Budget Issues Still Dominate After Session Adjourns

Balancing the budget was the dominant challenge in the 2011 legislative session. It still is an issue today as one Ways and Means leader underlines potentially shaky assumptions that underlie the state's balanced budget for the next two years.

Rep. Dennis Richardson had a hand in crafting the state budget but sees flaws in it.Rep. Dennis Richardson, R-Central Point, as House co-chair of the Joint Ways and Means Committee, was in the back room as budget decisions were made during the session. His recent newsletter says: "To reach a compromise between the Republicans and Democrats of both the House and Senate, so that a budget could be passed, we chose the road of 'assumptions.'"
Richardson rates five of them as risky:

  • Assuming that $239 million of savings will be identified by the Oregon Health Authority’s health transformation initiative.
  • Assuming that $51 million of savings will be identified by the Department of Human Services’ long-term care transformational initiative.
  • Assuming that $28 million will be saved by the Department of Corrections in “unspecified reductions."
  • Assuming that $19 million will be “loaned” from the Common School Fund to the Senior Property Tax Deferral program; the loan will need to be paid back before the end of the 2011-13 biennium, yet there is no source of revenue identified from which to fund the pay-back;
  • Assuming that $310 million from the ending balance will be allocated in the February 2012 session to avoid 7 per cent of additional cuts in agency and program budgets.  

Richardson could have added a sixth: The legislature's continuing assumption the federal government will allow states to create a reservoir of special purpose dollars – in this case, taxes on hospitals and health insurers – and allow those dollars to generate federal match under the Medicaid program. Further, in previous biennia, hospital tax revenue was strictly limited to apply toward hospital costs in the state budget. This time, no longer. Hospital taxes, as well as insurance tax revenue, were treated just like general funds – they could be used for any purpose viewed as appropriate by Ways and Means leaders.

Thus, the challenge if the money dries up in the future.

When the legislature approved the 2009-11 budget, it relied on about $1 billion of federal money under the federal "Stimulus 1" program.  Well, Stimulus 1 did not lead to Stimulus 2, and states like Oregon were left with huge gaps in the budget.

Another gap could occur if, at some point, Congress, more concerned than ever with drains in the federal treasury, may stop states from the Medicaid matching fund grab.  

The writer, CFM partner Dave Fiskum, has worked for more than 20 years as a lobbyist at the Capitol and has represented a number of clients affected by Ways and Means decisions, including a number of Oregon hospitals.