Oregon budget writers offer up a spending framework to Legislature on Wednesday — and a lot of uncertainty

By DIRK VANDERHART/Oregon Public Broadcasting

SALEM — Oregon’s top budget writers attempted to answer an impossible question Wednesday.

In unveiling a high-level spending framework, the co-chairs of the Legislature’s budget committee offered a picture of what priorities the state may be able to fund over the next two years.

The only problem: Much of that framework relies on money from the federal government, which is highly unreliable as President Donald Trump and congressional Republicans look to slash spending. Nearly a third of Oregon’s budget comes from federal funds.

“This document would look different if we didn’t have that sort of humongous uncertainty at the federal level,” said state Sen. Kate Lieber, D-Portland, who leads the Legislature’s Joint Ways and Means Committee alongside state Rep. Tawna Sanchez, D-Portland. “The federal level is making it so our revenue is uncertain.”

As a result, Lieber and Sanchez offered a budget picture that is far different than most years.

The bulk of their document offers a relatively placid picture of the state’s finances. With no cuts to federal funding, the budget co-chairs expect Oregon will have enough money to continue state services unabated, sock away money for emergencies or a future recession, and increase investments in priorities like housing, mental health and addiction treatment, and schools.

“We are better off than many states,” said Lieber, nodding to a major budget hole lawmakers in Washington state and others are trying to fill. “We are not in that position.”

But many people feel federal cuts are relatively assured — the question is by what magnitude.

Those scenarios raised the possibility that Oregon would face a funding gap of between $2.6 billion and $9.7 billion — holes that would require major adjustments as the state scrambled to backfill the lost spending in necessary areas.

“Oregon’s budget is not designed to plug federal holes,” Lieber said. “In fact, it’s designed to leverage federal resources.”

In a world where significant cuts don’t happen, Sanchez and Lieber say Oregon will have much of the money necessary to carry out a budget recommended by Gov. Tina Kotek in December, though they were clear they might diverge from the governor in some places.

Beyond funding current services, that potentially includes:

• $11.4 billion for K-12 schools, a more than 10% increase over the allocation in the current budget.
• $100 million in “emergency funds” that can be used outside of a legislative session, along with $250 million more specially earmarked for costs that could include wildfire prevention.
• $300 million for raises to state employees
• Nearly $2 billion more for human services costs that include Medicaid and foster care caseloads.
• $271.9 million in “targeted reductions” that budget writers argue would not hamper state programs, along with reductions in “one-time” spending in economic development, natural resources and other areas.
• Roughly $590 million left over for the state’s reserve funds
• $988 million that could pay for additional investments that Kotek has called for, including $825 million more for housing and homelessness programs, $246 million to bolster the state’s threadbare behavioral healthcare system, and more than $200 million more in education.

The framework doesn’t offer any indication of where lawmakers might find up to $3.5 billion that Kotek’s budget recommended in new funding for roads and bridges around the state. It also doesn’t account for potential new revenues lawmakers want to find to more sustainably fight wildfires.

Sanchez and Lieber on Wednesday told reporters the budget approach would maintain core government functions while avoiding new ongoing costs.

“What we don’t want to do is start any unnecessary new programs and then have to pull back if something happens in September or October with federal money,” Lieber said.

Federal funding isn’t the only looming uncertainty. Lawmakers won’t have the final revenue estimates they use to finalize the budget until a forecast state economists will deliver in May. The most recent forecasts from Oregon Chief Economist Carl Riccadonna have indicated lawmakers will have more money to spend than previously expected, but that may well change, depending on actions by the Trump administration and the direction of the national economy.

“We are in good shape, and this is where we are right this very second,” said Sanchez. “We don’t know what it’s going to look like in May. We have no clue.”