Roots vs Stems

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OBA Comments on Oregon Governor Brown’s December 1, 2016 Budget Announcement

Governor Kate Brown released her 2017-19 state budget this morning fulfilling her bi-annual statutory responsibility to have a proposed budget out on Dec. 1 of the even-numbered year.

This exercise is a herculean endeavor for her team and state budget officials, and serves as a blueprint for the Oregon Legislature which convenes in January for the 2017 legislative session.

After a long and very expensive election cycle, most eyes will turn her strategy for closing the $1.5 billion+ shortfall facing the state and funding critical services like education and healthcare.  Oregon is coming off of six years of unprecedented economic growth and revenue expansion in state coffers.  We truly have not witnessed an economy (and revenue receipts) like we are experiencing in this latest expansion.  In this current 2015-17 budget cycle alone, Oregon has over $1 billion in additional resources to invest – thanks to a thriving private sector economy.

Soooo….one might ask: why with record economic and state revenue growth do we see state budget deficits for as long as the eye can see?

The simple answer: (as the following chart illustrates) our PERS and Medicaid costs are increasing at rates that no amount of revenue growth or tax increases can keep up with – not even M97 in the long-run.

Next week at the Oregon Leadership Summit – the business community will outline a different strategy that focuses on the roots of Oregon’s budget dilemma.  Like any family, business or non-profit….we first will focus on the unsustainable cost drivers in the budget and review legally sound strategies of addressing the alarming growth rates that will severely stress our schools, colleges and universities when we need them the most.

Then, we (with our business and non-profit partners) will focus on the proven programs to extend this historic economic growth.  These must include transportation and infrastructure investments, fully funding the voter mandate (Measure 98) on CTE/STEM and career training and providing rural Oregon a break from the overly burdensome regulations hitting small and medium-sized businesses.

And lastly, we will look at Oregon’s revenue structure.  How can we add stability and provide long-term confidence for Oregon families looking at school options, paying community college tuition or facing an unexpected (and unwelcome) health care emergency?

The good news is:  there is another path that gets at the root of our challenges.  The governor said this morning, “the budget I am proposing today is a short-term solution to keep Oregon on track, funding a reduced level of core state services through a combination of budget cuts and new revenue.”

We, respectfully disagree. Oregon has spent far too long in the Band-Aid business.  As you can see from the final graphic – there is a much preferable route if we have the political confidence to take the road less traveled here in Oregon.