Murky Jargon Blurs Budget Clarity

Murky budget jargon can obscure the state's real fiscal condition. Are significant cuts necessary or is there cash tucked away somewhere in the state's budgetary mattress?A headline in The Oregonian several weeks ago made the point that murky words get in the way of public understanding of health care reform issues. An Oregonian editorial last weekend urged Governor Kitzhaber to do a better job of sketching the details of his vision of education and health care reform. 

Murkiness also exists when it comes to general budget issues as legislators head to their first official annual session two weeks from now.

Consider these facts/perceptions about the budget:

         *  The state economist says the general fund is down by $305 million from the close of the 2011 legislative session. On a total general fund budget of more than $14 billion for a biennium, that is a rounding factor. Still, perceptions exist that cuts to K-12, higher education, cops and prisons and social services will be in the offing during the February session.

         *  One key legislator on the Joint Ways and Means Human Services Subcommittee was spending time in his office several weeks ago preparing a cut list of about $500 million. Those cuts, if enacted, would exceed the total $305 million revenue drop projected so far. 

         *  Rep. Dennis Richardson, R-Central Point, House co-chair of the Joint Ways and Means Committee, took credit earlier this fall for holding back a "reasonable ending balance of $460 million when the committee he co-chairs approved the 2011-13 budget." In his on-line newsletter, he added this noteworthy quote:  "...the good news is that having withstood the political pressure to spend every dollar and by retaining the $460 million ending balance, none of the $305 million of reduced revenue will be taken from the budgets for public safety, human services or education."

         *  Sen. Chris Telfer, R-Bend, a member of the Senate Finance Committee and an accountant by trade, entered the fray last weekend. She wrote a piece for The Oregonian suggesting that, through pressure on the State Controller's Division, she found "what seems to be $680 million in what are called unrestricted fund balances."  She added, "these are end-of-the-year balances, separate from the safety net the legislature put in place at the end of the 2011 session."  [To dig beneath the $680 million, Telfer said there were $176 million in truly unrestricted funds...and an additional $516 million of so-called committed resources.]

Adding to the confusion are the various definitions used in explaining the state budget.

Could an "ending fund balance," such as the one Richardson described, actually be used as a "reserve fund" that can be tapped to cushion the blow on general fund services?  No one knows for sure.

Can "end-of-the-year balances," as contended by Telfer, be used to stop some budget cuts?

What does the term "continuing service level" mean and, whatever the definition, how critical is it to continue services?  [The "continuing service level" means the cost of simply funding two more years of government services as long as you also add money for inflation, roll-up costs, caseload increases and other factors.]

However, the term "continuing service level" is often replaced these days by the phrase "essential budget level" -– and that implies all of state government, for two more years, is essential.

Adding to the confusion is language around "position authority."  Agencies were told by the governor a few weeks ago not to fill vacant positions unless they filed an appeal with a State Department of Administrative Services committee, which would decide whether positions were "essential" or not. That prompted some observers to ask why positions were being filled in the first place if they weren't essential.

As legislators prepare for a one-month session in Salem, they will get more information on the state budget when the economist unveils another revenue forecast, scheduled for February 8.

Meanwhile, amid all the murkiness of the exact status, interests that depend on the state general fund are worried about their futures. Enough so that both SEIU and AARP have taken the rare step of buying advertising advocating that the legislature avoid further cuts in home health and long-term care, respectively. Activists also chose to hold up signs protesting against the governor last week as he delivered his State of the State address to the Portland City Club.

Here's hoping the murkiness clears up before the legislature makes new decisions on 2011-13 budget levels. Observers of the legislature deserve no less than a clear picture.


The author, CFM partner Dave Fiskum, has worked in state government and lobbied at the Capitol for more than 30 years. He has seen the murkiness for all of those years.