Kitzhaber Previews His Recommended Budget, Due Feb. 1

When it is printed and distributed February 1, Governor John Kitzhaber's budget for 2011-13 will be many inches thick, and it will contain enough budget-cutting proposals to garner criticism from across the political spectrum.

Kitzhaber gave a preview of his budget to a room full of reporters yesterday. He said he is assuming the state will have a little less that $15 billion to spend out of the General Fund this biennium, which is $3.5 billion less than is needed to maintain current state programs with inflation, caseload increases and other roll-up costs factored in. Most of the state general fund budget is expended on education, health care and public safety.

For Oregon's K-12 schools, Kitzhaber said he will propose about $5.56 billion. The 2009-11 budget allocated $5.7 billion, plus the state's school districts received extra federal funding. Districts will receive a little more than half the money in the first year, while they search for ways to survive on less funding in the second year.

For the Oregon Health Authority (OHA), which is a new agency taking responsibility for health-related programs previously administered by the Department of Human Services or the Department of Consumer and Business Services, Kitzhaber said he will propose $2.3 billion. It is a $350 million increase over the previous budget, but the OHA will be in the midst of implementing health care reform provisions. Additionally, the state will be lacking about $1 billion in federal stimulus funds it received to help buoy its service levels last biennium.

Kitzhaber also is proposing almost a 40 percent cut to the Oregon Health Plan, the state's Medicaid program for poor citizens. Kitzhaber said, "There are going to be significant reductions for (payments to) providers and benefits of recipients." But he hopes to gain flexibility from the federal government, which pays $7 of every $10 spent in Medicaid, to spend the money differently to serve more people. Many people on the Oregon Health Plan will be among the first to be rolled into the new health insurance and delivery system established under the Oregon Health Authority.

For the proposed state mental hospital in Junction City, Kitzhaber included bonding authority to raise money to build it. Mental health advocates have said they would rather spend the money on smaller community-based mental health clinics than build a second, larger state hospital such as the one in Salem. Senate President Peter Courtney, D-Keizer, elaborated on the dilemma in an interview with the Salem Statesman Journal's editorial board earlier this year (video).

Kitzhaber also said he would like to cut the state's public safety budget by a larger amount than he will propose in his recommended budget, but Oregon's many mandatory minimum sentences for adult offenders require a certain level of funding.

Beyond the two-year budget, Kitzhaber said he wants the state to begin planning longer-term budgets based on spending patterns and outcomes to avoid the peaks and valleys of a state revenue system so dependent on personal and corporate income.

"Looking beyond two years to four, six and eight years down the road," he said, "we have to be mindful of how we put this budget together is going to change our education and health-care systems, and various other aspects of our public services."

Oregon's Governor is required to submit a two-year budget to the state legislature at the start of every legislative session. Legislators, mainly in the Joint Ways & Means Committee, will consider and tweak the budget, sometimes rejecting proposals outright and adding new provisions, before passing a final budget in June.