Oregon’s general fund budget may take a $2.7 billion hit in this current budget cycle. Oregon cannot legally have a budget deficit. How will the state cut that money?
There are essentially two ways. The governor can do across-the-board cuts. Legislators could choose to let that stick, or they can come up with their own plan.
The governor and legislators should work together to come up with something more discriminating than across-the-board cuts. That’s what we elect them for — to set priorities and make those tough decisions.
Gov. Kate Brown already asked state agencies to make plans to cut their budgets by 17%. That may be slightly more than what is needed, but the plans will be a good starting point for discussion.
Since 2002, governors have used what’s called allotment reduction five times, driven by recessions. Allotment reduction is just the official name for across-the-board cuts. But when the governor does that, the governor can’t pick and choose. The assumption must be that all general fund budget allotments have the same priority and each gets cut by the same percentage. Some parts of state government actually can’t get cut under this process. For instance, the secretary of state, the state treasurer, the lottery, public universities and the judicial branch are exempt.
It also gets complicated because agencies do get some discretion in implementing cuts. An agency doesn’t need to spread them out equally within an appropriation from the general fund. It could decide certain departments could get cut and others would not.
If the Legislature is convened, it has much more authority to fine tune any cuts. It could fully eliminate a program or service that had been authorized. That can’t be done without the Legislature. The Legislature also could, for instance, decide that it would be silly to cut anything from the state’s employment department at this time because the agency has had so much trouble meeting the demand for unemployment payments. Additionally, the Legislature has the authority to cut spending for any entity under its budget power and can eliminate jobs and positions.
Oregon does have about $1.6 billion in rainy day funds, and Congress may take more action to help states. Regardless, the state will have some tough decisions to make. Because the Legislature has the power to more precisely decide how Oregon will respond to the budget challenge, the Legislature should convene to do so.