Legislative budget writers start reviewing cuts, hearing from public

Oregon State Capitol.

The co-leaders of the Oregon Legislature’s budget committee have laid out their framework for balancing the next two-year state budget with more than $2 billion in federal aid from President Joe Biden’s pandemic recovery plan.

The framework, which they announced March 24, will enable lawmakers to maintain state aid to public schools, state-supported health care and other services without many of the cuts proposed in Gov. Kate Brown’s original $25.6 billion budget back on Dec. 1.

The state school fund will be at $9.1 billion, excluding the money from the corporate activity tax that districts get for targeted programs and separate federal aid to enable districts to reopen schools.

The Oregon Health Plan, which enrolls 1.25 million low-income people, will be maintained without cuts. The federal government has raised its share of the joint federal-state program through Dec. 31 of this year.

The budget framework also proposes $780 million from Oregon’s $2.6 billion share of federal aid for programs and services envisioned under Biden’s plan, which became law on March 12. The overall $1.9 trillion plan passed both houses of Congress without any Republican support.

“The federal aid in the American Rescue Plan is a game-changer,” Rep. Dan Rayfield, a Democrat from Corvallis and one of the chief budget writers, said in a statement. “This support is critical to our recovery and will help the state continue vital programs and services for Oregonians who have been disproportionately impacted by the crises of the past year.”

But the budget framework of almost $28 billion from the tax-supported general fund and lottery proceeds will leave $520 million of that federal aid unspent until the 2023-25 budget cycle, when tax collections are also projected to fall short of meeting current service levels.

The budget committee leaders also propose a record $250 million allocation to the state emergency fund, given the continuing uncertainties about the coronavirus pandemic and wildfires. (The Legislature gave more money to the Emergency Board, which decides budget matters between sessions, but only after two special sessions in 2020.)

“Our framework addresses unprecedented challenges as we await further federal guidance with respect to the American Rescue Plan money designated for Oregon,” Sen. Betsy Johnson, a Democrat from Scappoose and a budget co-leader, said. “Our document is sufficiently flexible to respond during budget negotiations. However, it also prudently anticipates potential challenges for the 2023-25 budget.”

Counties and cities also will get share of federal aid under Biden’s plan. Cities with populations of 50,000 and up, and all counties, will get their money from the U.S. Treasury. Smaller cities will get theirs through the state, based on population.

Unlike Brown’s budget, which proposed tapping the state education reserve fund, the legislative framework would leave both the education and general reserve funds untouched. Lawmakers did draw $400 million from the education reserve fund last year, cutting it in half.

The state budget spends more money than the tax-supported general fund and lottery proceeds. But most of that money is in the form of earmarked federal grants or other sources, such as fuel taxes.

Shifting millions

The state’s new two-year budget cycle starts July 1. Instead of field meetings, which the pandemic precludes, the budget committee will schedule virtual hearings soon on the framework.

“This is just the beginning of the process,” House Republican Leader Christine Drazan of Canby said in a statement. “We look forward to hearing from our communities and working with our colleagues to determine how we can provide ongoing support for recovery and continue the programs and services important to families and children.”

Awaiting votes in both chambers is a continuing resolution that keeps agencies funded past June 30, if lawmakers have not yet approved their budgets.

Unlike the governor, who proposes a single budget, lawmakers approve individual agency budgets and other bills that fit into the co-chairs’ framework. The Legislature’s budget analysts keep track of the bills.

Budget subcommittees have heard agency presentations but still have to do much of the detailed work on individual agencies. The first agency budget emerged from the full committee on March 19.

Brown’s budget proposes a shift of $280 million into programs intended to overcome the effects of discrimination against Oregon’s racial and ethnic minorities. The budget co-leaders said they are continuing discussions with lawmakers of color — who now hold 12 of the 90 House and Senate seats — and others about how to incorporate those changes into the budget.

“It’s important to protect services that Oregonians depend on, and to make investments to overcome disparities caused by systemic racism,” Sen. Elizabeth Steiner Hayward, a Democrat from Beaverton and a budget co-leader, said.

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