking.

The plan, spearheaded by Sen. Chris Telfer, R-Bend, relies on cuts to the salaries and benefits of state employees, as well as reserve funds, reform of the controversial Business Energy Tax Credit and use of funds in agency accounts not normally touched by lawmakers.

Telfer says the plan shows that the two tax hikes, which the state budget is relying on for about $730 million over the next two years, are not necessary. “This budget says, “˜Hey, there are other options that don’t involve business choking tax increases or service cuts,'” she said in a news release.
Supporters of the tax hikes, however, say the Republicans’ budget entails cuts to education and relies on agency funds that may not be available “” as well as reserve funds that shouldn’t be touched until the economy stabilizes.

House Speaker Dave Hunt, D-Gladstone, said, “This alleged plan cuts hundreds of millions from the education budget. It cuts hundreds of thousands of dollars in scholarships for needy college students. It uses funny money schemes, and it leaves Oregon broke.”

Telfer said that Republicans feel confident in their plan but have been hampered by a failure to get the same level of cooperation normally provided to the Democrat-led Joint Ways and Means Committee, which writes budgets.

“For us to play Ways and Means is very difficult with the limited information we’ve been provided,” she said.

The Republican plan relies mainly on the following:

“¢ State employee compensation: $291 million

Republicans say that if both tax measures are defeated, Gov. Ted Kulongoski should go back to the state employees unions and negotiate cuts in pay worth $160 million, effectively rolling back state workers’ salaries to 2008 levels.

Republicans also think state employees should be asked to pay $187 a month for health care, much as they say the average teacher does.

Defenders of the tax hikes, however, say state employees have already agreed to a variety of unpaid furlough days and other cuts in compensation.

Scott Moore, a spokesman for the pro-tax coalition supported by public employee unions, said that the Republican plan appeared to ask for every state employee to give up $2,800 a year, which he contrasted with the proposed tax hikes on corporations and higher-earning Oregonians.

“We can’t ask for a dime more from families that make more than $250,000?” he said.

Telfer, however, said fairness also applies to public employees, who she said have not taken the level of cuts as most private-sector companies and employees already have.

“¢ Reserve funds: $203 million

Republicans say they will use $203 million from rainy day fund accounts that are currently projected to hold $382 million by July 2011.

Under Democrats’ legislatively approved budget, K-12 schools would have received $200 million in reserves.

However, that was only if the economy held up. Democratic lawmakers say an additional hole has appeared in the budget of $230 million or more, due mainly to the worsening economy.

In effect, the Democrats say, the Republicans are using $200 million that would either have gone to schools or been used for other services due to the worsening deficit.

“The money that they are counting on does not actually exist,” said Senate Majority Leader Richard Devlin, D-Tualatin.

Telfer, however, said that there are plenty of other efficiencies to be found in state agencies.

“¢ Agency account balances: $133 million

For months, Telfer and other Republicans have been arguing that there is another place to go to balance the state’s budget: money that state agencies receive other than personal and corporate income tax, dubbed “other funds.”

Depending on how you look at it, there are hundreds of millions, if not billions, available in these accounts.

However, Democrats and state officials say most of the money is already spoken for “” earmarked for road spending or other uses mandated by law.

Republicans have compiled a detailed spreadsheet of specific cuts that they say takes into account agencies’ stated needs for reserves as well as legal restrictions on the accounts.

Telfer called the list “low-hanging fruit.”

Hunt, for his part, questioned the use of $240,000 in funds that would have gone to the Oregon Student Assistance Commission, calling it an example of “gimmickry.”

“¢ Energy tax credit reform: $50 million to $85 million

Telfer says she has received a range of estimates on how much would be saved by reforming the state’s controversial BETC, which subsidizes renewable energy and conservation projects.

The most recent estimate is about $50 million.

That figure is what could be produced by negotiations already under way between lawmakers and lobbyists.

Democrats do not question that the BETC could produce significant savings.

In fact, Sen. Ginny Burdick, D-Portland, recently said the $50 million figure seemed realistic.

Nick Budnick can be reached at 503-566-2839 or at [email protected].