Hello Friend,
Have you driven on a freeway lately?
Have you visited an Oregon State Park? Have you been helped by a State Police trooper? Been in the foster care system? Received food stamps? Attended an Oregon public school, community college, or university? Are you a senior who receives in-home or nursing home care? Do you, or someone you know, receive health insurance through the Oregon Health Plan?
Nearly all Oregonians can answer "yes" to more than one of the above.
All of these programs are funded in part or in full by the State of Oregon.
All of these programs are slated for cuts due to the recession.
The complex state budgeting process can be intimidating to folks who aren't political insiders or professional lobbyists - it was a steep learning curve for me when I first started out in the legislature in 2007.
Yet the consequences of budgeting decisions are simply too important for ordinary citizens to ignore.
I've created a short video to help explain where our state budget comes from, and how we can move forward from here - I hope you find it useful. (Click here to see the video or click here to read the text version)
Most importantly, I want to hear what you think about our budgeting priorities.
We have tough decisions to make in the next 31 days - particularly on whether or not we should utilize the state's education rainy day fund - now is the time to make your voice heard.
Click here to participate in my online dialogue on the state budget.
As always, you should feel free to call me at my Salem office, email me (click here or just reply to this email), or attend one of my upcoming Coffee Shop Conversations - I've got one coming up on Thursday the 19th at the Bipartisan Cafe in Montavilla. (click here for more information)
Thanks for listening,
State Representative Ben Cannon
900 Court St NE
Salem, OR 97301
rep.bencannon@state.or.us
http://www.repbencannon.com
(503)986-1446
Past Newsletters
Recent Press
Oregon State Budgets 101
(click
here to see the video version)
Revenue
The Oregon Legislature has one Constitutional duty: to balance the state's budget. Unlike the federal government, we cannot go into debt (except for capital projects - i.e. bonds for school or road construction), and we cannot print money. So where does the money come from?
2007 - 2009 Legislatively Adopted Budget provided by the Legislative Fiscal Office
Well, there's three main sources:
1. The largest source of revenue for the state - about 50% of the budget, or $23.6 billion - is dedicated taxes and fees.
This category includes everything from tuition paid by students at Oregon universities to gas taxes paid by drivers, and fees paid to obtain a hunting license, visit a state park, drill a well, or mine on state land. Under state law, these taxes and fees are generally dedicated to programs that benefit of the people who pay them. Boat registration fees, for example, are dedicated to boater safety programs and facilities -- they can't be used for schools.
2. A second source of revenue for the state - about 19%, or $9.2 billion - is payments from the federal government.
This category includes, for example, Medicaid dollars that the federal government gives to Oregon for the provision of health care to low-income and disabled Oregonians. The Legislature has relatively little discretion about how to spend these dollars.
3. The final source of revenue for the state is personal and corporate income taxes and lottery revenue - about 31%, or $15.1 billion.
Lawmakers focus most of their attention on this category (the "General Fund"), because most of this revenue arrives without strings attached. We get to decide how to spend it.
2007 - 2009 General Fund Spending Breakdown provided by the Legislative Fiscal Office
Expenses
Oregon spends more than 90% of its general fund on education, human services, and public safety. Far and away the largest chunk goes to school districts on a (weighted) per-pupil basis, and this constitutes the primary source of revenue for K-12 schools.
2007-2009 Budget Woes
Back in June 2007, The Oregon Legislature adopted a two-year budget for the period ending June 30, 2009. Our budget was based on the best available revenue projections at the time, and we set aside a small ending fund balance in case those projections were off. We made small budget adjustments when we met briefly in February, 2008. Even then, few people predicted the economic collapse that began in late summer of 2008 and has worsened since.
Oregon's high unemployment rate, coupled with our dependence on the income tax, means that the General Fund is now projected to receive at least $800 million less revenue than we anticipated when we adopted our budgets nearly two years ago. That, in turn, means we need to spend $800 million less than we had budgeted, and we need to realize those savings over just the next four-and-a-half months.
While $800 million represents about 5% of the total budget for 2007-2009, it represents more than 20% of what we had budgeted to spend between now and June 30.
The Legislature will act this month to reduce budgets in line with new revenue projections.
Cutting schools, human services, and public safety by 20% this spring would be devastating: think very early school closures, prison closures, and reduced access to the Oregon Health Plan.
While it is not possible to raise new revenue quickly enough to lessen these cuts, there are two other ways the we might experience a softer landing.
The first would be for Congress to finalize a stimulus package that provides immediate payments for the states. It is not yet clear how much relief we might get from the stimulus bill, whose details are being hashed out in Congressional conference committee as we speak.
The second would be for the Legislature to tap some or all of the Rainy Day fund we created last session. Together with the Education Stability Fund (created by the Legislature during the last recession), we have approximately $800 million in reserve, not all of which we are permitted to spend in a single biennium.
These decisions -- a Congressional stimulus package and the Legislature's decision about tapping the Rainy Day fund -- will be made within the next few days and weeks, so it's crucial that you make your voice heard now.
Click here to participate in my online dialogue about the budget.
