Oregon Public Broadcasting

Things are not going to get better anytime soon in Oregon.  That was the message the state’s chief economist delivered to lawmakers Friday.

It means lawmakers are going to have to dig even deeper to find ways to balance the budget.  Salem correspondent Chris Lehman reports.

This is how fast things are going downhill. A month ago lawmakers expected to have a $1 billion shortfall on their hands.  Now, it’s a $2 billion shortfall. And those numbers could get worse before the next budget takes effect.

State economist Tom Potiowsky says the economy probably won’t hit bottom until the second half of this year.

Tom Potiowsky: “Now there’s a difference between bottoming out and feeling good.  Bottoming out is, you’re in as far down as you can possibly be.  And then we think it’s not much of improvements until probably the second half of 2010, until we get to what we might call the more feel good aspects.” 

A looming $2 billion shortfall in the next budget isn’t the only problem lawmakers have on their hands.  The current spending plan has also fallen into the red -- to the tune of close to $700 million.

Lawmakers will have to act fast to bring the current budget back in balance, which is required under the state’s constitution.

That could mean layoffs and reduced government services.  Those cuts could be avoided depending on the size and timing of a possible federal stimulus package.

Senate President Peter Courtney says he wants Congress to act fast.

Peter Courtney:  “Oh, I’m hoping. Please, please, please I’m hoping.  I’m looking into the sky because I don’t know where else to look.  Please, please, please, please, please.”

In the meantime the Salem Democrat wants the Legislature to pass a stimulus package of its own, based on borrowing.

Lawmakers will soon consider a $100 million bond measure to fund public works projects around the state.  

Courtney says the idea is to combat the state’s rapidly increasing unemployment rate.

Peter Courtney:  “It’s our hope that we can instantly get the money in the hands of those who will do the work and therefore help keep people who are in these kinds of jobs kept in these jobs as well as people who maybe have lost their jobs get them back to work.”

The specific projects to be funded under the plan have not been revealed.  But the idea of priming the economic pump with public money is one that’s been tried before.  

University of Oregon economist Joe Stone says you have to make sure you don’t just build things for the sake of putting people to work.

Joe Stone:  “If they’re well-chosen projects that would make sense pretty much anytime, then sure in the midst of a strong downturn it might make sense to invest in some well-chosen infrastructure projects.”

Some lawmakers are cool to the idea of the state going into more debt to jump-start the economy.

Republican Senator Frank Morse of Corvallis says the state could be digging itself into a deeper hole.

Frank Morse:  “To what extent do we impinge on the ability in the future to meet current obligations because of what we’ve bonded in this year, which reduces the ability to fund critical services in the future?”

The next few weeks will be critical ones in Salem.  Lawmakers have to keep one eye on Washington D.C. and the other on their own declining balance sheets.  The Legislature could be ready to make a round of cuts to state services by the end of February.