The Oregon Legislature's chief budget writers have proposed to shield state aid to schools, but to cut almost $400 million in other spending and draw down reserves to offset reduced tax collections during the coronavirus pandemic.
Elements of their plan, which legislative leaders released Thursday, July 16, will undergo public hearings next week. Each of the six budget subcommittees has been assigned a target for spending cuts.
Gov. Kate Brown and legislative leaders have said a second special session will be called later this summer — lawmakers already met June 24 to 26 — to deal with a two-year budget that is projected to fall about $3 billion short in anticipated tax collections.
The original budget from the tax-supported general fund and lottery proceeds, which constitute the state's most flexible spending, topped $23 billion. Lottery proceeds also are projected to be down, largely because the Oregon Lottery's chief moneymakers are video terminals in bars and restaurants, which have curtailed operations during the pandemic.
The rebalancing plan does not take into account new federal aid to states that Congress may or may not include in a new coronavirus recovery effort. The Democratic-led House already has passed a $3 trillion plan with aid to states included, but the Republican majority in the Senate has balked at the price tag.
The Legislature leadership's press release says:
"The scale of this crisis highlights the critical need for further federal action to support state investments in essential services that provide safety and security for all Oregonians, including the state's most vulnerable populations."
The co-chairs of the Legislature's budget committee are Sens. Betsy Johnson of Scappoose and Elizabeth Steiner Hayward of Beaverton, and Rep. Dan Rayfield of Corvallis. All are Democrats.
Their plan agrees with Brown's stated goal of a $9 billion state school fund, which the Legislature set in its original 2019-21 budget it approved last year. (About half that money already has been paid to Oregon's 190 school districts; July 1 marked the start of the second year of the state's two-year budget cycle.)
From the plan: "The fund remains at $9 billion, sparing students and teachers from devastating program cuts amid the uncertainty of the pandemic and holding critical investments in public education harmless at a time of great uncertainty."
To do so, the plan proposes to draw $350 million from the Education Stability Fund, the reserve lawmakers created and voters approved in 2002 from Oregon Lottery proceeds. This amount will reduce the fund by just under half; lawmakers cannot spend the entire fund in a single budget cycle.
The plan also proposes an ending balance of a little over $200 million, the bare minimum in recent decades. The balance is usually carried over into the next cycle, which starts in mid-2021.
Among other programs listed by the co-chairs as priorities for "preservation" are state aid to community colleges and state universities, Oregon Opportunity Grants for college students, housing stabilization, some health care and child welfare services, state prisons and community corrections, residential treatment capacity for youths, current Oregon State Police trooper levels and labs and medical examiners.
Their plan also lists specific programs within several agencies: Agriculture, Forestry, Justice, Veterans Affairs and Water Resources, plus tax administration in the Department of Revenue.
But the plan calls for the six budget subcommittees to come up with a total of $387 million in other spending cuts.
One of the proposed cuts would close the Shutter Creek Correctional Institution in North Bend, a 302-bed minimum-security prison converted from a former Air National Guard radar station in 1990. Warner Creek Correctional Facility, near Lakeview, would be scheduled to shut down at the close of the current budget cycle in June 2021.
In addition to $350 million from the Education Stability Fund, the plan proposes to channel back into the general fund a total of $213 million that the original budget earmarked for lessening the unfunded liability of school districts and other local governments for public pensions. However, the plan proposes to leave untouched the state's general reserve fund, which is estimated at $949 million.
Link to full document released Thursday by the co-chairs of the Oregon Legislature's joint budget committee, known as Ways and Means
Budget subcommittee meetings
Meetings of the Oregon Legislature's budget subcommittees are scheduled at these times to review details and hear public testimony via virtual means:
Wednesday, July 22: 9 a.m. to noon, Natural Resources; 1 to 4 p.m., General Government.
Thursday, July 23: 9 a.m. to noon, Education; 1 to 4 p.m., Human Services.
Friday, July 24: 9 a.m. to noon, Public Safety; 1 to 4 p.m., Transportation and Economic Development.
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