Oregon Public Broadcasting

Thursday brought a turning point in the 2009 Oregon legislative session.  The Oregon House voted to plug an $855 million gap in the current budget.  

The Senate approved the plan earlier this week, and Governor Ted Kulongoski is expected to sign it into law in a few days. 

The reason this is a turning point is that now lawmakers turn their attention towards an expected $3 billion gap in the next budget cycle.  Joining us now to discuss these developments is our Salem correspondent, Chris Lehman.

Q:  Chris, how did the Legislature fill an $855 million  hole with less than four months to go in the current budget?

A:  At first it looked as though they’d have to make deep cuts to state programs, things like education and public safety.  But the plan they came up with uses a generous amount of federal stimulus money.  Lawmakers made about $300 million in cuts to state programs, but more than half of the budget gap is being filled with those federal dollars.  The significance of the federal money was noted in today’s floor debate by Ways and Means co-chair Peter Buckley, a Democrat from Ashland.

Rep. Peter Buckley:  “I spent the entire weekend that that bill finally passed the U.S. Senate watching CNN and just not being able to sleep, because the impact of that Federal stimulus on our state is nothing short than a lifeline.  Without that Federal stimulus money colleagues we’d be closing our schools in May, we’d be closing down prisons in our state, we’d be impacting the safety of our citizens.”

Q:  So the worst of the cuts were avoided for now.  But we know lawmakers aren’t out of the woods yet.

A:  That’s right.  These cuts simply balance the current budget.  Under the Oregon Constitution lawmakers have to end each two-year fiscal cycle with a balanced budget.  Sometimes the state doesn’t bring in as much income tax as expected, so the Legislature has to start out their session by trimming the existing budget.  That’s what happened today.  But going forward, the real work of the Legislature is creating a spending plan for the next two years.  That’s what they’ll be doing over the next few months.  But the news on that front isn’t too good.  Lawmakers are staring into the face of a $3 billion gap in the next budget.

Q:  Well, how are they going to bridge that gap?

A:  That’s what we’ll find out over the course of the next few months.  One option is raising taxes, and there are several tax hike proposals floating around the Legislature, including a gas tax increase, a tax on hospitals, a hike in corporate taxes, among others.  But no one here thinks they can take care of all their problems with a series of tax increases. Ultimately the Legislature will have to make more cuts to state services.  However, the budget picture will be muddy until at least mid-May, which is when lawmakers get the next forecast of state revenues.  Those will be the numbers they’ll ultimately work with when they craft the budget for the next biennium.