Oregon: Living Beyond its Means

By Don MacGillivray

Some might say the sky is falling and it is.

Portland’s rainfall in February broke an all time record. Unfortunately a different kind of sky is falling at the Capitol in Salem.

The good: people are optimistic about Oregon’s strong economy that is experiencing a tremendous run of growth and out-performing much of the country.

The bad: Oregon’s expenses exceed by its income by $1.8 billion and this must be fixed, now.

The ugly: Everyone is in no mood to cooperate or compromise, but without it everyone will suffer.

The issues: PERS reform, education K-12, higher education, transportation, healthcare, public safety, housing, support for those in need, and anything left over is up for grabs.

On Saturday, February 11, the Joint Ways and Means committee of the Oregon Legislature held their “road show” Town Hall Meeting in Portland.

Legislators listened to sixty speakers from an overflow audience of over 300. Many said such deep budget cuts would set the state government back much too far.

Many of the sixty speakers wanted the K-12 school budgets increased as well as the budgets for higher education, healthcare, and social services.

Person after person told heroic and tragic stories of Oregon families and individuals that have suffered great losses and stolen futures because of the lack of available services in Oregon.

The testimony includes: business tax breaks cost Oregon $830 million that could fill half of the budget deficit; healthcare workers and social service providers with increasingly large case loads leaving many Oregonians in need; it costs the state $30,000 a year to care for prisoners while only $10,000 funds each K-12 student.

If nothing is done to end the structural deficit, Oregon will continue to have budget problems just as it has for over twenty years, Over half of the speakers wanted the out of state corporations to pay their fair share of state expenses by voting on a revised measure 97 that could win in spite of the opposition of national corporations.

Oregon’s K-12 schools will experience many painful changes when it is reduced to $7.8 billion.

The Quality Education Model requires the following: a full-day Kindergarten, class sizes under 25, more librarians, counselors, and elective subjects, equity for all students, and professional development.

The need for a first class education system is being driven by pressures from corporate business interests and families with school age students. There is great desire to improve schools, but with a 4% budget cut this can’t happen.

Higher education is expected to be cut by $2 billion which would be a 1.4% decrease. This will cause tuition hikes at all universities and reduce state support throughout the system.

There may be as many as 355,000 people that lose their current healthcare coverage. The Oregon Health Plan is expected to be reduced by $2.3 billion which is a 28% service level cut that will result in reduced coverage for dental, mental health and many others services.

Many low income Oregonians will lose their Oregon Health Plan coverage and others may see the elimination of as many as fifty prioritized medical services.

The Human Services budget is the big loser. With a 9% decrease. Cuts will especially be felt by people with developmental disabilities, women, children, seniors, and underrepresented communities of color.

Affordable housing is a great need all over Oregon and many want the state to begin building housing to help vulnerable, low income citizens as well as to address the growing problem of homelessness.

Oregon needs to address significant problems facing the state’s transportation system. Currently its funding is expected to be reduced by 17%. A new transportation plan is needed after years of inaction. Cuts to transportation can only worsen the situation.

In past legislative sessions, carbon pricing has prevented the passage of a successful proposal. Transportation is a high priority of the business community all over Oregon.

The Public Employee Retirement System(PERS) is a major issue impacting the state budget as well as the budgets of schools, counties, and cities. Investment proceeds have not keep up with the mandated 7.5% growth. The unfunded liability is now $22 billion which is more than the entire state general fund. This must be addressed and cannot be allowed to compromise Oregon’s future.

Two more budget issues must be addressed: The recent state minimum wage increase will cost the state over $140 million during the next biennium and will impact city, county, and school budgets all across the state and

Voters in Oregon passed three ballot measures in November for veterans, Outdoor School, and better school graduation rates. These will cost $350 million in the coming biennium.

It is clear that there is a structural revenue problem. All budgets since the passage of measures 5, 47, and 50 in the 1990s have resulted in reduced property taxes and require the state to provide funding for K-12 education.

This has made Oregon’s biennial budgets difficult to balance. The state is overdue for substantial tax reform and the most commonly talked about solution is a sales tax.

Republicans generally don’t want to increase revenue, but without serious changes, there is nothing to prevent continued problematic budget woes both this year and into the future.

The Republican solution seems to be “spending reform.” Some serious compromises must be made by both parties together or the sky might fall on both Salem and Oregon.

Oregon finished 2016 with one of the strongest state economies in the nation. The job growth rate is almost double the national rate and the unemployment rate was low.

Oregon’s economy is the key to increased state funding and prosperity, but the future is uncertain and it could go either way.

The new President also brings uncertainty. Foreign trade is one of the areas Oregon depends on more than most states and this could change significantly. Let’s hope the sun will be shining on Salem at the end of the 2017 legislative session.

Oregon: Living Beyond its Means

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