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Rep.
Richardson's Newsletter
March
29, 2011
Oregon's
2011-13 Co-Chairs Budget-Released Today
The
Oregon Constitution requires a balanced two-year State Budget with due
consideration given to anticipated revenues and approved expenditures.
For a brief YouTube summary of the 2011-13 Co-Chairs Budget, Click here.
The
process for creating Oregon’s 2011-13 State Budget began with the Ways
& Means Co-Chairs, Senator Richard Devlin (D-Tualatin),
Representative Peter Buckley (D-Ashland), and myself, reaching an
agreement which has three key components: 1. an anticipated, realistic
level of state revenue; (2.) an adequate Ending Balance to provide
reserves in case of future economic downturns; and (3.) an affordable
funding level for K-12 education. (To see Co-Chairs Initial Agreement, Click here )
In
order to proceed with the important task of formulating the 2011-13
Oregon State Budget, and with due consideration for the recently passed
constitutional amendment providing for Annual Sessions of the Oregon
Legislature, the Co-Chairs of the Joint Senate and House Committee on
Ways & Means have released today the “2011-13
Co-Chairs Budget.”
Revenue--$14.650 Billion.
For
the sake of clarity, when I refer to the State’s “revenue” I mean
Oregon’s income primarily from income taxes and lottery proceeds. The
Oregon 2011-13 State Budget will be balanced to the March 2011
Quarterly Revenue Forecast level ($14.650 billion), adjusted for
constitutionally mandated lottery fund allotments and other minor
adjustments.
Ending Balance--$460 Million.
The
March 2011 Quarterly Revenue Forecast predicts an economic recovery
that will result in new revenue totaling $1.345 billion more than the
amount forecasted to be received in the current 2009-11 biennium. The
2011-13 Revenue Forecast is based on assumptions relating to global,
national and statewide economic conditions that are uncertain. If
unforeseen economic circumstances occur during the 2011-13 biennium
that result in reductions in forecasted revenue, the State Budget’s
Ending Balance serves as a financial reserve to provide stability to
the State’s programs and services.
To
allow for multiple risk factors, any of which could result in
reductions of actual revenues received during the 2011-13 biennium, the
Co-Chairs have included in the State Budget a prudent Ending Balance
(EB) in the amount of $460 million. As much as $310 million of the EB
may be appropriated during next year’s February 2012 Legislative
Session, if economic conditions warrant it.
State
agency
budgets will be fully (100%) funded for the first year of the
biennium (2011-12), and 93% funded in the second year (2012-13). This
gives state agencies the first year to implement leaner, smarter and
more efficient reforms in their operations and time to prepare for the
2012-13 year’s budgets, which will decrease by 7%.
In
the event intervening revenue forecasts, between now and the February
2012 Legislative Session, confirm that Oregon is in a substantial
recovery with revenue forecasts even higher than anticipated, up to
$310 million of the Budget’s Ending Balance may be allocated from the
$460 million Ending Balance. Such allocations, if any, will be
determined at that time by the Co-Chairs. (The 7% reduction in funding
for the 2012-13 year does not apply to the State School Fund (K-12)
Budget.)
State School Fund (K-12) Budget.
To
provide the school districts with stable funding for their 2011-13
school budgets, the State School Fund will be set at $5.7 billion. This
funding level includes the opportunity for school districts (not ESD’s)
to share in $100 million from the Education Stability Fund (ESF). To
qualify for this bonus share, school districts must certify that they
will use it for educational purposes, not including increases in
salaries and benefit payments to school district employees. To read the
restrictions and opportunities for enhancement from the $100 million
from the ESF Click here.
In
order to enable Oregon’s 197 school districts to plan their budgets for
the 2011-12 school year, work is proceeding to present the State School
Fund (K-12) Budget Bill to the Assembly for a vote by mid-April. This
will be the first time since I entered the Legislature in 2003 that the
K-12 Education Budget is passed in April. This joint effort to “fund
K-12 Education first” is a tribute to this legislature’s bipartisan
cooperation. Hopefully, passing the K-12 Education Budget in April will
be a joint goal for Legislators in future sessions.
Summary of Initial Co-Chairs Budget.
After
establishing the projected revenue for 2011-13 at $14.650 billion,
subtracting both the $460 million Ending Balance and the General Fund
portion of the $5.7 billion K-12 Budget ($5.577 billion), the
balance
of Oregon’s available revenue for expenditures is $8.613 billion.
The
allocation
of this remaining revenue will result from the combined
efforts of the six Ways and Means Subcommittees and the Co-Chairs in
the weeks ahead.
Subcommittee Deliberations.
The
Joint Ways & Means Subcommittees will spend the month of April
analyzing and conducting public hearings on agency budgets. The
Subcommittee Co-Chairs will then provide their recommendations on how
best to balance budgets in their Subcommittee areas by prioritizing the
allocation of available revenue resources.
Below
are the initial allocations to the Six Ways & Means Subcommittees.
Follow
the links for each to see the major decisions and issues that must be
addressed in each subcommittee.
State School
Fund (K-12). $5.7 Billion
All Other
Education. $1.666 Billion
Human Services.
$3.729 Billion
Public
Safety/Judicial Branch. $2.410 Billion
Natural
Resources. $305 Million
Transportation
& Economic Development. $287 Million
General
Government. $264 Million
General Guidance for
Sub-Committees. Certain
factors apply to all Subcommittees to one extent or another. The
Co-Chairs are requesting the Subcommittee Co-Chairs and their members
to consider the following during Subcommittee hearings and
deliberations:
·
Consider
additional reductions from the Governor’s recommended budget
level to fill revenue holes and address funding issues, potentially
including:
o
Payroll and other compensation reductions that assume actions across
all three branches of government to:
--
freeze salaries at current levels, including no merit increases and no
cost-of-living adjustments for the 2011-13 biennium,
--
have state employees pay toward health benefit and PERS costs,
--
consider
other actions necessary to reach the reduction target
including furloughs and reductions in force, subject to collective
bargaining agreements.
o
Services and supplies reductions that assume the elimination of
standard inflation in agency budgets as well as a review of all other
above standard inflationary increases and other levels of services and
supplies expenditures.
·
Review
and analyze all vacant positions in agency budgets. The goal is
to eliminate positions that are not necessary for the agency to achieve
desired program outcomes; all other vacant positions (both management
and represented) will be eliminated and funding removed from the
budget.
·
Review
potential resources not included in the official March 2011
revenue forecast that can be utilized as additional sources of funding
for high priority programs.
·
Review
and analyze additional resources and efficiencies within agency
budgets that can be identified by the Ways and Means subcommittees as
offsets to reductions in higher priority programs.
·
Note:
Subcommittee allocations do not include $66 million of statewide
reduction actions that will be taken to reduce the total amount
provided for the program area, but with no change to program decisions.
Conclusion.
The Co-Chairs Budget is merely the starting point for creating a
balanced budget for the 2011-13 biennium. It identifies the available
revenue; it determines the Ending Balance, and it sets the State School
Fund (K-12) Budget.
The
real
work is being done in the Subcommittees, and if all goes well, a
balanced budget for the next biennium will be completed by the end of
May.
Sincerely,
Dennis
Richardson
State
Representative
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