Oregon Magazine


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.


Dennis Richardson
State Representative

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