Jeff Kruse

JUNE 16, 2017




We are now four and a half months into this Session with less than a month to go and we still don’t know a lot of the details of the majority party’s plan.  It does appear, however, that things are beginning to start happening.  Because all tax measures must start in the House, there are two big issues that need to be resolved there first.  The gross receipts tax, or the son of measure 97, will be coming out of the joint tax committee on Monday and could be on the House floor for a vote by Tuesday.  I have been told it will be defeated there and that should take care of that issue for this Session.  The other big money issue is the provider tax for the Medicaid program (HB 2391) and that bill passed on the House floor yesterday and is now headed for the Senate.


We knew dealing with Medicaid was going to be one of the biggest issues this Session.  At this point it would do no good to rehash the debate over the “expansion population” even though we knew it was going to cost the state more money in the long run, because it is our reality.  The issue simply becomes a matter of how we will fill the budget hole.  A workgroup was created to deal with this issue and there were very definite solutions available.  Unfortunately, the group came up with the wrong solution.  The hospitals were very willing to step up to the plate to fill the hole inside of the Medicaid system by increasing the percentage of the “assessment” that has been in place for many years.  This is where things went south from my perspective.  The workgroup insisted on going another direction and creating two new taxes.  The first was on hospitals and the second was on insurance premiums.  This is where the problems arise.  It takes a super-majority vote to create a tax, but once it has been created it can be increased by a simple majority vote.  With the full understanding of the fact the Democrat majority will continue, we are giving them the opportunity to increase these new taxes anytime they wish.  Because we have been hearing from the Speaker and the Governor all Session about how we need “new revenue,” one can easily assume we will see increases in the future.


One aspect of the budget process we are falling short of is the aspect of cost containment.  I have mentioned before the fact that the cost of government in Oregon has risen by 50% over the last ten years and we are on a trajectory that is completely unsustainable.  We have suggested we need to come up with one billion dollars in efficiencies in the general fund, but at this point all we have seen is four hundred million dollars all from “other funds.”  We believe it should be a requirement to prove to the people we are making efficient use of the money they are already sending us before we ask for more.  Unfortunately, the majority party seems set on the continued expansion of government for political reasons.  For example, the Oregon Health Authority, which is a very poorly run agency with nearly 4,500 employees is asking for nearly 200 more employees.  This is an agency carved out of the Department of Human Services over a decade ago and charged primarily with dealing with Medicaid and coordinated care organizations.'’  They have now involved themselves in the business of most other state agencies which adds greatly to the expense and overly complicates a lot of the work.  It clearly goes beyond OHA as to the vast amount of duplication we have in state agencies.  This is the first place we should be looking for efficiencies, but because it would include the elimination of government jobs, some will not let that happen.


One more point on the provider tax.  It is probably certain Congress will be reforming Medicaid in some form in 2018.  At that point all this budget voodoo we are creating might disappear.  At that point all we will be left with are the new taxes we have created.  This clearly serves the majority party’s agenda.  It is very disappointing when politics triumphs over good policy.




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