APRIL 21st, 2017 - TIME FOR SOME BUDGET REALITY

Jeff Kruse

APRIL 21, 2017

 

TIME FOR SOME BUDGET REALITY

 

We have now been presented with our third budget document.  The first was “The Governor’s Balanced Budget”, which has always been a document based on something other than reality.  In my 20 years in the legislature the Governor’s budget has always been nothing more than a political positioning document.  It has always included significant expansions in government and attempts to drive toward the need for additional taxes.  We have also received two budget proposals from the Democrat majority driving to the same conclusion.  They are peddling a false narrative that we have a $1.6 billion deficit and that new taxes are the only way we can reach a balanced budget.  It is not true, it’s a false choice. It is time for some reality.

 

The first problem is the very flawed way budgets are created.  Our budget model is called a “current service level budget.”  Simply stated what that means is we assume everything government is doing is wonderful and needs to be not only continued but also expanded.  With this flawed model, we never really question agencies as to either their attempts at finding efficiencies or actually justify the need for all of their personnel and programs.  With this flawed model the additional cost of government every two years is always in double digits and the projection for the next biennium is almost a 20% increase.  The per capita spending by government in Oregon is actually greater than it is in California, and to attempt to continue on this spending curve will be disastrous for our state.

 

The real starting point should be the fact Oregon will have at least an additional $1.5 billion to spend just based on the growth of the economy in the current tax structure.  This means we have an 8% increase in the budget before we even start.  One would think this would give us the needed flexibility to come into balance.  Admittedly there is the additional issue of covering the one time federal allocation for the Medicaid expansion population, but even that should be an issue we can resolve.  There is just no rational reason for us to be growing the cost of government by over $3 billion in a two-year period.  The massive increase in the cost of government over the last decade pales in comparison to this proposal.

 

There are other options rather than tax increases and it is time we actually started seriously looking at the alternatives.  The first component will be the hospital tax.  This is rather complicated as it goes into the very complicated matrix of Medicaid funding, but it could add an additional five to six hundred million to the state’s revenue, closing most of the gap in Medicaid funding.  Next we need to look at making government more efficient.  For example, having a hiring freeze on non-essential state employees would save approximately $750 million for the biennium. With just these two measures we have filled almost all the theoretical budget hole we are told we need to fill.  The rest could easily be accomplished by simply requiring state agencies to tighten their belts just a little bit.

 

I could give many examples of agencies that are continuing to expand at unreasonable rates, but for this purpose of this letter I will mention just one and that is the Department of Education.  This has become a bureaucracy over time that seems to serve only itself.  When you talk to school administrators and teachers you find the agency requirements add significantly to the cost of school districts and return very little of value.  This agency has hundreds of employees and a budget of hundreds of millions of dollars that many of us think would be better spent at the school district level.  The point here is our ability to adequately fund schools could be accomplished by reallocating this money from the state to districts. Money should be reaching students and teachers in the classroom, where it matters most.

 

When you add these examples to our proposals for some real PERS reforms it becomes very apparent our budget issues can easily be solved without the need for new taxes.  Proof that what we are proposing is a very real solution is the fact the Governor just announced she is doing a two-month hiring freeze.  Clearly her proposal accomplishes nothing and was only done for political reasons, but it does show there are real solutions available if the Democrat majority is willing to move away from their agenda of ever expanding government.

 

We probably won’t be getting into the real major budget issue for several weeks yet, but I think it is important to know there are other solutions and it is time they were considered.

 

Sincerely,

 

Senator Jeff Kruse

email: Sen.JeffKruse@oregonlegislature.gov I phone: 503-986-1701
address: 900 Court St NE, S-205, Salem, OR, 97301
website: http://www.oregonlegislature.gov/kruse