Senate President Rob Wagner, D-Lake Oswego, poses next to the marbles he uses to simulate the Oregon budget. Oregon lawmakers expect to have fewer marbles to allocate given changes to state finances since the end of the legislative session. (Photo by Julia Shumway/Oregon Capital Chronicle)
As Oregon lawmakers stare down a deficit of at least $373 million over the next two years — and brace for the possibility of a bigger shortfall in the state’s next quarterly revenue forecast expected Wednesday — they asked all state agencies to create lists of ways to cut 5% of their legislatively approved budgets.
Lawmakers on budget-writing subcommittees will hear about those possible cuts this week. Ahead of those meetings, the Capital Chronicle reviewed each agency’s proposal.
Most would be able to cover cuts — at least temporarily — by holding open vacant positions or taking more time to rehire when employees leave. Doing so would reduce the immediate impact to most Oregonians, but it also means more work for current employees and potential service reductions.
In other cases, proposed cuts could lead to crowded prisons, less tuition aid for community college students and fewer shelter beds. Rep. David Gomberg, a coastal Democrat who chairs one subcommittee, told the Capital Chronicle legislative budget writers have difficult choices to make.
“I will tell you that they will be painful, and they will be ugly,” Gomberg said.
Democrats who run both the House and Senate blamed the Trump administration and Congressional Republicans for creating the budget crisis. Oregon ended the legislative session passing a budget with a surplus of nearly $475 million, but that surplus had turned into a nearly $375 million deficit within just two months.
That’s due in large part to the state tax code automatically replicating changes to federal tax code, which means new federal initiatives, like exempting overtime pay and tips from income taxes and allowing individuals and businesses to immediately deduct 100% of the cost of “depreciating assets,” such as real estate and equipment, will apply to state taxes as well.
“The Trump administration created a multi-biennial, billion-dollar budget crisis for Oregon, and now it is up to the Legislature to work with local communities and make tough choices to best preserve the core, mandatory state services that support everyday Oregonians,” Senate President Rob Wagner, D-Lake Oswego, said in a statement Friday. “We know the value of the programs and services under review, and we will work to ensure Oregon protects core services and emerges from this crisis stronger.”
During the most recent legislative session, the Oregon House of Representatives voted along party lines to divorce the state’s tax code from the federal code to avoid the budget shortfall, but the Oregon Senate did not take a vote.
Education
Officials from the state’s early learning, K-12 and higher education agencies proposed shrinking initiatives expanding access to career and technical education programs and science, technology, engineering and math, or STEM, programs, as well as programs geared at improving attendance and community outreach.
Oregon Department of Education officials said they prioritized protecting school meal programs, student success plans for students with disabilities and funding meant to improve literacy.
Schools are already calling on the Legislature to dip into the $1.2 billion education stability fund to ensure no mid-year cuts.
The state’s Higher Education Coordinating Commission could pause some scholarships and aid meant to help students afford college and child care. That includes possibly pausing new applications for the Oregon Promise scholarship, which helps cover community college tuition for the state’s recent high school graduates and suspending child care grants for low-income parents attending college in Oregon.
“It is difficult to meaningfully cut HECC’s budget without impacting access, opportunity, and support for learners seeking postsecondary education and training,” commission officials wrote in their presentation to lawmakers.
The Department of Early Learning and Care, which already suffered $45 million in cuts in the most recent legislative session, would need to cut more than $60 million to meet a 5% cost reduction during the next two years.
At a news conference Wednesday hosted by the Childcare for Oregon Coalition, a group of nonprofit early education groups, labor unions, caregivers and other advocates called on the state to dip into budget reserves to make up for losses.
They were particularly concerned about any cuts to the early learning agency’s Employment Related Day Care program, which helps parents making 200% or less of the federal poverty level pay for childcare. The program is slated to run out of money by 2027, advocates said.
“Now is not the time to disinvest in the workforce,” said Kaliko Castille, political director for APANO Communities United Fund, which advocates for Asian and Pacific Islander communities.
Public safety
Oregonians could be looking at slower court systems, crowded prisons, fewer resources for state law enforcement investigations and decreased local grant funding for anti-theft programs under the proposed cuts public safety agencies put forward.
The Oregon Youth Authority specifically warned lawmakers of “risks associated with accelerated release” should they reduce its budget by 5%. The Oregon Department of Corrections, meanwhile, is considering closing the Tillamook-based South Fork Forest work camp and the Eastern Oregon Correctional Institution.
Charging people with crimes and bringing them into prisons or the court system could also become more difficult with less public access at the Oregon Judicial Department. Staff for the department say that a $35 million dollar cut or 5% reduction in funding could reduce the courts’ ability to respond to rising caseloads and implement court security projects. The Oregon Constitution also outlaws reducing compensation for judges, so “any reduction against that amount must be offset by deeper cuts to court operations.”
Both sides arguing in criminal cases will face increased hurdles due to proposed cuts to the Oregon Public Defense Commission and Oregon State Police. State law enforcement have proposed shuttering two forensic labs in Pendleton and Bend, which perform analytical tests such as fingerprinting and look at biological and chemical evidence.
The Oregon Public Defense Commission, meanwhile, said it could shift costs to counties by ending payments to district attorneys for discovery evidence requested by defense attorneys. The agency recently touted a 30% reduction in unrepresented cases statewide since May, but the most recent package suggests the elimination of reserve funds for the state’s trial division, which the agency and Gov. Tina Kotek have previously sought to expand.
The Oregon Criminal Justice commission also stressed that most of its funding goes toward public safety and criminal justice efforts in local communities, rather than the agency itself. It said that reductions, depending on the severity, could result in recruitment delays and eventually a loss of grants for local law enforcement and communities fighting illegal marijuana, retail theft or addiction.
Human services
The state’s human services department is no stranger to cuts from federal uncertainty, and it’s already staring down roughly $500 million in losses every two years under new regulations from the GOP tax and spending law meant to reduce payment errors for the Supplemental Nutrition Assistance Program, or SNAP.
A 5% cut at the agency would amount to $372 million mainly through workforce reductions and paying providers and contractors less. It could result in the most vulnerable residents of the state, including children and foster families, receiving even fewer benefits.
One program on the chopping block is the Temporary Assistance for Needy Families UN program, which provides family coaching, engagement and cash assistance to families with little to no income. The proposed reductions would see the loss of benefits for about 3,200 2-parent families, reversing a policy to provide them those services under Oregon’s 2007 House Bill 2469.
On a broader level, however, the agency plans to rework its caseload and eligibility funding as more people are expected to lose food stamp benefits under the GOP law tightening SNAP eligibility. While changes in compensation rates to providers make up $158 million of the total proposed cuts, the second highest areas of cuts are caseload and eligibility work, which total around $71 million, and cuts to the workforce which make up more than $52 million.
The Oregon Health Authority informed lawmakers it was taking an “agency-wide strategic prioritization process” that would require reviewing its internal rules, finances and goals until the end of 2025.
In the meantime, lawmakers are looking at a proposal that suggests cutting medical marijuana programs, public health outreach and funding for doctors who work in underserved communities. At the agency’s lowest priority would be to reduce insurance benefit plans for Oregon’s public employees and educators by around 15%, potentially increasing premiums for enrollees.
Housing
Alongside pausing hiring, program reductions within Oregon Housing and Community Services could mean discontinuing financial assistance and case management targeted to low-income seniors who are homeless or are unstably housed. Other programs provide the same support regardless of age, agency director Andrea Bell wrote in a letter to the Joint Ways and Means Committee.
The housing agency also proposes discontinuing its Foreclosure Avoidance Counseling program, which provides free and low-cost resources and help to Oregonians struggling because of a home foreclosure. Doing this would require the agency to cancel its contracts with foreclosure counseling organizations, which Bell said would likely result in layoffs of those organizations’ staff.
The agency also proposed reducing funding for people to replace their aging manufactured homes and some state funding for shelter beds and other outreach services to homeless Oregonians.
“Shelters could lose beds, developments could fold and ultimately people would lose stable and affordable housing,” Bell said in her letter. “Reducing staff would make it more difficult to implement, monitor and support the work of the agency.”
Transportation
Despite finally securing a 10-year plan to raise $4.3 billion in funding so it doesn’t have to lay off nearly 500 of its workers, the Oregon Department of Transportation isn’t immune to the impact of the state’s budget deficit.
Cutting expenses within the agency could mean not completing some projects, such as the Boone Bridge replacement project near Wilsonville and the bridge replacement project over McCord Creek in the city of Cascade Locks.
The agency also proposes reducing a program that provides ID cards to incarcerated people before release, cutting back on grants meant to help seniors and people with disabilities with their transportation needs, reducing wildlife crossing projects and scaling down passenger rail services.
The agency would see the most savings if it left at least 175 positions vacant, ranging from road maintenance, information technology, customer service, delivery, rail safety inspection and local government jobs.
Natural resources
Oregon’s natural resources agencies could scale back tens of millions of dollars by leaving vacant positions unfilled and reducing the services they offer farmers, ranchers, loggers and others across industry.
For the Department of Environmental Quality, that means less work on toxics monitoring, curbing harmful algal blooms and monitoring groundwater contamination. The Department of Forestry would invest less in services and support for logging in state forests, and pause some investments in wildfire detection cameras and landscape resiliency projects.
The Water Resources Department would need to cut about $5 million from its budget. One-fifth of that could come from conducting less surface and groundwater data collection and analysis, despite lawmakers trying for years to fund and staff the agency to get more accurate water quantity and quality data.
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