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Legislative Midterm Report: Budget and Transportation

Published Thursday, May 4, 2017

This is the third and final part of our midterm report on the 2017 Legislature, looking at the two biggest tasks facing Legislators - the 2017-19 budget and a transportation package.

Legislators face a constitutional requirement to balance the budget and political pressure to deliver a plan to modernize the state's decaying infrastructure system. To succeed on either front, they will have to cut costs elsewhere or raise revenue - and probably both. Don't expect either of these tasks to be completed before the final weeks of the Session. Here's a look at where both stand:

The 2017-19 Budget

A little more than two months remain in the 2017 Session, and leaders are still brainstorming. There has been a spurt of activity in the past two weeks, but it consisted mostly of procedural moves, old ideas and politically difficult proposals. We still haven't seen a detailed budget proposal or a comprehensive plan for revenue and spending reform.

But there have been rays of hope. A proposal from a five-Legislator bipartisan work group included some of the more interesting cost-saving ideas that have been kicked around. They included:

  • Making any cost of living increases for employees of organizations reliant on state General Funds follow the same rules as increases for state employees.
  • Changing the collective bargaining process to even numbered years so the Governor's budget proposal includes the full cost of increases for the upcoming biennium, and limiting economic issues in collective bargaining agreements to two years.
  • Requiring Legislative approval for reclassification of positions and addition of new steps to salary ranges for state positions.
  • Refraining from creating and starting programs at the end of the biennium, which hides the full cost of the program until the next budget.
  • Refraining from creating new programs or funds that have no money to support them.

Any policy changes that improve government efficiency should be strongly considered by the Legislature. And some combination of ideas from the work group and less ambitious proposals from Governor Kate Brown, paired with targeted revenue increases, could produce a balanced budget for 2017-19. At the minimum, the Legislature must cobble together that type of package before Legislators can go home.

But it will take bolder ideas to achieve real reform that puts Oregon on a sustainable long-term fiscal path. The Joint Committee on Tax Reform, comprised of members of the House and Senate revenue committees, is charged with taking the lead on that task. It held its first meeting Tuesday, devoting it to an examination of how a gross receipts tax might be implemented in Oregon. The timing for introducing a gross receipts tax is far from ideal, coming off voters' overwhelming rejection of Measure 97 in November.

Senator Mark Hass (D-Beaverton), one of the committee's Co-Chairs, urged anyone who "has a better plan to reform and modernize taxes" to bring it forward. But there obviously isn't much time to produce a proposal and secure support for it during this Session.

The Brighter Oregon coalition, which includes Associated Oregon Industries (AOI) and the Oregon Business Association (OBA), has said that the most practical path is to adjust the existing tax system to build a 2017-19 budget and to pursue long-term reform after the 2017 Session. The coalition is urging government leaders to build a long-term fiscal plan around the tenets of the Oregon Business Plan: Grow the economy, control spending and if revenue increases are necessary, tie them to measurable outcomes in education and other priority areas.

The recent focus on cost containment is encouraging, but a lot of hard work remains for Legislative budget writers.

To see Governor Kate Brown's budget proposals, click here.

To see proposals from the five-Legislator bipartisan work group, click here.

To read more about Brighter Oregon's recommended approach to the budget, click here.

Pursuit of a Transportation Package

The effort to develop a transportation bill has proceeded in more or less the opposite fashion of the budget process. Legislators have stayed mostly out of the spotlight, but work groups created by the Joint Committee on Transportation Preservation and Modernization spent most of the first half of the Session assembling proposals in four policy areas. This effort came after a tour of the state during the summer and fall to gather input from Oregonians. The committee hopes to use these reports to develop the framework for a transportation package by mid-May.

The work groups, which have evolved since the start of the Session, are:

  • Highway Maintenance. To read more about its work, click here.
  • Public Transportation and Public Safety. To read more about its work, click here.
  • Traffic Congestion and Freight Mobility. To read more about its work, click here.
  • Accountability. To read more about its work, click here.

The thoroughness of the Joint Transportation Committee should be commended, but few people needed to be convinced that Oregon has many transportation needs. The biggest challenge for the committee is the same one that faces budget writers: finding money.

The committee gathered information on a wide range of options. To see presentations on some of the funding mechanisms, click here.

Money always has connected the budget and a transportation package. The Joint Committee on Tax Reform and Joint Committee on Transportation Preservation and Modernization each are likely to propose some form of tax increases. That likelihood makes government cost-control efforts as important to transportation discussions as they are to budget talks.

AOI and OBA are part of a broad coalition that supports the effort to pass a transportation package that will address congestion, improve freight mobility, and make communities safer, healthier and more livable. You can learn more about the coalition and follow efforts to develop a plan at http://gooregon.org/.

The overwhelming defeat of Measure 97 showed that Oregonians will not give the Legislature a blank check. Taxpayers - individuals and businesses - will support tax increases only if they are convinced the money will be well spent. The Legislature has about two months left to make that case and complete a budget and transportation package.

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