Budgeting Is Harder with More Needs and Fewer Dollars | | |
Dear Friends and Neighbors,
Next Friday morning, we’ll be hosting our second live Legislative Town Hall at the north campus of Oregon Coast Community College in Lincoln City. You can attend in person, participate online, or watch the recording later.
I usually have meetings of the Ways and Means Committee on Friday mornings and have planned to Zoom in to most of these monthly gatherings. But this Friday, no committees are scheduled as we’re out on the road and will be in Astoria later in the day. So I’ll be participating in person.
Learn more about our Town Halls here. Friday morning at 8:00 a.m. you can connect here, watch, and ask questions.
Here’s a link to the recording of the February 28 Town Hall. Use passcode: &KjMBX03. About 100 people took part – most of them remotely.
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Saturday morning I left early for the first of our Statewide Community Budget Hearings. Generally, these hearings are fondly referred to as the Joint Ways and Means “Roadshow." Six hearings are scheduled with the Saturday event held in Gresham.
The atmosphere outside the Mt. Hood College Theater was carnival-like. A plethora of advocacy organizations had pop-up booths where they handed out doughnuts and tee shirts. Public employees were in purple, gun control advocates and teachers in red, county and municipal workers in green, food advocates in blue, and infrastructure advocates in orange vests and hardhats …. it was a rainbow of advocacy.
People lined the sidewalk leading to the theater, chanting and singing. It was friendly, but also a bit intimidating.
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Inside the theater, 400 seats were filled and people stood in the side aisles. More than 200 had signed up to testify and comments were limited to two minutes each so that we could hear from as many people as possible.
We heard passionate and poignant stories and pleadings for increased funding of schools, special education, food programs, emergency housing, health and behavioral health, public wages, public safety, and public transportation. No one made suggestions of where to reduce spending.
Legislators listened rather than speaking or asking questions. And I can tell you it was exhausting.
These traveling listening sessions are often dismissed as political theater. Critics charge that they don’t change outcomes and can be used by advocacy groups to engage their members. But sitting on the decision-making side of the table, I can tell you that they do matter and that legislators are listening. If anything, feedback forums serve to personalize hard budget choices and make those decisions even more difficult.
Senator Kate Lieber (D-Beaverton), co-chair of the Committee, concluded the two-and-a-half-hour program by thanking all who testified and all who came. She then reminded people that the money we have available is much less than the money we were being asked to spend.
The Roadshow continues next Friday with our one coastal gathering in Astoria at 5 p.m. in the Liberty Theatre, 1203 Commercial Street. Members of the public can register to testify here.
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At the same time that our Ways and Means Committee began traversing the state to listen to Oregonians, the co-chairs of the committee unveiled the first major outline of what that budget may look like.
The document Sen. Lieber and House co-chair Tawna Sanchez (D-Portland) presented on Wednesday reflects $38 billion in projected spending to continue current programs and ends with a surplus of $987.5 million, after setting aside close to $600 million for long-term savings.
This “framework” document offers a relatively placid picture of the state’s finances. If there are no cuts in federal funding, the budget co-chairs expect Oregon will have enough money to continue state services, sock away money for emergencies or a future recession, and increase investments in priorities like housing, mental health and addiction treatment, and schools.
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- $11.4 billion for K-12 schools, a more than 10% increase over the allocation in the current budget.
- $100 million in “emergency funds” that can be used outside of a legislative session, along with $250 million more specially earmarked for costs that could include wildfire prevention.
- $300 million for raises to state employees.
- Nearly $2 billion more for human services costs that include Medicaid and foster care caseloads.
- $271.9 million in “targeted reductions” that budget writers argue would not hamper state programs, along with reductions in “one-time” spending in economic development, natural resources and other areas.
- Roughly $590 million left over for the state’s reserve funds.
- $988 million that could pay for additional investments that Governor Tina Kotek has called for, including $825 million more for housing and homelessness programs, $246 million to bolster the state’s threadbare behavioral healthcare system, and more than $200 million more in education.
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But this early step toward adopting the state’s next two-year budget comes against a backdrop of federal uncertainty. Many of the federal grants Oregon and other states use to stretch local dollars are disappearing under the new administration of President Donald Trump, and congressional proposals to cut federal spending by up to 30% could turn a modest state budget surplus into a gaping deficit.
About 32% of Oregon’s budget comes from federal spending. Oregon lawmakers face the prospect of passing a two-year budget, which we are required to do by the end of June, without knowing what Congress will do.
The framework also does not include Governor Kotek’s three major proposed spending increases: $211 million for education needs, $825 million for housing and homelessness and $247 million for behavioral health. The $987.5 million surplus wouldn’t cover all of the Governor’s priorities, or any new spending proposed by legislators.
The framework also doesn’t offer any indication of where lawmakers might find up to $3.5 billion that Kotek’s budget recommended in new funding for roads and bridges around the state. It also doesn’t account for potential new revenues lawmakers seek to fight wildfires more sustainably.
Federal funding isn’t the only looming uncertainty. Lawmakers won’t have the final revenue estimates they use to finalize the budget until a forecast state economists will deliver in May. The most recent forecasts from Oregon Chief Economist Carl Riccadonna have indicated lawmakers will have more money to spend than previously expected, but that may well change, depending on actions by the Trump administration and the direction of the national economy.
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Uncertainly is a core part of our current budget deliberations. So let me try and detail the challenge in a different way.
If federal funds were to remain at current service levels, Oregon would receive $38.6 billion across all budget areas over the next two years.
If the Republican majority in Congress were to pass proposals to reduce federal spending by 30%, the state would receive $10.7 billion less in federal human services and education funding alone. A 20% reduction could reduce Oregon’s federal money for human services and education by $7.1 billion and a 10% cut in those areas could mean $3.6 billion less for the state, according to Oregon’s Legislative Fiscal Office.
One of every two kids in the state receives their health insurance coverage through the Oregon Health Plan, which is our Medicaid program. That is at risk.
At the Oregon Department of Transportation, grant funding to support 19 infrastructure projects around the state remains frozen under President Trump’s January 20 executive order, which paused disbursement of funds from the 2021 bipartisan infrastructure law and the 2022 Inflation Reduction Act, both of which were passed by Congress. That includes $1.5 billion previously approved to help replace the I-5 bridge between Oregon and Washington.
To add another complication, Transportation Secretary Sean Duffy has instructed his department to use new criteria that prioritize funding to communities with marriage and birth rates higher than the national average and that require cooperation or compliance with federal immigration enforcement.
The state budget is simply not designed or prepared to backfill those kinds of potential federal funding cuts. So as I said above, Oregon lawmakers face the prospect of passing a two-year budget, which we are required to do by the end of June, without knowing what Congress will do.
Budget leaders in Salem are saying, “We’re facts, not fear at this point.” That means we’re not reducing budgets … yet.
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The terminations of federal workers by the Trump administration’s Department of Government Efficiency may ultimately stretch into the hundreds of thousands. That would amount to the largest mass layoff in U.S. history.
More than 62,000 federal workers across 17 agencies lost their jobs in February alone. By comparison, there were 151 cuts in January and February last year.
The scale of cuts would likely “overwhelm” the Unemployment Compensation for Federal Employees, or UCFE, program, the “rarely utilized and creaky” system most federal workers use to claim unemployment benefits, according to a report by The Century Foundation.
Federal job cuts will land hard in rural Oregon and are already being felt in Lincoln County where we have a cluster of agencies based around the Port of Newport.
Susan pointed to me to an article in Kiplinger designed to answer questions for federal employees in transition.
Many federal employees are facing career transitions due to layoffs, early retirements, and restructuring. If you find yourself in this situation, what financial actions should you consider? Here are the key things to know before making a move.
If your transition is due to a layoff or early retirement package, you need to understand whether you’ll receive any money, and if so, how much and for how long. Also:
- Will the money stop if you accept a new role?
- Will you accrue sick leave and vacation time during your transition?
- Will you be paid for unused leave at your final resignation date?
- Will you accrue credits toward pension benefits if the offer is deferred?
You should also ask whether you qualify for any programs that would support you during your transition, such as unemployment benefits or workforce retraining programs. Consulting a financial professional can provide you with valuable guidance.
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The 2025 session reached a critical deadline on Friday as all bills in policy committees needed to be scheduled for a hearing and work session to remain alive. That had legislators scrambling.
With more bills being heard in committee, hearing rooms are packed. “We have likely more people who want to testify than can testify,” Senator Jeff Golden, an Ashland Democrat, told the crowd at a hearing earlier this month. “I really don’t like doing this. We’re going to ask you to keep your comments to a minute 30 seconds. And we have a clock here.”
Crowded hearing schedules are a result of more bills being heard, and also a result of changes that allow the public to testify remotely. The simple fact that you can appear from home and not have to drive to Salem and navigate the Capitol has easily added a third more witnesses to each bill being heard.
I had three bills this week that had good hearings.
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My proposal to better prepare Oregon homes and businesses for power outages and natural disasters by waiving property taxes on generators and power backup systems was well received in the Committee On Climate, Energy, and Environment.
- My proposal to create the Oregon Animal Trust, not funded with state money, to raise funds for spaying, neutering, and low-cost veterinary support had a good hearing. I probably had an unfair advantage since the hearing was filled with persuasive advocates in green uniforms and carrying cookies.
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Between hearings and testimony, we continue to see a reliable flow of visitors to the Capitol in Salem advocating for a variety of measures, causes, and concerns.
I was particularly pleased to see my neighbors, Caitlyn and Alyssa Graham from Otis, who came with their mom Amy and other Lincoln County realtors to talk about legislation. It is the best part of a day when I can take young Oregonians into the House chamber and give them a close look at how and where laws are crafted.
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Please carve out some time next Friday morning to join our Town Hall or submit written testimony on our budget for the coastal roadshow hearing.
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Representative David Gomberg
House District 10
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