Despite “crisis” budget grows 10%

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Oregon’s 2017 Legislative Session began with laments of a “budget crisis” and “shortfall”. To close the gap between what previous Legislatures had promised to spend and the actual amount of money available, virtually every kind of tax increase imaginable was proposed. At the end of the Session, and with only marginal new or increased taxes enacted, Oregon’s Legislatively Adopted budget for 2017-19 managed to grow 10.3 percent from the previous 2-year period. Somehow, the “crisis” was averted by doing very little.

Among the “highlights” of the Adopted budget were record spending in General Fund + Lottery of $20.9 Billion and record “All Funds” spending of $74.4 Billion (note: “All Funds” includes federal funding and all “Other” revenue such as that from fees and charges which the State receives). The All Funds budget amounts to almost $10,000 per person living in Oregon per year. This does not include local government spending, except for some money transferred to those jurisdictions such as some gas tax and cigarette tax revenue.

The All Funds budget spends 17 percent (almost $13 Billion) of it’s total budget on “Administration,” and K-12 education will receive over $8.1 Billion (also a record), in addition to local school district funding from property taxes and other sources.

Among the open questions are the expectation of about $22 billion in federal funding – almost 86 percent of which are for “Human Services” purposes – over the next two years. Oregon governments are substantially at odds with the Trump Administration on a variety of issues, and threats to withhold federal funding over these disagreements could reduce this area of funding.

Virtually every major fiscal issue facing the State was dodged, including any significant progress on reining in the costs of the Public Employee Retirement System (PERS). While most Legislators and many in the media recognize the potential for PERS to significantly damage the State’s finances (Illinois currently offering a cautionary tale on the path Oregon is on), the Courts appear to have made the System virtually untouchable. Discussions of a major reform of Oregon’s business tax system intended to make doing business in Oregon even more difficult and expensive, fell apart as the faction supporting truly punitive taxes and the faction supporting just higher taxes battled to a draw.

All in all, it was a “more of the same” Session with some higher taxes, a lot of higher spending and promises of even more spending in future biennia and a more robust and intrusive State government, more involved in the lives of it’s citizens than ever before.

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