Rep Richardson on What’s Inside New Co-Chair’s Budget

Oregon’s biennial budget is crafted each session after months of long hours and tedious work performed by the Joint Senate/House Ways and Means Committee members. The head “Budgeteers” for the Senate and the House are the Co-Chairs of the Ways and Means Committee. This session the Senate Co-Chair is again Senator Kurt Schrader (D-Canby). On the House side the Co-Chair is Representative Mary Nolan (D, Portland).

This session marks Senator Schrader’s third term as Senate Co-Chair. He has earned the reputation as a no-nonsense numbers man, and the Senate Democrats are fortunate to have him as their Co-Chair. Representative Mary Nolan is a mathematician. Although she was inexperienced in the Ways and Means process, Mary was my recommendation (for whatever that was worth), to the Speaker to serve as House Co-Chair.

As you can see from their proposed “Co-Chairs Budget,” the Senate and House Co-Chairs assume there is nearly $15 billion in tax and lottery revenues to spend. This $15 billion (actually $14.923 billion), represents an 18% increase in income tax and lottery revenues over the current biennium. In addition to the 18% increase in spending, the Co-Chairs want to add the following additional streams of revenue to the pool:

(1.) $170 million in proposed tobacco tax revenues;
(2.) $60 million in proposed additional revenues from more than doubling the costs for real estate document recording fees;
(3.) $232 million proposed extension of health care and other “provider” taxes; and
(4.) $350 million in proposed additional long-term debt, including $100 additional “Connect Oregon II” bonds and $250 million in additional “Light-Rail” bonds””both bonding proposals to be paid from lottery proceeds. Thus, the total spending contemplated by the Co-Chairs is $15.8 billion.

In sum, the Co-Chairs have proposed a General & Lottery Funds budget of $14.9 billion, plus $812 million of additional “other funds” spending, and have assigned the Ways and Means Subcommittees the job to determine how best to allocate the $15.8 billion. To guide the Subcommittees the Co-Chairs suggest the following be included in the allocations:

– $6.245 billion to K-12 education (an 18% increase over the current budget and $185 million above the Governor’s Recommended Budget””regrettably the GRB’s community college’s budget was reduced by $25 million and the University system by $15.4 million.
– $47 million for “Shared Responsibility” grants to make college more affordable for students.
– $100 million to affordable housing programs.
– $50 million to counties suffering from loss of O & C timber replacement funds, for road repairs.
– $222 million to add 100 new Oregon State Troopers (Notably, these new troopers are to be funded without the Governor’s proposed tax on automobile insurance policies).
– $29 million to expand Head Start’s preschool program (down from the $40 million proposed by the Governor).

Although not part of the budget, $139 million is to be transferred to Oregon’s new Rainy Day Fund, from the budget’s proposed $173 million “ending balance.”

The Co-Chairs’ proposed budget also endorses the Governor’s transportation-improvement program, his renewable-energy initiatives and his expansion of state-subsidized day care expenditures. In addition, it would boost payments to the child-care providers. The Co-Chairs also support substantial increases in funding for parks and salmon habitat, environmental regulation and enforcement, and taking the next step for building a new mental hospital in Salem.

In sum, the Co-Chairs Budget provides (a.) substantial increases in funding for all divisions of government, (b.) substantial increases in the size of government and number of government employees, and (c.) substantial increases in Oregon’s long-term debt. The Co-Chairs are quick to remind us that they could have spent more by recommending the additional tax increases desired by the Governor, and by incurring even greater levels of indebtedness than they have. To their credit, the Co-Chairs did fund the additional 100 State Troopers without the tax increase required by the Governor.

Nevertheless, when the euphoria over the increased funding for nearly every agency and program subsides, we fiscal conservatives are left with the nagging question, “How will such increases be sustained in the future?” Even when you allow for the 1% allocated to the new Rainy Day Fund, a net spending increase of more than 18% above the current biennial budget is breath-taking. I can only sit here and shake my head. After all, the voters have spoken; the liberals are in charge; and, who am I to rain on their parade. It’s like the Roaring Twenties”¦Happy Days are here again.

Sincerely,

Dennis Richardson
State Representative