By Representative David Gomberg, House District 10
Last week, Governor Kotek released her recommended budget. According to the executive summary, the plan will build more housing, reduce homelessness, increase access to mental health and addiction services, and improve education outcomes. More specifically, the Governor wants to spend $1 billion in the next two years to preserve and build more affordable housing, funnel more than $9 billion to public schools and devote millions to increase staffing at the Oregon State Hospital, under a proposed spending plan released on Tuesday.
In total, Governor Kotek wants to spend $32.1 billion in state general funds and lottery funds over the next two years. With additions for housing and schools, that’s a small increase over the $30.7 billion that state budget analysts calculate lawmakers would need to prevent cuts to current levels of services.
It is important to understand that Governors present proposed budgets which are then refined by the legislature. Think of the 500-page document this week as a first draft. In roughly a month, legislative leaders will determine their own revenue and spending plans. Then budget subcommittees, like the one on Transportation and Economic Development that I co-chair, review specific agencies. Our recommendations are sent to the full Ways and Means committee and then to the House and Senate for final approval.
That process will conclude in late June.
State economists believe the economy is declining and that the 2023 session will be dealing with a modest revenue shortfall. They project a $560 million deficit. In other words, we are half-a-billion dollars short of what we need to pay for what we are doing now. Although this is only about 1.5% of the total budget, it marks a significant change from the previous 3-4 years in which the legislature had a massive surplus of cash coming from the Federal government. In real terms, that means budget writers like me will be working to detail reductions in current agency spending and there will be little left for new projects or investments.
Over the past several years, Oregon has set aside funds in savings accounts and a “Rainy Day Fund”. Those reserves now hold about $2 billion and are among the most healthy in the nation. Is it raining in Oregon?? The Governor proposes to tap those savings accounts to close the budget gap. Technically, she is not removing money but rather skipping normally scheduled payments.
Also in question is the $3.7 billion “kicker”. Our Constitution requires that when economists underestimate revenue, we return the surplus to taxpayers. Basically, while cutting budgets and accessing our savings to pay bills, we are also returning unexpected revenue. As of now, there does not appear to be votes for kicker reform.
Before we adjourn, the legislature will pass a balanced budget that protects our priorities while consolidating where we can to ensure the state runs efficiently and effectively. We are clear on our priorities: fixing the housing and homelessness crisis, keeping Oregon communities safe, and stabilizing our economy. At a high level, I believe the Governor’s proposed budget does this. But I also know that the budget will change now that it is in legislative hands.
Stay tuned as the process evolves!
On top of current services, the state will have some special needs that will make the budget environment even more challenging. Oregon needs to commit $1 billion for the Interstate Bridge Replacement proposal that would seek to rebuild the I-5 Bridge connecting Oregon with Washington.
There will likely be a significant shortfall in the state’s Medicaid budget that will require more cash.
Another initiative getting significant early action is the package being considered by the Joint Committee on Semiconductors. Legislative leadership is looking for early approval of incentives to leverage Federal monies to encourage semiconductor manufacturing in Oregon. Outside of cash incentives, it remains to be seen whether the legislature will grapple with the harder policy decisions, including tax benefits or land use changes that would make more space available for manufacturing activity.
And finally, there is disagreement about the level of funding that the state’s K-12 system will require. While analysts believe the system requires $9.5 billion to keep whole, education advocates say we really need closer to $10.3 billion.
While the final budget will be completed in June, early legislative priorities will include a major funding package of about $130 million to start addressing acute homelessness issues and building more housing and $300 million for semiconductors.
The session deadlines for 2023 are more aggressive than in past years, which means there is a high likelihood that there will be fewer bills than usual that make it through the legislature.
- Wednesday was the deadline for introduction of the Governor’s budget.
- February 21st is the deadline for legislators to submit any requests for legislation.
- Any bill not scheduled for a committee ‘work session’ by March 17 is considered dead.
As the big priorities and early budget discussions move forward, I’ve also been focused on measures with a direct connection to our district.
Roughly one-third of the residents of our district are over the age of 65. Many have chosen to continue working or take part-time jobs to supplement retirement income. With low unemployment and growing shortages of skilled, qualified workers, hiring older workers can help employers and furthers economic and social policies. But sadly, many older workers experience problems on the job. 62% of Oregonians ages 40+ have seen or experienced age discrimination in the workplace. Early today (Monday) I testified as Chief-Sponsor of HB 2800 which will require Oregon workers to be treated fairly based on their skills and experience, not their age.
Working remotely has become much more commonplace in recent years. At least 500 of the state’s 45,000 employees live and work far from Salem – some in states like Texas and Florida with no income taxes. Current Oregon policy says that “employees who work under the full-time remote work model must be reimbursed by the agency for travel to and from the central workplace.” Now, if you live in Depoe Bay and are called to Salem occasionally, no one reimburses your gas or parking costs. But if you live in Florida, apparently we pay your airfare back to Oregon. And I think that’s wrong. That’s why I co-sponsored SB 853 which prohibits the state from paying costs of travel to or from Oregon for employees in state service who telecommute from a principal worksite outside this state.
Too many of our neighbors lost everything in raging wildfires. In federally declared disasters, they can deduct losses from their taxes. But in smaller events recognized by the state but not the national government, they don’t qualify for tax deductions. The Oregon legislature can’t fix federal tax laws. But we can make sure fire survivors get some Oregon benefits. That’s why I sponsored HB 2812 to expand personal casualty losses. Listen to my testimony here and my response to the question of the financial cost of fires in our Otis community.
I spent Saturday on the road, traversing our large and diverse district.
Starting in Otis, I drove to Corvallis for the monthly legislative briefing with the Benton County League of Women Voters at ten. At one, I hosted a Town Hall at the Philomath City Hall. Then I drove to the Monroe City Hall for another Town Hall at three.
At 6:30, I joined the Newport Seafood and Wine Festival leadership for dinner. That delightful event returns to the central coast February 23-26.
Finally I headed for home, returning to Otis, having driven 216 miles for three live town halls, speaking on my feet for over four hours, and about 13 hours after I started. It was a good day.
Thank you to Benton Commissioners Malone, Augerot and Wyse, and Mayors Jones and Sheets for joining me at these events.
If you have interest in any of the bills we are considering, please let my office know or send a note to the committee hearing the bill and it will be included in the formal record.
address: 900 Court St NE, H-480, Salem, OR, 97301