November 20, 2008

From the Associated Press: Oregon Revenue Forecast & Budget Cuts

By BRAD CAIN Associated Press Writer

SALEM, Ore. (AP) _ Oregon state government is facing an immediate $140
million shortfall that is prompting Gov. Ted Kulongoski to order
across-the-board cuts in state agency spending.

That development Wednesday comes in the wake of the state's new revenue
forecast that also predicts the state will be more than $800 million
short of the amount needed to maintain current services through 2011.

State Economist Tom Potiowsky delivered the grim news to lawmakers
Wednesday, saying that Oregon's economy could well get worse in the
coming months before any recovery begins.

In response, Kulongoski used his executive authority to order agencies
to make cuts that will translate to about 1.2 percent of each agency's
current two-year budget.

Because there are only six months left in the current budget, the cut
will be closer to 5 percent of what each agency has to spend,
Kulongoski's office said.

"This recession demands tough decisions and requires shared sacrifice
— and today's action is the first of many difficult decisions that
lie ahead," Kulongoski said in a statement.

Potiowsky issued his quarterly revenue forecast only a few days after
the release of what he called a "horrible" state jobless report. It
showed that Oregon's unemployment rate soared to 7.3 percent last month,
well above the national average of 6.5 percent.

He said Oregon's economy is in the same downward spiral as the rest of
the nation, with home prices falling, thousands of Oregonians losing
their jobs and consumers "missing in action," and not spending on
anything beyond the essentials.

On Dec. 1, Kulongoski is to release his proposed 2009-11 budget that
will have to take into account sharply reduced revenue available for the
next two years.

That could translate to less money for schools, universities, human
services, state police and other state services when the 2009
Legislature convenes in January.

"Families are hurting, businesses are hurting and our communities are
hurting," Kulongoski said in a press release. "The reductions I'm
ordering today will have an impact on us all, but my hope is that it
will help us gain some stability for the current budget so we can focus
on targeting our investments in the next budget that get Oregonians back
to work and invest in our children's future through health care and
education."

Senate President Peter Courtney (D-Salem) said members of the
legislature need to "roll up their sleeves and begin finding ways to
close these budget gaps."

"We can't just tax our way out of it and we can't just cut our way out
of it," he said.

Courtney added that his priorities will continue to be protecting vital
services like education, public safety and the human services safety net
of things like food stamps, aid to needy families and healthcare for
children. He will also strongly advocate in favor of a bold program of
bond-funded construction projects that will create jobs while repairing
the state's deteriorating infrastructure.

House Republicans issued this statement in reaction to the news:

SALEM, Ore. - In light of a $762 million revenue shortfall for the
2009-11 biennium, House Republicans today called for sustainable and
prioritized spending in the next budget. The caucus also called for tax
reforms to promote capital investment and to provide tax relief for
lower-income Oregonians and working families.

"Spending in 2007 was unsustainable, and now the Legislature is facing
difficult decisions in 2009," said House Republican Leader Bruce Hanna
(R-Roseburg). "It is time to bring government spending back under
control, and to pass measures to keep dollars flowing through our
economy and to keep capital within our state."

Rep. Vicki Berger (R-Salem), Vice-Chair of the House Revenue Committee,
said the Legislature can't continue to increase spending and
taxpayer-obligated debt. She said Legislature must pass tax reforms to
help working families and lower-income Oregonians, and prioritize
spending to protect schools, public safety and health care for
vulnerable Oregonians.

"The state can't afford to dig a larger fiscal hole," Rep. Berger said.
"It is time to focus on sustaining the programs and services most
important to Oregonians, and passing pro-growth and pro-family tax
reforms that would put more dollars back into our economy."

Earlier this year, House Republicans announced legislation to double
the state's child tax credit and make Oregon's income tax fairer for
lower-income workers. The caucus will also introduce legislation to
reform Oregon's capital gains tax rates, among the highest in the
nation, to promote capital investments in businesses and workers.

"Rather than finding new ways to extract more money from Oregonians, we
will work to put more money back into their pockets and back into the
economy," Rep. Hanna said. "The Legislature must create a better
environment for businesses that helps them succeed and create jobs."

November 19, 2008

From the Oregonian Op-Ed: A budget perspective

The right medicine for an ailing budget

by Charles Sheketoff, Guest Opinion
Tuesday November 18, 2008, 4:28 PM

Tomorrow we'll find out just how deep Oregon is in the hole when the state economist presents the latest revenue forecast. No one is -- or should be -- expecting good news.

While a revenue shortfall certainly calls for belt tightening by agencies, a dramatic cut in state spending would be a big mistake. Leaving aside the harm that it would cause many Oregonians, particularly the most vulnerable, slashing services is the wrong medicine for what ails Oregon.

The revenue shortfall stems directly from the country's economic downturn. As demand for goods and services from both consumers and businesses has shrunk, employers have laid off workers or even shut their doors. With business activity and employment down, income tax revenue has declined.

What's needed most to turn around a recession is spending. And when consumers and businesses can't or won't spend, the only sector able to do so is the state.

But unlike the federal government, Oregon can't run a deficit. So unless it covers its shortfall with reserve funds -- tapping Oregon's reserves ought to be the first move, though they may not be adequate -- the only options are to cut spending or raise revenue.

Slashing state services inevitably reduces the flow of dollars through the economy. When the state retrenches, it cuts payments to businesses and nonprofits that provide direct services. It pares back programs such as the Oregon Health Plan that bring matching federal dollars into the Oregon economy. All this happens as demand for many public services increases because of the recession. In other words, slashing state services aggravates the problem.

To avoid deepening the recession and to help the state get past it, Oregon should confront its revenue problem with a revenue solution -- crafted in such a way as to have the least detrimental impact on in-state private sector spending.

On this, a 2001 study by two highly regarded economists -- Nobel Prize winner Joseph Stiglitz of Columbia University and Peter Orszag, now the director of the Congressional Budget Office -- points the way. It concluded that during a recession, a better option than cuts to state services is a tax increase on the wealthy, who can cover the increases by reducing their savings rather than their spending.

What might such a tax increase look like? For starters, a new 11 percent tax bracket on Oregonians with income over a half-million dollars for joint filers, or $250,000 for single filers, would raise hundreds of millions next biennium. Such a tax would apply to fewer than one out of every 100 taxpayers -- those best able to ride out the economic storm unscathed. There are other options, too.

It's appropriate that today's forecast is being presented to the House and Senate revenue committees, not the Joint Ways and Means Committee. The revenue committees write our tax laws and can explore smart revenue solutions to our revenue problem.

The suggestion of a tax increase undoubtedly will elicit howls from those who fail to acknowledge the important role that government plays in the economy. They will claim, contrary to reality, that a tax will "pull money out of the economy."

But the current economic crisis demands smart, practical solutions, not ideological sound bites. Slashing public sector spending would deal a serious body blow to the best economic actor still standing.

Charles Sheketoff is executive director of the Oregon Center for Public Policy.

November 17, 2008

Senate President's Comment on Unemployment


 

Office of the Senate President

 

900 Court St., N.E., Room S-203

Salem OR  97301

www.leg.state.or.us/senate/senpres

 

 

News Release 

Contact:    Robin Maxey                                                                  November 17, 2008

                   (503) 986-1605   

                   robin.maxey@state.or.us

 

Rising Unemployment Shows Need for Legislature to Create Jobs, Protect Safety Net
Statement by Senate President Peter Courtney

“The release today of the October unemployment figures is the first of two sobering announcements I expect this week. The second will come in the form of Wednesday's quarterly revenue forecast. I expect it to be bad. I can handle bad. I just need to know how bad it’s going to be.

 
“The jump in unemployment in our state to 7.3 percent tells me two things. It is critical that the Legislature do all it can to protect the human services safety net on which more and more Oregonians will need to depend – things like food stamps, aid to needy families and health care for children. Plus, we must create jobs by making long overdue investments in our infrastructure.

 

“All of the experts – including the State Treasurer and the state economist – say the best thing the Legislature can do to help turn the economy around is to create jobs.

“As the most veteran member of the Oregon Legislature I have been through severe economic crisis in the past – in the early 80s as a freshman in the House and six years ago when it took five painful special sessions before we were able to stop the bleeding. Trying times like those teach you something. It is my goal for the Legislature to approach this recession with the wisdom learned from the pain Oregonians endured in 2002.

 

“We are already gathering information so that we can approach the 2009 session and the cuts that are going to be necessary in a way that will keep the criminals from running wild, protect education, protect the human services safety net and give us the ability to invest in jobs-creating infrastructure projects.”

November 10, 2008

DHS 10% Reduction Options

Download file

 Follow the "download file" link to view the 10% reduction options presented by the Department of Human Services.

 

 

Transportation Report from Transportation Advisory

November 6, 2008

(Salem) – Today Governor Ted Kulongoski received a report from his Transportation Vision Committee outlining a comprehensive transportation plan for consideration as the Governor develops his agenda for the 2009 legislative session.

You can read the plan at:

http://governor.oregon.gov/Gov/pdf/tvreport_final.pdf

 

 

 

 

 

 

 

Governor Kulongoski's Agenda for Climate Change 2009

The Governor has announced his legislative package to address climate change, global warming and environmental concerns.

 You can read the report at: http://governor.oregon.gov/Gov/pdf/climate_change_agenda_1008_final.pdf

 

 

From Oregon Senate Democrats: Caucus Leaders Announced 11/08


 

 

 

SENATE MAJORITY OFFICE

 

Oregon State Legislature
State Capitol
Salem, OR

 

 

 

News Release

 

November 7, 2008

CONTACT:    Molly Woon, Senate Majority Office, (503) 367-4327

 

SENATE DEMOCRATS ELECT LEADERS, REAFFIRM 2009 AGENDA

 

 

ASTORIA – Demonstrating their commitment to fight for Oregon’s middle class and those working hard to get ahead, the Senate Democrats today announced their leaders for the 2009 legislative session.

 

At a retreat held in Astoria this afternoon, Senate Democrats elected the following:

  • Senate President:  Sen. Peter Courtney (D-Salem)
  • Senate President Pro Tempore:  Sen. Rick Metsger (D-Welches)
  • Senate Majority Leader:  Sen. Richard Devlin (D-Tualatin)
  • Senate Deputy Majority Leader:  Sen. Laurie Monnes Anderson (D-Gresham)
  • Senate Majority Whip:  Sen. Alan Bates (D-Ashland)
  • Senate Majority Whip:  Sen. Mark Hass (D-Beaverton)
  • Senate Assistant Majority Leader:  Sen. Floyd Prozanski (D-Eugene)
  • Senate Assistant Majority Leader:  Senator - Elect Diane Rosenbaum (D-Portland)

 

At the same meeting, the caucus also reiterated its support for the Oregon Agenda 2009.

 

“The members elected today are a testament to the strong and experienced leadership in our caucus,” said Senator Devlin. “I am honored to have the support of my colleagues and I am confident that this team will be effective advocates for our 2009 agenda and the people of Oregon.”

 

Many of the Senate Democratic leaders elected this weekend have held their positions previously. Senator Courtney has been Senate President since 2003 and Senator Devlin was elected Senate Democratic Leader in July 2007.

 

Under Senate Rules, Senators Courtney and Metsger must receive 16 votes each from the full Senate to be elected President and President Pro Tempore, respectively. Democrats hold 18 seats in the Senate, which will convene January 12, 2009.

 

###

 

From Oregon House Democrats: Leadership positions chosen 11/08

Hunt Will Be House Democrats’ Nominee For Speaker

Mary Nolan Named House Majority Leader for 2009 Session

House Majority Leader Dave Hunt (D-Clackamas County) will be the House Democrats’ nominee for Speaker of the Oregon House of Representatives following today’s House Democratic Caucus meeting.  Rep. Mary Nolan (D-Portland) will assume Hunt’s current role as majority leader.

Democrats, who will hold 36 seats in the 2009 session, unanimously selected Hunt to be their choice for Speaker to replace U.S. Senator-elect Jeff Merkley. Thirty-one votes are required to win election for Speaker which will be held on January 12, the first day of the 2009 session.

“I am honored to be my colleagues’ choice to be Oregon’s next House Speaker,” said Hunt, who was first elected to the House in 2002.  “Our job in the 2009 session is to strengthen our economy and protect the gains we made in 2007-08 in education, health care, public safety, renewable energy, infrastructure, and fiscal responsibility.  Our focus will be on helping Oregon families make it through these tough times and I am pleased to have such a strong group of colleagues by my side.”

Nolan, who was first elected in 2000, said House Democrats are honored by the strong show of support from Oregon voters, and pledged to get to work immediately on the critical issues facing Oregon.

“This is a diverse and talented group of people who have been charged by the voters of Oregon to take on our economic challenges and move us to a better future,” said Nolan. “House Democrats are ready to lead all of Oregon forward.”

House Democrats also elected these members to their Leadership Team:

Speaker Pro-Tem: Arnie Roblan (D-Coos Bay)

Majority Whip:      Peter Buckley (D-Ashland)

Deputy Majority Whip: Tina Kotek (D-Portland)         

Assistant Majority Whip: Tobias Read (D-Beaverton)

Assistant Majority leader (policy): Sara Gelser (D-Corvallis/Philomath)

Assistant Majority Leader (political): Phil Barnhart (D-Central Lane and Linn counties)

Contact Geoff Sugerman - 503-510-3704. House Majority Office

November 05, 2008

Revenue Restructuring Hearings Statewide

Hearings to begin on possible tax changes

 

by Dave Hogan, The Oregonian

 

Thursday October 30, 2008, 5:32 PM

 

SALEM - A task force reviewing ways to restructure Oregon's tax system will begin holding public hearings in mid-November as it prepares to report its findings to the Legislature in January.

 

The group listed five long-term options for tax changes Thursday, including replacing personal income taxes with a sales tax or imposing a business investment tax instead of the corporate income tax.

 

But task force chairman Lane Shetterly emphasized that the group is only providing information on possible long-term changes. "We're laying these out as options," said Shetterly, a Dallas attorney and former legislator. "We're not recommending one or the other."

 

Oregon's state government system relies heavily on income taxes, with about 90 percent of its general fund and lottery revenues coming from individual income taxes. That system is considered volatile because income tax receipts drop during economic downturns, leaving the state short of money to pay for education and other services.

 

The task force, which has 17 voting members, is supposed to look at possible ways to have a more stable revenue system and stimulate economic growth. Thursday's meeting was the last for the group before it holds six hearings around the state, beginning at 5 p.m. Nov. 13 at the Jackson County Library in Medford.

 

Two other 5 p.m. hearings will be held Nov. 19 at Vert Auditorium in Pendleton and Nov. 20 at the Deschutes Fair & Expo - North Sisters Conference Hall in Redmond.

 

Hearings will begin at 6 p.m. Dec. 8 at the Hatfield Marine Science Center's main auditorium in Newport, Dec. 12 in the Eugene School District Education Center's main auditorium, and Dec. 17 at the Tigard Public Library's Community Room.

 

Long-term options listed by the task force include:

 

* Eliminating the state's personal income tax and adding an 8.5 percent sales tax with exemptions for items such as shelter and in-home food. The group notes this approach, without offsetting provisions, would reduce net income for most households.

 

* Reducing personal income tax rates to 2, 4, 6 and 8 percent, imposing a 1.31 percent gross receipts tax, establishing a $50,000 homestead property tax exemption, increasing the earned income tax credit to 50 percent of the federal earned income credit, and eliminating the corporate income tax. The task force says this would have positive economic effects and would increase revenue stability.

 

* Creating a property-tax exemption up to $750,000 of assessed value for owner-occupied residences, doubling the personal income tax brackets to $6,400 and 16,100 for single taxpayers, and imposing a 2.7 percent sales tax. Research indicates this would lead to "compelling gains in employment, household income and revenue stability," the groups says.

 

* Eliminating the corporate income tax and imposing a 0.3 percent value added tax. The tax force noted there is little experience at implementing a value added tax at the state level.

 

* Eliminating the corporate income tax and imposing a tax on business investment expenditures. The relative novelty of this approach means various administrative issues would need to be addressed before it could be implemented.

 

While the task force is not recommending any particular long-term approach, it is recommending some short-term changes. For one thing, the group recommends requiring that a 10-year forecast of state discretionary spending and revenue be part of the state budget process.

 

-- Dave Hogan; davehogan@news.oregonian.com

 

September 16, 2008

From the New York Times: Editorial - Gambling with Medicaid

September 15, 2008

Editorial

Gambling With Medicaid

Rhode Island is seeking a federal waiver to change much of its Medicaid program from an open-ended entitlement with no limit on spending to a capped budget with fixed expenditure limits.

Gov. Donald Carcieri, a Republican, is hoping to close his state’s looming budget deficits and curb rising Medicaid costs, two problems that are bedeviling many states. But prudent leaders would be wise to watch what happens — and especially what happens to Rhode Island’s poorest residents — before following this path.

Medicaid has traditionally been an “entitlement program” that pays the medical bills of all residents whose incomes are sufficiently low to qualify for coverage. There is no limit on how many people can enroll or on how much the state and federal governments must spend to provide services. In the current fiscal year, Rhode Island’s Medicaid program is costing about $1.9 billion — with slightly more than half paid by the federal government and the rest by the state.

Under the proposed waiver, the federal government would contribute a fixed annual amount for the next five years (roughly what it was projected to spend anyway), but Rhode Island would limit its contribution to 23 percent of its general revenue budget.

That would mean substantially less money for Medicaid. An analysis by the Center on Budget and Policy Priorities estimates that if the waiver is granted, the state’s Medicaid budget will fall $231 million short of the projected $2.07 billion needed next year — with the gap increasing every year.

The state is hoping to make up the difference, without harming patients, by providing health care more cheaply. It wants to require most long-term care patients to get treatment at home or from community-based services rather than in expensive nursing homes and would put virtually all beneficiaries in managed care.

If that isn’t enough, it wants flexibility to charge higher co-payments, put people on waiting lists for treatment, and limit the duration and scope of services.

States already have great leeway when it comes to Medicaid, so it may be reasonable to give Rhode Island the flexibility to try something new. This is still a risky path. If costs escalate more rapidly than expected and savings don’t materialize, the state might feel obliged to cut Medicaid spending even more drastically. Rhode Island’s most vulnerable citizens would pay the price.

 

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