Governor’s budget based on dubious assumptions

by Sen. Doug Whitsett

Earlier this week, Representative Whitsett and I were among Oregon’s 60 state representatives and 30 state senators participating in a two-day organizational session in preparation for the 78th Legislative Assembly. Newly elected and re-elected legislators took their oaths of office and then assembled in the House Chamber to listen to the governor’s State of the State speech.

The Speaker of the House and Senate President formally assigned members to serve on House and Senate committees. All bills that were pre-session filed had their first reading in their chamber of origin so that the Speaker and Senate President may assign them to committees for further work.

All Legislators were required to attend several mandatory training sessions on the second day in preparation for the upcoming lawmaking session. The Assembly was then adjourned until Feb. 2.

At that time, Legislators will reconvene and begin hearings on the 9,000-plus pages of legislation that have already been introduced. Those timelines and processes give veteran and new lawmakers three weeks to sift through the more than 1,000 bills that have already been introduced.

In spite of this tsunami of proposed legislation, Oregon’s Constitution actually requires the Legislature to do only two things. First, we must adhere to both the Oregon and United States Constitutions. Second, we must balance the state budget.

Unlike the federal government, the State of Oregon must have a balanced budget. Although the state Constitution does allow the Legislative Assembly to authorize borrowing money, it does not allow the state to run budget deficits.

The Oregon Constitution requires a two-year, or biennial, budget. The next budget period begins on July 1, 2015 and ends on June 30, 2017.

It is worth noting that nothing in the Constitution requires the Legislature to spend all of the money that flows into state coffers. However, it does require that expenditures must be no more than the revenue that is received during that two-year fiscal period.

The state’s General Fund revenue is estimated to be about $17.6 billion for the next two years.

That is about $1.8 billion, or 11 percent, more than the Legislature has ever before had available to spend.

To put that amount of money into perspective: The current Oregon General Fund budget allows for spending as much as $4,000 for every man, woman and child that is currently living in the state. The $1.8 billion increase would provide yet another $450 per Oregon resident.

This estimate of available revenue includes at least four assumptions regarding potential budget savings that may not materialize.

1. It assumes that the growth in medical delivery costs will be significantly reduced by the development of Coordinated Care Organizations in Oregon. There is as of yet no proof that such a thing will ever actually happen.

2. It presumes that there will be significant savings in the cost of incarcerating inmates in the correctional system resulting from the implementation of the provisions of House Bill 3194, which was enacted in 2013.

3. It supposes that the Oregon Supreme Court will uphold all of the Public Employee Retirement System reforms that were enacted during the 2013 and 2014 sessions.

4. Finally, the budget assumes that there will be no personal income tax kicker refund.

None of these assumed savings are by any means certain. Nevertheless, the Governor’s proposed budget spends all of the assumed savings, and then some.

His budget spends nearly half of the entire predicted General Fund and Lottery revenue on education. It proposes nearly $450 million in new spending for pre-kindergarten, full-day kindergarten and reading programs for grades one through three. However, his budget appears to ignore funding increases for programs for the other 500,000 K-12 students throughout the state.

One might ask how all this new funding for preschool kids is going to help our kids who are currently attending failing schools. Is the strategy to simply ignore our abysmal high school graduation rates? Is the plan to accept the appalling status quo for the current generation of middle and high school kids?

I believe that the governor’s proposed budgets are disheartening at best. But it is the responsibility of the Legislative Assembly to write and enact appropriate budgets for the state. As a member of the budget-writing Joint Ways and Means Committee, I take these duties very seriously.

The Ways and Means Committee Co-Chairs issued their Budget Framework for 2015-17 yesterday.  While considerably better than the Governor’s proposed budgets, it is a work in progress that requires a great deal of public participation.

Given what has been proposed and the stated intentions of our state’s chief executive, we have a lot of work ahead of us for the next five or six months.

Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls