Familiar Players and Policy Choices

Cutline: Governor Brown and Oregon lawmakers face a huge budget hole and a potentially challenging political environment to find compromises on spending cuts or tax increases.

Cutline: Governor Brown and Oregon lawmakers face a huge budget hole and a potentially challenging political environment to find compromises on spending cuts or tax increases.

As the dust settles from the election, the view of the 2017 legislative session is becoming clear – and familiar.

Democrats remain in control. Experienced presiding officers, Senate Peter Courtney and Speaker Tina Kotek, will lead the legislature. Governor Kate Brown will continue to fulfill Governor Kitzhaber’s term. Fifteen freshman legislators, one in the Senate and 14 in the House, will join the ranks. Then there is a budget to balance and a transportation funding package to debate.

Familiarity, however, will not make the tasks at hand any easier.

On February 1, 2017 the legislature will begin the arduous task of balancing a budget with a predicted $1.4 billion deficit. It is a deficit made more challenging by the strain on the general fund from the statewide ballot measures Oregonians passed this November – money for veterans, technical education and outdoor school for all.

Legislators wont be able to count on additional revenue from Measure 97, the gross sales tax measure Oregonians widely rejected. To balance the 2017-19 budget, legislators must cut spending or find more revenue – or both. Courtney told reporters he isnt sure he has the votes right now for a tax increase or major budget cuts.

The search for alternative revenue opportunities is already underway, but so far with no consensus. There may not be a consensus for a while. Because Democrats lack supermajorities in the House and Senate, they will be required to find at least one Republican in each chamber to pass a revenue-raiser.  It remains to be seen whether business leaders, fresh from spending millions to defeat Measure 97, will be willing to sit down to negotiate another tax plan.

It is customary that revenue-raising goes hand in hand with other legislative actions, especially budgets, which stand to be cut. Brown asked her state agency heads to submit pro forma budgets with 10 percent cuts. She is constitutionally obliged to submit a balanced budget without using new revenues, a requirement recently observed more in the breach than reality. Her budget is due out December 1.

What could make the 2017 session different is a change in game plan in Washington, DC on Medicaid. Oregon is one of the states that expanded Medicaid eligibility and the cost is a significant part of the budget hole lawmakers face. If Congress switched to Medicaid block grants to states, that budget hole could widen.

There is a broad consensus on the need for a transportation funding package. Last session, the package was derailed over other legislation. It probably will fall to Brown to recommend a new starting place for a transportation funding package.

Transit advocates are pushing for a funding component, but that is complicated because any revenue raised taxing cars, trucks or the fuel they consume is constitutionally dedicated to the Oregon Highway Trust Fund for road and bridge improvements.

Another wild card is President-elect Donald Trump’s $1 trillion infrastructure investment plan, which CFM’s Joel Rubin has observed is noteworthy because it doesn’t involve any new federal spending on transportation. The plan relies on tax credits and investments by private contractors, which may not be very applicable to Oregon’s highways, bridges and transit systems.

While the players and policies are familiar in Salem, there could be surprising new turns that Brown and legislators will face. With Brown facing re-election in 2018 and at least two potential rivals encamped in the Capitol – Secretary of State-elect Dennis Richardson and Rep Knute Buehler – finding common ground on mountainous issues could be more challenging.

Public affairs associate Ellen Miller recently earned her MBA from Willamette’s Atkinson Graduate School of Management, with a focus on public management and policy.