Difference between revisions of "Oregon state budget"

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Oregon faced a $3.5 billion gap between projected revenue and the estimated cost of sustaining operations for two more years. The legislature bridged the gap and crafted a $14.7 billion two-year budget that left schools, social safety net programs and just about every other government service far short of their desired levels. The budget does not raise taxes.  The budget leaves more than $460 million of projected revenue unspent.<ref name=gloomy>[http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20110827/NEWS/108270307 The Mail Tribune "Gloomy outlook for state economy" Aug. 27, 2011]</ref><ref>[http://www.deseretnews.com/article/700148443/Ore-Legislature-finishes-budget-adjourns-session.html?pg=1 The Desert News "Ore. Legislature finishes budget, adjourns session" June 30, 2011]</ref>  The $460 million ending balance meant that cuts were not necessary when revenues in Aug. 2011 dropped $200 million.<ref name=gloomy/>
 
Oregon faced a $3.5 billion gap between projected revenue and the estimated cost of sustaining operations for two more years. The legislature bridged the gap and crafted a $14.7 billion two-year budget that left schools, social safety net programs and just about every other government service far short of their desired levels. The budget does not raise taxes.  The budget leaves more than $460 million of projected revenue unspent.<ref name=gloomy>[http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20110827/NEWS/108270307 The Mail Tribune "Gloomy outlook for state economy" Aug. 27, 2011]</ref><ref>[http://www.deseretnews.com/article/700148443/Ore-Legislature-finishes-budget-adjourns-session.html?pg=1 The Desert News "Ore. Legislature finishes budget, adjourns session" June 30, 2011]</ref>  The $460 million ending balance meant that cuts were not necessary when revenues in Aug. 2011 dropped $200 million.<ref name=gloomy/>
  
Gov. John Kitzhaber's settlement with state labor unions amounted to $42 million more than he had planned on paying in salary increases.  The governor initially said that he would accept only a 6 percent increase in total compensation, amounting to $184 million from the general fund, and the legislature based the budget on that, but the Governor negotiated an overall increase is 7.4, percent, or $224 million, according the legislative fiscal officer. <ref name=settlement>[http://www.oregonlive.com/politics/index.ssf/2011/09/oregon_faces_added_budget_pres.html OregonLive.com "Oregon faces added budget pressures as labor settlement comes in $42 million higher than expected" Sept. 22, 2011]</ref>  Kitzhaber did negotiate with unions that, for the first time, workers will pay 5 percent of their health premium costs.<ref name=settlement/>
+
Gov. John Kitzhaber's settlement with state labor unions amounted to $42 million more than he had planned on paying in salary increases.  The governor initially said that he would accept only a 6 percent increase in total compensation, amounting to $184 million from the general fund, and the legislature based the budget on that, but the Governor negotiated an overall increase is 7.4, percent, or $224 million, according the legislative fiscal officer.<ref name=settlement>[http://www.oregonlive.com/politics/index.ssf/2011/09/oregon_faces_added_budget_pres.html OregonLive.com "Oregon faces added budget pressures as labor settlement comes in $42 million higher than expected" Sept. 22, 2011]</ref>  Kitzhaber did negotiate with unions that, for the first time, workers will pay 5 percent of their health premium costs.<ref name=settlement/>
  
 
State officials said in Sept. 2011 that they could not quantify how much money gets paid out for contracts, but conservative estimates place the figure at $100 million.<Ref>[http://www.statesmanjournal.com/article/20110925/NEWS/109250346/State-can-t-quantify-its-contract-spending?odyssey=tab|topnews|text|News The Statesman Journal "State can't quantify its contract spending" Sept. 25, 2011]</ref>
 
State officials said in Sept. 2011 that they could not quantify how much money gets paid out for contracts, but conservative estimates place the figure at $100 million.<Ref>[http://www.statesmanjournal.com/article/20110925/NEWS/109250346/State-can-t-quantify-its-contract-spending?odyssey=tab|topnews|text|News The Statesman Journal "State can't quantify its contract spending" Sept. 25, 2011]</ref>

Revision as of 15:00, 24 February 2014

Oregon state budget

Flag of Oregon.png
Budget calendar:  Biennial
Fiscal year:  2012-2013
Other state budgets
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In FY2012, Oregon faced a $3.5 billion gap between projected revenue and the estimated cost of sustaining operations for two more years. The legislature bridged the gap and crafted a $14.7 billion two-year budget for FY2012-13 biennium that left schools, social safety net programs and just about every other government service far short of their desired funding levels. The budget does not raise taxes.[1]The budget as original passed can be found here. Lawmakers later passed a budget rebalancing plan to address a gap.[2]

According to reports the "all funds budget" was $51.2 billion in 2007-09 and increased to $55.9 billion in 2009-11, a 9%increase. However, the "general fund" decreased from $15.1 billion for 2007-09 to $14.2 billion in 2009-11 and to $14.7 billion in 2012-13.[3]

In FY2012, Oregon had a total state debt of approximately $56,030,547,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 state budget gap.[4] The FY2013 state debt total is down from the FY2012 total of $58,019,973,000.[5]

In FY2012, Oregon's total state debt per capita was $14,471.23.[6]

Oregon budgets on a biennial cycle and the fiscal year begins on July 1.[7]

Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):

State 2008 2009 2010 2011
Oregon 28.68% (#28) 33.05% (#25) 36.09% (#27) 36.55% (#24)
  • Figures were calculated by dividing each state’s intergovernmental revenue into its general revenue.[8][9]

FY2014-15 State Budget

On Nov. 30, 2012, Gov. John Kitzhaber released his state budget proposal for FY2014. His proposed budget can be found online.Cite error: Closing </ref> missing for <ref> tag

The budget features a $16.5 billion general fund with $8 billion in spending on education, $6.2 billion on K-12 education. The governor said his budget assumes 4.5 percent health care inflation in FY2014 and less than 4 percent in FY2015. In comparison, inflation for FY2013 is above 5 percent.[10] The governor's proposal also assumes the state accepts 200,000 new Medicaid patients under the federal health care overhaul beginning in 2014, with new costs would be initially shouldered by the federal government.[11]

Other highlights of the proposed budget include:[10]

  • hiring an 500 additional teachers as a result of $6.2 billion for K-12 schools, an 8 percent increase from the prior budget;
  • ending furlough days for state workers;
  • increasing spending on at-risk children and families;
  • $450 million in bonding authority for the Columbia River Crossing -- the project to replace the Interstate 5 bridge.

FY2012-13 State Budget

Budget Rebalancing Plan

To address the gap created by state revenue estimates that are $300 million less than anticipated, legislative leaders from both parties reached a compromise budget rebalancing plan that avoids closing a prison in Salem and making $13 million in cuts to providers of in-home care to seniors and the disabled. The plan does not tap reserves or raise taxes. It also eliminates middle management positions. The governor opposes the middle management cuts, but his spokesman said that he would sign the budget once it receives full legislative approval.[2] As part of the plan, some of the state's settlement with mortgage lenders over foreclosure practices will be retained to offset future revenue shortfalls or unanticipated spending.[2]

The compromise was reached after lawmakers announced on Feb. 1, 2012, a budget rebalancing plan that avoid cuts to K-12 education and programs for seniors and the disabled, while creating a cushion in case the state suffers continued declines in revenues.[12] After the co-chairs of the Ways and Means Committee developed a budget, and on Feb. 16, 2012, Gov. John Kitzhaber recommended amendments to that budget, including using reserves to avert the closure of Santiam Correctional Institution in Salem, block a further shift of inmates to other temporary beds, and ease or cancel some smaller cuts in education and human services.[13] The Governor's full memo detailing his suggested amendments can be found online. [14]

On December 13, 2011, Gov. Kitzhaber responded to lower than anticipated revenues by enacted a hiring freeze and capped enrollment in some safety-net programs, including Oregon Health Plan's "Standard" program which services those who do not qualify for Medicaid. Legislative leaders requested the action and will take up budget issues when they reconvene in February 2012.[15]

Budget as originally passed

Oregon faced a $3.5 billion gap between projected revenue and the estimated cost of sustaining operations for two more years. The legislature bridged the gap and crafted a $14.7 billion two-year budget that left schools, social safety net programs and just about every other government service far short of their desired levels. The budget does not raise taxes. The budget leaves more than $460 million of projected revenue unspent.[16][17] The $460 million ending balance meant that cuts were not necessary when revenues in Aug. 2011 dropped $200 million.[16]

Gov. John Kitzhaber's settlement with state labor unions amounted to $42 million more than he had planned on paying in salary increases. The governor initially said that he would accept only a 6 percent increase in total compensation, amounting to $184 million from the general fund, and the legislature based the budget on that, but the Governor negotiated an overall increase is 7.4, percent, or $224 million, according the legislative fiscal officer.[18] Kitzhaber did negotiate with unions that, for the first time, workers will pay 5 percent of their health premium costs.[18]

State officials said in Sept. 2011 that they could not quantify how much money gets paid out for contracts, but conservative estimates place the figure at $100 million.[19]

Gov. Kitzhaber sought a shift from managed-care systems to coordinated-care organizations in order to save $240 million. To do so, the House approved House Bill 3650 by a vote of 59-1.[20]

Federal funds make up 24.9% of the $54 billion state budget. The total funds budget for 2011-13 is lower than the 2009-11 legislatively approved budget largely due to the 18.6% decline in Federal Funds, the combined General Fund and Lottery Funds budgeted expenditures are actually $1 billion more in 2011-13 than in 2009-11, an increase of 7.5%. [21]

Legislative Proposed Budget

The two-year budget is projected to total approximately $14.6 billion. K-12 schools are expected to receive around $5.7 billion, accounting for 39% of the total budget. Spending on human services and Medicaid is expected to be 26% of the budget at $3.73 billion and public safety spending would receive $2.41 billion, constituting nearly 16% of the total.[22]

Governor's Proposed Budget

On Feb. 1, 2011, Governor John Kitzhaber submitted his proposed $14.8 billion general fund budget , which is an additional $1.2 billion in expected revenue over FY2010-11.[23][24] The Governor's budget can be found online. The governor's budget generally allocates to each agency the dollar amount it had in the prior budget, and then spreads the additional revenue funds among his top priorities, such as education.[24] Gov. Kitzhaber asked the legislature to craft a budget based on the Feb. 15 revenue forecast, instead of waiting until the forecast in May.[24]

In his proposed budget the governor said that state employee and school district unions must choose between jobs and layoffs. Employees will preserve more jobs, maybe their own, if they accept changes in compensation — paying some of their pension and more of their health-care costs.[23]

Kitzhaber also said in his proposed budget that he wants the legislature to grant him authority to craft a unified state education budget encompassing pre-kindergarten, K-12, community colle and kill everyone A memo by the Department of Administrative Services, which oversees budget and management for the governor, and the Legislative Fiscal Office, which analyzes budget issues for lawmakers stated the assumption that labor costs will go up by 13.4 percent in the two-year cycle.[25] The memo bases that finding on the following:

  • An end to unpaid furloughs by state employees, who are scheduled to take 10 to 14 days off for savings during the current budget cycle.
  • A resumption of step increases, based on longevity
  • Cost-of-living increases estimated at 2.5 percent in the first year (2011-12) and 2 percent in the second year (2012-13).
  • Increases of 9 percent annually in health-insurance premiums for the 2011 and 2012 calendar years.
  • An increase of 6 percentage points in the state contribution to the Public Employees Retirement System.
  • A continuation of payments on $2 billion of pension-obligation bonds, which voters approved in 2003 as part of a legislative overhaul of the public-pension system.[25]

State Treasurer Ted Wheeler cautioned that adding more debt could result in a downgrading of the state's credit rating, resulting in millions of dollars more in interest when it issues more bonds. Wheeler said, "Once you decide you're not going to be fiscally disciplined, where does it stop?"[26]

Governor Kulongoski and an advisory panel recommended that $500 million in savings could come from restraining growth in employee and retiree compensation.[27] The panel also recommended $1.7 billion in cuts, all in an effort to start to close a gap of $3.5 billion between projected tax collections and current services and aid to schools in the next biennial budget.[27]

Governor-elect Kitzhaber, who took office on Jan. 20, 2011, must submit his FY2012 budget proposal by Feb. 1, 2011.[27] Kitzhaber presented some budget ideas after the election, including his desire to develop budgets over a 10-year span, instead of the current two-year period.[28] He also appointed a handful of leaders from business, education, health care and other sectors to chair transition teams that will point out areas ripe for changes or cuts.

Budget transparency

Oregon currently has no statewide, official spending database online. However in February, a group of 27 legislators said they are sponsoring a bill, the "Open Books Oregon Project," that would require the state to create a searchable website by Jan. 1, 2010, listing revenue and expenditures for all state agencies.[29]

  • On June 27, 2009 the Oregon state senate unanimously passed House Bill 2500 which will lead to the creation of a website that tracks state spending. On June 30, 2009 the bill was unanimously adopted by the House and will now move to the Governor’s Desk. The nonpartisan bill was written by State Representatives on both sides of the aisle, including: Arnie Roblan, Jefferson Smith, Kim Thatcher, and Gene Whisnant. The passing of HB 2500 marks the largest step towards government transparency in Oregon history.[30]
  • Oregon HB 2500 called for the creation of the Oregon Transparency website was created.[31][32] The measure required the Department of Administrative Services to create the site containing information about state agency revenues, expenditures, contracting, human resources and other data. The website developed and maintained by the Oregon Department of Administrative Services.[32][33]

Government tools

The state has budget information on its transparency website.[34]

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State Database Searchability Grants Contracts Line Item Expenditures Dept/Agency Budgets Public Employee Salary
Oregon Transparency
{{{1}}}
N
600px-Red x.png
{{{1}}}
{{{1}}}
{{{1}}}
P
Partial.png
  • Oregon Transparency provides employee salaries, but does not include employee names or any sort of identification.[35]

It came to light in September 2011 that state officials cannot quantify what is spent on state contracts. Ken Rocco, head of the Legislative Fiscal Office responsible for tracking state expenditures, said, "The total amount spent on contracts is reflected in the state budget but it is contained within what we call 'Services and Supplies' and we don't have specific details down to the level of what is purchased by contract versus other purchasing mechanisms."[36]

See also: Evaluation of Oregon state website

Multi-Measure Budget Transparency Profile

The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Oregon, which measures state transparency as of September 2011 using indicators from a range of organizations. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.[37][38]

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[39][40]

Budget background

Oregon's budget covers two fiscal years (a biennium). This means it runs from July 1 of an odd-numbered year to June 30 of the next odd-numbered year. The current fiscal period is from July 1, 2009 to June 30, 2011. The budget development process has three major phases: Agency Request, Governor’s Recommended and Legislatively Adopted.[41]

Agency Request Budget Agencies start the budget early in even-numbered years to develop their Agency Request Budget. This lays out agency finances and policies for consideration by the Governor. The Budget and Management Division (BAM) gives agencies guidelines to use in this process. Agencies send their budget request to BAM by September 1.[42]

Governor's Recommended Budget The Governor and BAM review the budget request. They use the Governor’s priorities, budget policies and current law to make budget decisions. The Governor’s Recommended Budget document summarizes those decisions. It gives data on all the state’s revenues and expenditures. It also gives information on each agency’s budget. The Department of Revenue puts together a Tax Expenditure Report that is published at the same time. The Tax Expenditure Report outlines the various reductions available to residents for the income tax.[43]

Legislatively Adopted Budget The Governor presents the Recommended Budget to the Legislature when it meets at the start of the next calendar year (January of 2009, during the 2009-11 biennium). Legislative committees review the proposed budget. They hold public hearings to hear from each agency and the public. Each budget bill has a Budget Report that presents the committee recommendations. The Legislature votes on each budget bill. The budget bills that are enacted into law make up the Legislatively Adopted Budget. Agencies carry out, or execute, the budget over the two year budget period. The Emergency Board can make some changes to the budget between legislative sessions. Special sessions may also be called to deal with budget issues. The Legislatively Adopted Budget and the changes to it make up the Legislatively Approved Budget.[44]

The Oregon State Legislature convenes every two years in regular session on the second Monday in January during odd-numbered years, a date set by statute. Oregon Constitution does not specify a limitation on session length, however most sessions last approximately six months. During the interim, legislators serve on interim committees and task forces that study issues likely to be faced during the next legislative session.[45]

Under a 1951 law, the governor possesses the authority to cut spending proportionately from the tax-supported general fund to avert a deficit.[46]

Accounting principles

See also: Oregon government accounting principles

The Oregon Audits Director is the only independent auditing organization in the state with the authority to review programs of agencies in all three branches of state government and other organizations receiving state money. Authority for the responsibilities of the Audits Division is found in sections 297.010 through 297.990 of the Oregon Revised Statutes. Their audit reports are published online in a user-friendly, searchable format. The Division of Audits was established in 1929 by the state legislature to carry out the duties of the [Secretary of State for Oregon|Secretary of State] as the constitutional Auditor of Public Accounts.[47]

The Institute for Truth in Accounting (IFTA) rates Oregon “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Oregon's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.[48] Oregon's CAFRs are annual publications of the Oregon Statewide Accounting and Reporting Services (SARS), State Controller's Division, Department of Administrative Services. The State Controller’s Division is responsible for statewide financial accounting, financial reporting, and administration of the statewide accounting system for state government. It prepares the Statewide Comprehensive Annual Financial Report (CAFR); administers statewide central disbursements; and provides professional fiscal guidance, training, and consultation to state agencies. [49]Cite error: Closing </ref> missing for <ref> tag ||AA+||Aa1||AA+[50] |- | |}

Stimulus

Oregon received $3.05 billion in federal stimulus funding between February 2009 and June 2013.[51]

Public Employees

See also: Oregon public employee salaries and Oregon public pensions

According to 2011 Census data, the state of Oregon and local governments in the state employed a total of 82,648 people.[52] Of those employees, 58,091 were full-time employees receiving a net pay of $268.5 million per month and 24,557 were part-time employees paid $32.2 million per month.[52]

External links

Additional Reading

References

  1. The Desert News "Ore. Legislature finishes budget, adjourns session" June 30, 2011
  2. 2.0 2.1 2.2 OregonLive.com "Legislators reach compromise on Oregon budget; governor reportedly agrees" Feb. 23, 2012
  3. The Register-Guard,"Has government tightened its own belt enough?," January 15, 2010
  4. State Budget Solutions "State Budget Solutions' third annual State Debt Report shows total state debt over $4 trillion" Aug. 28, 2012
  5. State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
  6. State Budget Solutions "State debt more than $37,000 per private worker, $13,000 per capita" Oct. 2, 2012
  7. National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting" April 2011
  8. US Census Federal Aid to State and Local Governments
  9. Tax Foundation' "Monday Map: Federal Aid to State Budgets. Accessed October 15, 2013
  10. 10.0 10.1 OregonLive.com "Gov. John Kitzhaber's budget offers 500 more teachers, cap on PERS increases" Nov. 29, 2012
  11. Cite error: Invalid <ref> tag; no text was provided for refs named bw
  12. The Mail Tribune "Legislators reach state budget deal' Feb. 1, 2012
  13. The Statesman Journal "Governor releases budget counterproposal" Feb. 16, 2012
  14. Governor's Budget Memo
  15. KATU.com "Kitzhaber to enact state hiring freeze, spending halt" Dec. 13, 2011
  16. 16.0 16.1 The Mail Tribune "Gloomy outlook for state economy" Aug. 27, 2011
  17. The Desert News "Ore. Legislature finishes budget, adjourns session" June 30, 2011
  18. 18.0 18.1 OregonLive.com "Oregon faces added budget pressures as labor settlement comes in $42 million higher than expected" Sept. 22, 2011
  19. The Statesman Journal "State can't quantify its contract spending" Sept. 25, 2011
  20. The Statesman Journal "Oregon Legislators pass health care, stall on prison budget" June 27, 2011
  21. Oregon Capitol News "Declining state budget causes differing party opinions" Sept. 15, 2011
  22. "Oregon's K-12 schools get shrinking share of state budget" April 16, 2011
  23. 23.0 23.1 The Statesman Journal "The challenges of Oregon Gov. Kitzhaber’s budget" Feb. 1, 2011
  24. 24.0 24.1 24.2 OregonLive.com "Kitzhaber budget wins favorable reaction from Republicans...for now" Feb. 1, 2011
  25. Cite error: Invalid <ref> tag; no text was provided for refs named june
  26. [The Oregonian "Hard choices: Little talk of new taxes or new revenue" Sept. 27, 2010]
  27. 27.0 27.1 27.2 The Statesman Journal "State budget cut proposals aimed at worker pay and benefits" Dec. 1, 2010
  28. Cite error: Invalid <ref> tag; no text was provided for refs named incoming
  29. USA Today,"States put spending details online," February 23,2009
  30. "Source", New Website for State Budget Transparency Gets Final Approval, June 30, 2009
  31. House Bill 2500
  32. 32.0 32.1 Oregon Transparency: Get to know the state's budget About Us visited Aug. 30, 2010
  33. Oregon Transparency: Get to know the state's budget
  34. Oregon Budget
  35. State Workforce
  36. The Statesman Journal "State can't quantify its contract spending" Sept. 25, 2011
  37. Institute of Government and Public Affairs
  38. University of Illinois Transparency Profile for Oregon
  39. [ University of Illinois 50 State Transparency Comparison
  40. University of Illinois State Transparency Profiles
  41. Oregon.gov Web site, retrieved November 9, 2009
  42. Oregon.gov Web site, retrieved November 9, 2009
  43. Oregon.gov Web site, retrieved November 9, 2009
  44. Oregon.gov Web site, retrieved November 9, 2009
  45. Oregon State Legislature Web site, retrieved November 9, 2009
  46. Cite error: Invalid <ref> tag; no text was provided for refs named foretells
  47. Audit Reports
  48. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  49. Oregon State Controller Web site, retrieved November 9, 2009
  50. Portland Business Journal "Oregon's credit rating upgraded" Mar 9, 2011
  51. Recovery, "Stimulus Spending by State"
  52. 52.0 52.1 2011 Oregon Public Employment U.S. Census Data