By Ted Sickinger The Oregonian/OregonLive
Seven months before legislators convene at the Capitol, lawmakers, business groups and the governor are crisscrossing the state to discuss the state budget, education funding, rising public pension costs and taxes.
It’s the same set of issues that has tied the Legislature in knots for years and likely is a preview of another big budget battle in 2019.
Underlying all the discussions: Despite the best economy in three decades, Oregon still hasn’t gotten its fiscal house in order.
Unemployment is as low as it’s ever been. Wages are growing. And in a state where the budget is heavily dependent on income taxes, the second longest postwar expansion on record has turned into a revenue gusher.
Yet expenses are projected to grow even faster. If the state maintains the current level of services, economists project, it will face a general fund deficit between $500 million and $1.1 billion in the next two-year budget cycle, and even larger gaps in the following two biennia. And that assumes the economy continues to boom for the next six years.
The question now is whether lawmakers will pass what some are calling a “patch and pray” budget in the next legislative session, which starts in early 2019, kicking the problem down the road for another two years.
“We know a recession is coming, and when it comes it will compound the problem,” Jeremy Rogers, vice president of the Oregon Business Council, told members of the Eugene Chamber of Commerce at a meeting earlier this month.
Business groups are using their statewide tour to sound the alarm about that recurring gap between revenues and expenditures, and the lack of political will to fix it. They’ll highlight the “fiscal crisis” when they unveil a new policy wish list at the annual Oregon Leadership Summit in December.
That playbook, they say, will include a proposal to raise taxes, including business taxes. But they’ll also call on lawmakers to rein in runaway costs – specifically pension and other benefit costs – that they say are overwhelming state and local governments ability to provide basic services and make strategic investments.
Meanwhile, a bipartisan group of lawmakers, the Joint Interim Committee on Student Success, is on its own listening tour. It’s supposed to determine what Oregonians want from their troubled education system and how to pay for it.
The group is modeled on the committee that toured the state before developing the $5.3 billion transportation plan that lawmakers passed in 2017. Many observers expect a similar outcome this time around, with a detailed education plan providing the political cover for the business tax increase that Democrats and unions have been advocating for the last three years.
Finally, Gov. Kate Brown is on her own “State Budget Tour.” She’s making the rounds with handful of staff and agency heads, providing a budget 101 presentation to demystify the budget process for community leaders and businesses, and to begin prioritizing what she’ll offer in her own budget proposal in December.
The upshot of all this chatter will depend on election results in November, whether Brown is re-elected, whether Democrats gain a supermajority in the house, Senate, or both, and whether business groups develop any political muscle to back their policy proposals.