Oregon legislative leaders announce plan to restore some cuts to senior, disability programs

Published: Monday, July 19, 2010, 8:02 PM     Updated: Monday, July 19, 2010, 8:05 PM

Legislative leaders have reached an agreement to blunt budget cuts affecting seniors who receive in-home care as well as programs helping people with disabilities

There's broad consensus among lawmakers to restore $17.1 million in cuts that were part of the 9 percent across-the-board budget cuts ordered by Gov. Ted Kulongoski last month,Rep. Peter Buckley, an Ashland Democrat and co-chair of the Legislature's Ways & Means budget committee said Monday.

That means Medicaid programs providing at-home services to more than 11,000 seniors, people with physical disabilities or mental illness will be continued through June 2011.

Under the plan, Oregon Project Independence will also be saved -- at least through February. The popular program provides some 2,000 seniors with housekeeping, shopping and other help to keep them living independently. Respite care and other support for families caring for a child with disabilities will also be continued through February.

The announcement comes just days before some of the programs were scheduled to be eliminated and after the Oregon Department of Human Services had sent thousands of letters notifying people that the state could no longer afford the care they were receiving.

Layoff notices had also gone to case managers who work with those clients.

Most of the cash to restore the programs comes from a $30 million account set aside for Human Services and under the control of the Legislature's Emergency Board. The board, which makes budget decisions when the full Legislature is not in session, is scheduled to vote Thursday on the plan.

"This buys us time on some programs," Buckley said.

In the meantime, he said state officials will look at Oregon Project Independence as well as the other restored programs to "see if there are ways we can save money that we haven't focused on before."

"We're holding these things together," Buckley said. "But we have to look at any way to reduce costs."

Oregon state government must close a $577 million hole in the second year of its current two-year budget. State law gives the governor authority to order only across-the-board cuts in a budget passed by the Legislature, but allows the Legislature to carve out exceptions.

Even with this latest plan, Human Services must still slash spending this year by more than $140 million. That means many of the agency's announced cuts are still moving forward.

For example, elderly Oregonians may still see cuts in services they receive because the Emergency Board is planning to restore only $17 million of the $44 million affecting state programs serving seniors and people with disabilities.

Job training and assistance will be cut for parents who are out of work and receiving welfare payments from the state. Day care subsidies for very low-income families will also be reduced, if not eliminated, later this year.

"This is an important step forward, but it certainly doesn't fill the gap for many families," said Stephanie Tama-Sweet, a public policy advocate for the Oregon Food Bank and co-chair of the Human Services Coalition.

"We have tremendous needs in our communities that are not going to be met by these buybacks," Tama-Sweet said. "We need to have a larger conversation as a state on how we prioritize and fund these services in the long run."

--Michelle Cole 

 

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In-home care would see severe cuts

  Peter Wong

• Statesman Journal June 9, 2010

Proposed spending cuts submitted to Gov. Ted
Kulongoski would eliminate Oregon Project
Independence and drastically reduce federally
funded personal care and in-home care for older
and disabled people.

The cuts are contained in a proposal by the
Department of Human Services, the largest state
agency, which has a target of $158 million of the
projected $577 million shortfall in tax collections.
The proposal was posted online this morning at the
website of the Department of Administrative
Services, which oversees budget and management
for the governor.
Among the other proposed spending cuts from the
tax-supported general fund are some mental-health
services, including 20 positions at Oregon State
Hospital that would be left unfilled, and state-
subsidized day care except as mandated by federal
law for families in transition from welfare assistance.
Proposed cuts in three divisions - Children, Adults
and Families; Health Services, and Seniors and
People with Disabilities - amount to $148 million
of the $158 million target.
They also would result in losses of federal grants,
in some cases twice as much as the amount of state
funds proposed to be cut.
The cuts would result in layoffs at the agency and
nonprofit organizations that receive payments to
provide services.
The agency estimates that 650 positions would be
eliminated. Day-care and in-home care workers also
would lose jobs, although the agency documents
offer no estimates of those because they do not fall
directly within the agency.
Oregon Project Independence, which provides in-
home services to allow seniors to stay in their own
homes, apparently was singled out because it does
not draw federal grants. But since its inception more
than 30 years, it has been popular with members of
both parties.
The Oregon Association of Area Agencies on Aging
and Disabilities said today that cuts in those
programs now may cost more in the future as
people's physical impairments require more
expensive care.
During the past three decades, Oregon has built a
system to keep people out of nursing homes and
hospitals until their conditions worsen.
The cuts, said association chairman Scott Bond, "will
limit the ability of our long-term care system to
follow the Oregon model of care - helping
individuals find the least restrictive care setting
possible and retain their independence. These cuts
also negate the savings that our state budget
realizes by helping people stay in their home and
community - which will cost our budget more in
state general fund as we move forward."
The cuts are not final. Kulongoski will review them,
and then decide whether to invoke 9-percent cuts
across the board in general-fund spending or
phase in the cuts. Under a 1951 law, the governor
can cut only across the board to eliminate a
potential budget deficit; legislators can cut
selectively and have the last word on spending.

pwong@StatesmanJournal.com or (503) 399-6745

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Prisons closures, elderly aid cut-off top list of proposed Oregon budget cuts

Published: Wednesday, June 09, 2010, 10:28 AM     Updated: Wednesday, June 09, 2010, 11:08 AM

Harry Esteve, The Oregonian
Three Oregon prisons would close and about 1,000 minimum-security prisoners would be let go, under a proposed set of state budget cuts released this morning.

Also on the chopping block: Oregon Project Independence, which helps seniors stay out of nursing homes by providing them in-home care; a state program that delivers meals to 240 seniors and people with disabilities; and a program that subsidizes daycare costs for low-income parents, affecting about 5,000 people.

These are among the options outlined by state agencies, who have been ordered by Gov. Ted Kulongoski to slice 9 percent from the final 12 months of their two-year budgets. Kulongoski ordered the cuts after state economists projected a $577 million shortfall in the 2009-11 budget.

If the scenarios of freed prisoners and abandoned elderly seem familiar that's because they are. Similar proposals have been made in recent years as state revenues continue to plummet.

It's unclear at this point whether this time the cuts will stick, or if Kulongoski or the Legislature will find another method for balancing the budget. For example, closing prisons requires either legislative action or special commutation of inmates by the governor.

"The governor received these plans at the same time the public did," said his spokeswoman Anna Richter Taylor.

In a news release, Kulongoski called the list of cuts, which have come from every agency, "the next step in this difficult process" of rebalancing the current budget. "There are no good answers and no easy solutions."

Also unclear early is how many state workers face layoffs under the proposed list of cutbacks. Many agencies, such as the state police, are leaving positions unfilled, but not issuing pink slips. State police would delay hiring 24 recruits, which also will postpone its goal of providing 24-hour patrols on state highways.

In other agencies, layoffs are unavoidable. School districts, which must find $250 million in cost savings, already have announced some layoffs and shortened school years.

Kulongoski and other state leaders continue to hold out hope of a federal bailout. Congress is considering two measures that could provide hundreds of millions of dollars to public schools and health programs.

Read Thursday's Oregonian for more details of the proposed cuts.

- Harry Esteve

© 2010 OregonLive.com. All rights reserved.

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Special session possible

GOP request was rejected last week, but budget realities loom

By Peter Wong • Statesman Journal • June 17, 2010

 

Just one week after lawmakers rejected a Republican request for a special session to rebalance the state budget, the Democratic speaker of the Oregon House said a session is now looking more likely.

"The more we dig into the effects of the proposed across-the-board cuts, the more devastating the effects are becoming apparent," House Speaker Dave Hunt of Gladstone said.But when lawmakers might call themselves back is still an open question, hinging on their agreement on what to do about specific cuts — and whether there is federal aid to cushion them.Gov. Ted Kulongoski received agency plans for 9 percent cuts that he ordered after a forecast shortfall of $577 million in tax collections. State law allows the governor to cut only across the board in general-fund spending; lawmakers can cut selectively.

Kulongoski said last week he would not go along with proposals by the Department of Corrections to close three small prisons, two of them in Salem, and cut deeply into community-corrections grants for counties. He said he would ask the Legislative Emergency Board, which meets between legislative sessions, to make up the difference from the state emergency fund.Hunt said lawmakers also are opposed to other proposed cuts, such as state aid to schools and employment-related day care. He said lawmakers would let stand some of the agency proposals. Unless substantial federal aid to states materializes from Congress, state reserves do not contain enough to offset all the cuts. The best estimate is that about $150 million to $175 million is available."They will be modest add-backs. In no case will we be adding back enough to fill the entire hole," Hunt said. "But I think there is a strategic way to add back portions that will ameliorate the worst of the cuts. If federal money comes through, we'll be able to do more."

Although the proposed agency cuts were disclosed a week ago, Tuesday was the first time that many lawmakers were briefed by the legislative fiscal staff on their potential effects. The briefings were conducted after a special meeting of the Legislative Emergency Board, which approved a plan by state universities to offset their share of cuts by tapping extra tuition generated by increased student enrollment.

Kulongoski plans to implement the cuts on July 1, the start of the second year in the 2009-11 budget cycle. He can change details of agency plans. He has not yet decided whether to implement the entire cut on July 1 or phase in cuts.

Help from D.C.?

Hunt said the timing of a special session is still uncertain.Democratic leaders are awaiting what Congress may do to provide additional aid to states in the form of Medicaid payments and help for education.

Oregon's share of Medicaid aid would be about $200 million of the $24 billion being considered. It stands to gain $230 million for schools and $40 million for community colleges and universities of the $23 billion being considered for education. President Obama backed both in a recent letter to congressional leaders, but political concerns about adding to burgeoning federal budget deficits cloud prospects for either measure.Hunt was bound for Washington, D.C., on Wednesday, partly for a meeting of speakers from the 50 states. Presiding officers of the larger chambers in 49 states, and of the one-chamber legislature in Nebraska, are known as speakers. He said the trip's cost is not being paid by the public. Hunt said the chances of more Medicaid aid look good. Majority Democrats in the U.S. Senate added that money to a pending extension of unemployment benefits and tax breaks; the Senate has not yet voted on the bill. But Hunt said more aid to education appears uncertain.House Republican Leader Bruce Hanna of Roseburg criticized the measures as "another taxpayer-funded bailout from the federal government."

Hunt disagreed."Oregon pays far more federal taxes than we get back for services, so this is a perfect time for us to step up and say we need help from the federal government in the global economic crisis," Hunt said. "I'm optimistic there will be at least some federal assistance on the way." Hunt said Congress would have to act by its Independence Day recess for help to be useful to Oregon.

Wanted: A plan

Hunt and Senate President Peter Courtney, D-Salem, opposed a Republican request for a special session filed May 26.

It failed by the deadline to muster the 31 votes in the House and 16 in the Senate required to invoke lawmakers' authority to meet on their own. The request was backed by just 17 representatives and eight senators, all Republicans. But not even all the Republicans in both chambers sided with their party's request — and only nine senators cast ballots.

Hunt and Courtney have said it's important for lawmakers to have a plan before lawmakers meet in such a session during an election year.Courtney has said he does not want a repeat of what happened in 2002, when lawmakers met a record five times and wrangled over what to do. In 2006, leaders from both parties worked together to formulate specific budget and policy proposals and were able to hold a one-day special session that lasted just six hours. Courtney became Senate president after the 2002 budget crises."What I learned from 2002 is that I never want to do that again," Courtney said. "What I learned from 2006 is if we have to do it again, we should do it exactly that same way. We had a plan going in. We had the votes. We passed five bills in one afternoon. We avoided turning the people's business into political theater in the middle of an election year."

Courtney has speculated on a special session later this summer, perhaps closer to the next quarterly economic and revenue forecast scheduled for Aug. 26.

pwong@StatesmanJournal.com or (503) 399-6745

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Democrats trim unemployment bill for support

WASHINGTON - Republicans and a dozen Democratic defectors in the Senate dealt a defeat to President Barack Obama Wednesday, just days after he pressed Congress to renew pieces of last year's economic stimulus bill.

A catchall measure combining jobless aid for the long-term unemployed, aid to cash-strapped state governments and the renewal of dozens of popular tax breaks for businesses and individuals failed to muster even a majority in a test vote, much less the 60 votes that would be required to defeat a GOP filibuster.

Now, Obama's Democratic allies have been forced back to the drawing board in their efforts to pass the measure, which also would protect doctors from a looming cut in Medicare payments and raise taxes on investment fund managers. A new, scaled back version of the measure is likely to be revealed Wednesday afternoon.

Finance Committee Chairman Max Baucus, D-Mont., said after the vote that "Plan B" is to do some "shuffling, rearranging of some of the provisions" of the bill but not making wholesale changes.

Just on Saturday, Obama made a plea for the measure, including $24 billion in aid to cash-strapped state governments to help avoid tens of thousands of layoffs and ensure the economy doesn't slip back into a recession.

To try to revive the bill, top Democrats are expected to roll back last year's $25 a week increase in unemployment checks and give doctors just a short reprieve from scheduled cuts in their Medicare payments instead of relief until the end of next year. Democratic leaders promise to restore the $24 billion in state aid that was struck by Wednesday's vote.

Wednesday's defeat of the measure was unexpectedly lopsided as Democratic moderates — who almost uniformly voted for an earlier version just three months ago — joined with every Republican against the pending version on a 45-52 tally.

The vote reflected rising voter anger over deficits and the nation's $13 trillion debt. And it's by no means certain the measure can be revived to win moderate Democrats back and garner the handful of GOP votes needed to eventually pass it.

 

"They've laid the straw that broke the camel's back as far as I'm concerned," said Sen. George Voinovich, R-Ohio, who provided a critical vote to advance an earlier version of the measure in March. "We're talking $50 billion in new taxes, $80 billion in new borrowing. ... I've gotten to the point where I've had it."

The likely cuts mean that people on unemployment insurance are likely to see their benefits reduced by $25 a week. Doctors are likely to win only a seven-month reprieve from a 21 percent cut in their Medicare payments that's set to take effect Friday. Those steps would appear to cut about $20 billion from the measure.

Over the weekend, President Barack Obama renewed his push for the measure, warning that "hundreds of thousands" of state and local government jobs could be lost without $24 billion in Medicaid money to help states balance their budgets and $23 billion more to prevent layoffs at local school districts.

The pending bill is a catchall measure anchored by a six-month extension of jobless benefits for people who have been out of work for more than six months. It also includes the $24 billion in help for cash-starved state governments, dozens of expired tax breaks for individuals and businesses, a fivefold increase in the per barrel tax on oil drilled offshore and a new tax on investment fund managers.

Nine Republicans supported the earlier version of the bill against a GOP filibuster, as did every Democrat but Ben Nelson of Nebraska. Now, a lot of that support has eroded.

"I'm very concerned about the cost of the bill," said Susan Collins, R-Maine.

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Candidates for governor pledge

changes to fight budget shortfalls

By Peter Wong

Statesman Journal

May 30, 2010

With a potential gap of $2.5 billion looming between projected tax collections and current state services and aid to schools in the next two-year budget, the major-party candidates for Oregon governor are pledging change.

Republican Chris Dudley, who has never held elected office: "I will end the practice of automatic spending increases." Democrat John Kitzhaber, who has been governor twice before: "We must all recognize that the Oregon state government of tomorrow will not do as many things as it does today, nor in the same way."

Candidates for governor in 36 other states — and for thousands of legislative seats across the nation — are saying similar things. But a national expert said it is one thing for candidates to say they will control spending — and another for officeholders to do it. In terms of tax-supported general funds, over which governors and lawmakers have the most discretion, states spend an average of 35.1 percent on aid to schools and 16.2 percent on Medicaid, the jointprogram of state and federal health insurance for low-income people.

"If you take those off the table, you have to balance the general-fund budget from a much smaller part of the pie," said Scott Pattison, executive director of the National Association of State Budget Officers.

"But I say you have to go where the money is." In Oregon, 40 percent of the general fund and lottery proceeds go to schools — the largest chunk — and 7 percent to Medicaid. "If governors and legislators do not make major structural changes to schools and Medicaid, those programs will suck up all the new money," Pattison said.

 

"What is going to happen is that all other parts of government are disproportionately going to receive less or be cut more. It's simple math. I think you will see tight budgets from state funds to higher education, corrections, mental health and social services — and this is a years-long situation."

In Oregon, the crisis — or opportunity — came early in the form of a newly projected shortfall of $577 million in state tax collections for the current two-year budget cycle.

The big chunks

Twenty years ago, the state paid 30 percent of school operating costs, and local property taxpayers paid 70 percent. But after Oregon voters limited property tax rates in 1990 — and shifted the burden onto the state budget — the ratio is reversed today. School spending is popular with both parties because every legislative district contains schools.

With a few exceptions, Republicans joined Democrats in the Oregon Legislature last year to add $200 million to school spending and override vetoes by Democratic Gov. Ted Kulongoski. The total was $6 billion, which roughly is the same as in 2007-09. Under Kulongoski's requested across-the-board cut in the aftermath of the latest shortfall of $577 million, more than $240 million would come from aid to schools. Salem-Keizer's share is estimated at $17 million.

"I do not see how our schools withstand an added $240 million in cuts in the course of the next year," said House Speaker Dave Hunt, D-Gladstone.

The case is different with spending on Medicaid, which every state has — but which relies on federal money.

Although Oregon has budgeted $6.1 billion in the current two-year cycle for Medicaid, which is in the Oregon Health Plan, $4.2 billion of it is federal funds.

As part of the federal economic-recovery act, the state share for the current budget is $3, and the federal share is increased from $5 to $7. Slightly under $1 billion of the state's share is from the tax-supported general fund. The rest comes from earmarked cigarette and hospital taxes — voters approved a specific cigarette-tax increase in 1996 — and other sources. One fact about Medicaid that many people are unaware of, Pattison said, is that 68 percent of its costs result from just 26 percent of those covered — mostly older and disabled people with chronic medical conditions. As the nation ages, Pattison said, those costs are expected to rise while Congress has just broadened health-care coverage.

"As we see the implementation of federal health-care reform in the next few years, I expect that cost to continue to go up," he said.

Corrections help?

In the case of the Oregon Department of Corrections, its 1993-95 spending was just short of $400 million, virtually all of it from the general fund, and it had capacity for 6,625 inmates and 196 special-purpose beds.

Its current two-year budget is about $1.5 billion, 80 percent of it from the general fund and under 10 percent in federal aid. As of May 1, it housed just shy of 14,000 inmates, 42 percent of them serving mandatory minimum sentences for violent crimes that voters approved as Measure 11 in 1994.

Under Kulongoski's across-the-board cut, the agency would lose $50 million. But even Kulongoski conceded that because of various restrictions — including other state laws, federal requirements for inmate medical care and representation by labor unions — the agency was "boxed in the most."

"The Legislature is going to have to provide additional funding for them to be able to work their way out of this," he said.

Senate President Peter Courtney, D-Salem, said the corrections budget is not the only one with heavy dependence on the general fund. Oregon Youth Authority and Oregon State Police also face substantial cuts.

"One of the core functions of government is public safety," he said. "You cannot release dangerous people to the streets."

Corrections Director Max Williams, himself a former Republican legislator, sits on a governor-appointed "reset Cabinet" that is going to put forth suggestions in June about broadly reshaping public-safety services, not just his agency.

"They are going to challenge us on the way we have always done business," he said. "They will force us to decide how much are we willing to spend, for what services, and what ultimately makes sense, judged against other state services."

pwong@StatesmanJournal.com or (503) 399-6745

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Income taxes linked to volatility

By Peter Wong

Statesman Journal

May 30, 2010

For Oregon and other states, it is no surprise that tax collections are down — even if Oregon officials were taken aback with the lower-than-expected numbers for income taxes in the quarterly forecast last week. But one national expert said all states are being hit harder than might be expected. And he said the ups and downs are greater in states such as Oregon, which rely on income taxes. In addition to people who are unemployed for long periods, working fewer hours or have had unpaid furloughs, states are not collecting as much from the higher-end earners more likely to have capital gains and investment income.

According to the National Association of State Budget Officers, 41 states are collecting less than projected for the year ending on June 30, six are collecting about as projected, and just three are collecting more. It reported some improvements in March; another survey is planned for release Thursday.

Most states levy both income and sales taxes; Oregon is one of five states without a general sales tax. "State tax revenue is more volatile and does not necessarily track economic activity," said Scott Pattison, executive director of the national group. "We have had huge declines in state revenue, well below the actual decline in the economy, and most starkly after Sept. 11, 2001."

He said it is even worse in the current downturn, which is more severe than the 2001-02 recession — and it will take years for states to recover to pre-2008 levels. Forty-three states, including Oregon, levy income taxes. Nevada and Washington are among the seven that do not. In five Western states with income taxes chosen for comparison by the Oregon Office of Economic Analysis, income tax collections were down in all but Arizona for the fourth quarter of 2009.

In last week's Oregon forecast, Oregon's personal income taxes — based on 2009 returns due April 15 — were down by $472.3 million. At 16.4 percent less than in the previous year, they set set a record low. The state unemployment rate remains above 10 percent. Corporate income taxes, however, went up by $14.3 million. They now threaten to trigger a refund to businesses after the close of the budget period in June 2011 under the state's "kicker" law. Pattison also said that states that rely on income taxes, such as Oregon, also are increasingly dependent on the smaller group of higher-end taxpayers.

"A huge percentage of state income-tax revenues comes from those people," Pattison said. "Some argue that's good because it's progressive, based on the ability to pay. But we're reliant on them and it creates volatility." During the economic boom of the late 1990s, Oregon's taxable income from capital gains rose steadily until it reached $6 billion on 2000 tax returns. In the following three years, however, that income dropped by half — resulting in big losses in tax collections for the 2001-03 budget cycle. But it took a while for experts to figure it out. A similar pattern occurred in California, whose population and state budget dwarfs Oregon's. Barely three years ago, Oregon's taxable income from capital gains set a record at nearly $9.5 billion. But based on early tax returns filed for 2009 and due April 15, that amount is estimated at $2 billion. Although it's not final, that total would be the lowest since 1994.

"Capital gains are always a problem to forecast," said Josh Harwood, senior economist with the state Office of Economic Analysis. "They are not only extremely volatile, they show up in our revenue stream in April. It gets down to individuals — very segmented at the high end with a small number of returns.

"It's a reality that we are going to see volatility — but I hope not like this going forward." Oregon provides no special tax breaks for most capital gains, which are the profits from the sale of assets such as stock. They are treated as ordinary income, which has been taxed at a maximum of 9 percent.

Under Measure 66, which lawmakers passed in 2009 and voters upheld Jan. 26, individuals earning more than $125,000 and households earning more than $250,000 pay at higher marginal rates. Some of the increases are temporary, through 2012, and some are permanent. If they owe extra taxes on 2009 returns as a result of the increases, they can pay by Oct. 15 without interest or penalties.

State Economist Tom Potiowsky said experts will have a better idea by then of the effects of Measure 66 and 67, which lawmakers passed to raise a total of $727 million to balance the budget.

"A big increase in capital gains does not look very plausible in terms of something to rescue us," said Rep. Vicki Berger, R-Salem, a member of the House Revenue Committee who opposed Measure 66. "Yet this is the basket we put our eggs in when we did the tax increase last year."

But Chuck Sheketoff, executive director of the Oregon Center for Public Policy based in Silverton, has a differing view. "Without Measures 66 and 67, there's no question we would have been in worse shape," said Sheketoff, who has been critical of proposals for capital-gains tax cuts.

In addition to diverting future "kicker" tax refunds into a state reserve fund, Sheketoff said, lawmakers need to re-examine other tax breaks that result in less money for state coffers. Both major-party nominees for governor — Democrat John Kitzhaber and Republican Chris Dudley — have called for reduced taxes on capital gains. But both have conditioned it on reinvestment of the money in Oregon to create jobs.

Dudley opposed Measure 66. Kitzhaber supported it, but said he agreed with critics that it increased Oregon's dependence on income taxes. "We have to ask ourselves three basic questions about the tax code: Is it fair? Is it stable? Does it align with our economic development objectives or enhance the kind of economicactivity we want to occur in this state?" he said.

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Error makes Oregon state budget shortfall even bigger

By Harry Esteve, The Oregonian

May 27, 2010, 2:56PM

Oops. That bad-news Oregon revenue forecast? It just got worse.

State officials say that when they prepared the latest quarterly report, they overstated by $14.5 million how much the state will get in cigarette taxes.

As a result, the revised shortfall projected for the state's general fund budget is $577 million instead of the $563 that was the target of heated discussion earlier in the week.

State economist Tom Potiowsky said the mistake occurred in translating numbers from the computer programs he uses for the forecast into the written report.

"It's an embarrassment," Potiowsky said, adding that he wishes the error had gone the other way. "But you face up to it and you correct it, which we have done."

On Tuesday, whenthe forecast was released, Gov. Ted Kulongoski gave state agencies two weeks to work out budget cuts amounting to 9 percent over the next 12 months. He also ordered a continuation of pay freezes for management employees and called on state worker unions to reopen their contracts to accept pay and benefit roll backs.

The next day,Senate Republicans called for a special session of the Legislature to tackle the shortfall and make more strategic cuts to spare public schools.

– Harry Esteve

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Governor calls for 9 percent cut of agency budgets

Economy improving, but state coffers still
short of needed funds

 

 

 

Peter Wong and Dennis Thompson Jr. •
Statesman Journal • May 25, 2010

The bad news from today’s quarterly economic forecast is that tax collections for state government c
offers, based on 2009 returns filed in April, are still going down.

The good news is that economic indicators, such as jobs, are picking up.

For the current two-year budget, forecasters today said they expected the state to be about $456
million short of the money needed to maintain current services.

Oregon Gov. Ted Kulongoski, in a press conference immediately following the forecast, said he would
order state agencies to reduce their budgets by 9 percent.

He said the budget crisis requires “swift and decisive” action, but he would not call the
legislature into a special session.

The governor also said he would:

•Tell agencies to report cut lists in two weeks. This
could lead to layoffs, reduced work weeks and more
furlough days.

•Extend a pay freeze for executive and
unrepresented state workers through June 2011.

•Ask state public employee unions to agree to the
same extended pay freezes for a total of $19.9
million in general fund saviings.

•Ask the state Public Employee’ Benefit Board to limit
benefits cost increases to 5 percent, which could
save $30 million in the next calendar year.

Looking forward, income taxes and lottery proceeds

 

are projected at $16 billion in the 2011-13 budget
cycle. But that total is still $2.5 billion short of what
budget experts say is needed to maintain state
services and aid to public schools.

In addition to higher costs, the state will lose one-
time money such as federal economic-recovery
funds — although there is talk about extending
federal health-care aid to states — and the state’s
education and general reserves.

Meanwhile, lawmakers are awaiting what a group known as the governor’s “Reset Cabinet” will offer to set priorities for state services, propose services for reduction or elimination, refocus to serve more
people or improve efficiency.

Gov. Ted Kulongoski is scheduled to discuss the group’s proposals June 25 at the Portland City Club.

pwong@StatesmanJournal.com or (503) 399-6745

 

 

 

 

To read the full revenue forecast, please visit:

 http://www.oregon.gov/DAS/OEA/economic.shtml#Most_Recent_Forecast

 

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