BY SARAH ROSS

SALEM- Senate President Peter Courtney, D- Salem, and House Speaker Dave Hunt, D-Clackamas County, announced on Tuesday their intentions to use the week’s Emergency Board meeting to prevent cuts to senior in-home care and services for those people with disabilities.

During the Legislative Emergency Board meeting scheduled for Thursday morning, Hunt and Courtney expect to restore $17 million of the $158 million that the Oregon Department of Human Services was required to cut as part of the governor’s allotment process.

“We simply refuse to allow elderly people to be forced out of their homes and into more expensive nursing homes,” said Hunt in Tuesday’s press release. “We refuse to allow those suffering from physical and mental illness, and their families, to fall through the cracks in the state budget caused by this global recession.”

The Emergency Board took similar action in June to prevent a budget shortfall within the Oregon University System and is scheduled to meet again in September, following the next revenue forecast in August.

Courtney added that it has been the leaders’ goal all along to protect the vulnerable and to avoid higher cuts in the future.

“These will continue to be our guiding principles as the Legislature works to find ways to meet both our responsibility to maintain a balanced budget and our moral obligation to protect Oregonians who rely on state services,” stated Courtney in the same release.

The leaders hope to restore enough funding to the DHS to protect Oregon Project Independence, Medicaid In-Home Care programs for seniors, Community Mental Health programs, and the Developmental Disabilities Family Support Program.

BY SARAH ROSS

SALEM- Gov. Ted Kulongoski’s final approval over agency budget cuts has reverted Oregon’s General Fund spending to approximately 2007 levels. Oregon’s General Fund budget accounts for about 22 percent of the entire Oregon state budget.

Despite cuts to the General Fund, the state’s total budget has increased by over $11 billion since the last biennium.

Gov. Kulongoski approved cuts made Tuesday by state agencies to reduce Oregon’s budget by $577 million, in order to close the unexpected budget deficit announced last month.

Kulongoski used his “allotment authority” to make across the board cuts for every agency rather than calling the Legislature into a special session to make specific reductions. The cuts that go into effect starting on July 1^st will represent a 9 percent cut for the remaining year of the 2009-2011 budget.

“With limited options to balance the budget, and growing uncertainty about federal assistance, the longer we wait to implement these reductions, the deeper the cuts will have to be to bring the budget into balance,” said Kulongoski in Tuesday’s press release.

The governor stressed the need to “operate with the reality of today,” explaining that the state doesn’t have the revenue to support the services that were approved in the legislature’s budget.

Responding to concerns of prison closures and the release of criminals due to the cuts for the Oregon Department of Corrections, Kulongoski restated his intentions of asking the legislature’s Emergency Board Committee to grant the Department the necessary funds to keep prisons open.

Senate President Peter Courtney and Speaker of the House Dave Hunt issued statements soon after the governor’s announcement.

Courtney called news of the cuts “sobering,” but reinforced the Legislature’s commitment to “soften the blow from the most severe cuts.”

“Each step of the way, we’ll be thinking of everyday Oregonians and the challenges they’re facing in their own lives,” said Courtney.

Hunt echoed similar sentiments saying the legislature will continue on the same course it’s been on in the past few weeks. This includes figuring out the worst of the cuts, lobbying for additional federal funding, and preparing cuts to the agencies that the governor doesn’t have control over, such as the legislature.

With the $577 million reduction, the legislatively approved budget for the 2009-2011 biennium will be reduced from $14.2 billion to about $13.7 billion.

Ken Rocco, Legislative Fiscal Officer for the Legislative Budget Office, noted that while the General Fund budget is smaller than it was in 2007-2009, when it was $14.4 billion, it is still bigger than it was prior to that biennium.

The 2005-2007 biennial General Fund budget totaled $12.4 billion (which is $1.3 billion less than this year’s adjusted budget). Prior to that, the budget in 2003-2005 was $11 billion and in 2001-2003 was $10.5 billion.

The state’s total budget this biennium is $59.6 billion. It was $48.3 billion in 2007-2009.

An Oregon Politico analysis into how this biennium’s General Fund budget compares to the others shows increases in “Other Education” and Human services. Rocco said these increases came about from additional student assistance grants and “caseload growth” for the human services department due to the recession.

Rocco also mentioned that the cuts made by the governor will only be to the general fund and are actually only 4.6 percent of the biennial budget. They are reflected as 9 percent cuts because those agencies that have already spent their budgets for the first half of the current biennium will need to cut 9 percent from the next year to meet the 4.6 percent cut for the full biennium.

The governor’s largest reductions are coming in education and human services. The Department of Education will lose $258,945,297 while the Department of Human Services has to reduce its budget by $158,260,778.

Schools will face the brunt of the Department of Education’s loss with many of them reducing school days or laying off staff in order to meet their reduction goals while honoring union contracts.

As for human services, most of their cuts will come from food stamps, mental health services, the State Hospital, and “managed care organizations.”

And although the general budget mentioned above is being cut, the “Other funds” budget which constitutes just over 50% of the state’s total budget has continued to grow each biennium, including this one. This budget consists of funds used by agencies for services and are usually paid for with taxes and fees. This budget was approved at $29.9 billion in the current biennium which is up from $23.8 billion in 2007-2009, $21.8 billion in 2005-2007, and $18.09 billion in 2003-2005.

BY RACHEL CHEESEMAN

SALEM- In response to the $560 million shortfall in Oregon’s state budget, Governor Ted Kulongoski plans to proceed with his “reset” by implementing a 9 percent budget cut across the board.

The governor said he is “not a fan of across the board cuts,” but they were the only option available, considering the magnitude of this year’s shortfall.

“I have learned – and am convinced – that in a situation like this, the best response is swift and decisive action,” Kulongoski said. “Difficult times call for difficult actions.”

The budgets for the Department of Education and the Department of Human Services will be cut by about $252 million and $154 million, respectively. In addition, the Oregon University System’s budget will be cut by about $31 million, the agency for community colleges and workforce development by about $20 million, and the Department of State Police by about $10 million.

The governor said that while many might expect him to call a special legislative session to rebalance the budget, he would not do so, saying it would be “pennywise and pound foolish.”

“The politics at this time is not conducive to people sitting down and making good policy decisions,” he said, referring to the upcoming election season.

Shortly after the governor’s announcement, Senator Ted Ferrioli, R-John Day, sent out a press release calling for a special session, saying it would be better to “do the job right with a scalpel” than let the governor cut the budget with a hatchet.

Senator Peter Courtney, D-Salem, who served in the Senate during past recessions, said that a special session would be effective only if there were more financial resources available in revenue, rather than relying almost entirely on the emergency, reserve and rainy day funds. Currently, the reserves contain about $175 million.

Rep. Dave Hunt, D-Clackamas, said more information about the impact of cuts on different agencies must be available before the allocation of reserve money can be decided.

“We have to assess the impact of these cuts and ameliorate the effects of the worst cuts,” he said.

Hunt even mentioned cutting funding for entire agencies to refocus dollars on the services they are intended to improve, naming the Commission on Children and Families specifically, which receives approximately $25 million.

“Those are the kinds of decisions we’re going to have to make,” he said.

The governor also announced that he intends to extend the pay freeze for state employees to June 2011 and asked the Public Employees Benefit Board (PEBB) to reduce its cost increases from 10 to 5 percent this year, saving about $50 million together. The governor said he hopes to “deliver savings while preserving as many jobs as possible.”

“A 9 percent cut is significant and will most certainly lead to layoffs,” Kulongoski said. “But layoffs should be the last possible alternative.”

Hunt said the legislature intends to maximize federal money and continue its “laser light focus” on job creation to minimize the negative effects of this budgetary shortfall and speed up the growth and recovery Oregon’s economy has been experiencing. While these growth rates have been a welcome change of pace for Oregon, they have not been enough to overcome the heavy blow dealt by the recent recession in the latest fiscal year.

“I think getting people back to work is the fundamental answer,” he said.

Tom Potowski and Josh Harwood from the Office of Economic Analysis present their forecast to the Joint Revenue Committee

BY SARAH ROSS

SALEM- Oregon’s leaders were caught by surprise Tuesday morning upon learning that the State now must endure a $560 million budget shortfall for the current biennium.

A presentation by Tom Potowski and Josh Harwood from the Office for Economic Analysis showed that the state’s revenues are short $560 million for the 2009-2011 biennium.

Before unveiling the large budgetary gap, Potowski urged the committee to see the positive signs that his office found.

“I’ve just given you a picture that I think is hopeful in that we’re starting to see the recovery and moving forward,” said Potowski. Yet, he acknowledged the disconnect between those signs and the reported shortfall.

The most noticeable difference between this forecast and the one given at the end of February was the decrease in personal income tax revenue by $798.1 million, adding to an overall decrease of $876.5 million for General Fund revenue.

Harwood added that the State’s Capital Gains income tax went down in 2009 by almost half, going from just under $4 billion to under $2 billion.

“We are not alone. All the states have seen this sort of situation where the final payments in the April period were down much farther then what they actually expected,” said Potowski.

He added that Oregon differs from other states in that it has not been able to cushion its decline, as many other states have with their sales taxes. He went on to say that Oregon’s situation therefore may look worse than other states because it is so dependent on the very volatile personal income tax.

Legislative leaders were taken aback by this news which, according to Senate President Peter Courtney, they didn’t see coming.

“This has been a sobering morning for us,” said Senate Revenue Committee Chairwoman Ginny Burdick, D-Portland. “We can’t put ourselves through this anymore and it really is time to do kicker reform.”

The shortfall will add an additional $200 million to the 2011-2013 projected budget shortfall of $2.6 billion, projected in the March forecast.

In Tuesday’s press conference, House Speaker Dave Hunt reinforced that the shortfall would be even greater if the tax measures 66 and 67 had not passed.

However, Hunt’s declaration did not stop House Minority Leader Bruce Hanna from issuing his own statement blaming the shortfall on Legislative leadership.

“Rather than working with the private sector to encourage job growth, Oregon’s businesses have been stifled by job-killing taxes and mandates. It’s no surprise that April’s tax collections were ‘dismal,’ because the Democratic supermajority has done nothing to improve our private sector economy,” wrote Hanna.

BY SARAH ROSS

SALEM- The Oregon Legislature is meeting briefly this week to hear reports from passed legislation and work on legislation to be presented in the next regular session.

The body is gathering for three days of Interim House and Senate Committee hearings, starting Monday, in preparation for the upcoming session.

The practice of meeting for three days of hearings was instituted by House Speaker Dave Hunt in 2009 in order to save costs during the regular session.

“We are simply more efficient and cost effective when we bring committees together over these three day periods. It allows for joint committee hearings and greater sharing of critical information like the revenue forecast,” said Speaker Hunt in a press release sent out last week.

A new revenue forecast is set to be released by the State’s economist on Tuesday at 11 AM during a Joint Revenue Committee hearing.

More interim hearing are scheduled for September and December.

BY SARAH ROSS

EUGENE- Concerns over Oregon’s state budget and economy ruled the conversation at Wednesday’s town hall in Eugene.

The meeting was held at the Song Brook Community Center in west Eugene for local constituents to talk with their legislators about February’s legislative session. The legislators, all Democrats, included Rep. Val Hoyle, Rep. Nancy Nathanson, Rep. Terry Beyer, and Rep. Paul Holvey and House Speaker Dave Hunt, from Clackamas County.

Although questions were proposed about forestry and rent control, the audience focused their comments on the state’s budget. Questions, such as how to get tourists to pay their fair share of taxes and how accurate the state economist’s revenue forecast really is, were addressed to the Lane County representatives.

One question drew particular interest when the leaders were asked if something was being done to address the short-handed staff and resources at the Department of Human Services.

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With regard to the forestry issue, Speaker Hunt agreed that the environmental pendulum probably has swung too far in an extreme direction recently and that more harvesting of the resource should be considered, just not to the extent that it was permitted a few decades ago.

None of the legislators took a hard and fast stance on rent control, but Rep. Holvey said a conversation on the topic likely would be needed.

To get tourists to pay their fair share in taxes for using local resources, the legislators cautioned away from a sales tax, with Speaker Hunt calling it regressive. However, he did show interest in some kind of user fees that are generally tourist-specific.

BY SARAH ROSS

SALEM- Shortly after the gavel dropped Thursday on February’s special session, leaders for the state’s two legislative bodies spoke on the progress, or lack thereof, which was made in February.

Senate Minority Leader, Ted Ferrioli, R-John Day, spoke about the partisan politics which he says played into the policies passed.

“The majority party has spent the last 24 days using the legislature as their personal political cattle prod, hoping that Oregonians won’t notice the posturing and vengeful, partisan retribution against political enemies,” said Ferrioli.

Contrarily, Senate President Peter Courtney, D-Salem, made an effort to shed light on the body’s accomplishments during the short session.

“We showed that in Oregon when the going gets tough, the tough gets going. We didn’t sit on our hands. We accomplished what we came here to do,” he said. “We brought the state budget back into balance after a revenue forecast that was down and tackled important policy issues.”

Speaker of the House, Dave Hunt, D-Clackamas County, echoed that sentiment saying, “From extending unemployment benefits and funding day care for low income families to adding more dollars for college aid, we’ve helped families today when they need it most.”

Roseburg Republican Bruce Hanna, House Minority Leader, made clear his frustrations on the legislature’s attempts to improve job creation in the state.

“There was a lot of talk about creating jobs, but the only jobs that were created this session were 200 new government positions that’ll be difficult for us to sustain in the future,” stated Hanna.

“It’s unfortunate that rather than curbing spending, legislative leaders drained reserves, increased state debt and then called for a federal bailout for the next budget.”