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December 3, 2024
Dear Neighbors and Friends,
I hope that you and your loved ones had a very happy, healthy, and meaningful Thanksgiving holiday. I know that I did. I want to thank all of you who have been working to make this a better state, a better country, a better world. More than ever now, we need everyone to be pulling together for the common good.
As you’ll see in tonight’s newsletter, this is a very busy time for legislators. We’re still digesting the meaning and effects of the latest revenue forecast (overall quite positive). The We return to Salem next week for December Legislative Days, a round of committee hearings, caucus meetings, Senate confirmations of executive appointments, and even an official special session, convened by the Governor to allow us to appropriate dollars needed to pay our wildfire bills
The Governor has just released her recommended budget for the next biennium, a crucial first step in the public budget process. Legislators, advocates, and interested parties are all poring over it as I write this. It reflects both the Governor’s priorities and the positive revenue forecast. Of course, as they say, “The Governor proposes; the Legislature disposes.” A crucial step, but just the first step.
Next week is also the deadline for submission of the first round of bills for the 2025 session. Legislators and staff are putting the final touches on legislative concepts—LCs--planning their trajectory and their support. You can expect to soon see many of them posted on the legislative website, olis.oregonlegislature.gov. That’s the case for “Committee Bills,” those that are introduced collectively by legislative committees. Those that are “Personal Bills,” with individual chief sponsors and co-sponsors, must be filed by the end of next week (Friday, Dec. 13); they won’t be posted until mid-January.
You of course won’t see my name as a sponsor of any these final bills, but I do have a number of them in the queue (around 50) for others to shepherd. Much of my time in these final days is spent helping to identify and support the shepherds. Many of these LCs are products of the various task forces and work groups that I’ve been involved in. Others are further work on issues like the Critical Energy Infrastructure Hub, Juvenile Records Expunction, Prison Education, Medical Release, access to higher education, and more.
I’m looking forward to discussing and sharing thoughts on all of these in this Saturday morning’s zoom constituent coffee. Hope you can make it!
P.S., this week marks the end of my partnership with my Chief of Staff, Emory Mort. As my time in office winds down, Emory is heading to a very exciting new position: Chief of Staff to newly-elected Portland City Councilor Tiffany Koyama-Lane. This will be an extremely important and interesting assignment, as the new system gets off the ground. This new system has the potential to dramatically improve the services provided to Portland residents, but only if the Councilor offices are able to work productively together and provide true constituent service to residents. Any of you who have worked with Emory will know that he is the perfect choice for this assignment. He has helped so many of our constituents solve problems, taking their problems and concerns seriously and treating them with humanity and respect. And he has helped me in so many ways. Please join me in wishing him the best.
Until next time, please take care, and let me know if you have any questions or thoughts about anything in tonight’s newsletter.
Next (Remote) Constituent Coffee: December 7
Saturday, December 7, is the first Saturday in October, and that means time for another constituent coffee.
This one will be all-zoom.
As usual, the meeting will be 9-10:30 a.m. You can register for it here.
I look forward to discussing with you the implications of the new revenue forecast and the Governor’s Recommended Budget (slated for release on December 2). I’ll be giving you a preview of December Legislative Days (coming up the following week), and sharing info about the final set of bill proposals that I’m submitting.
Plus, we'll have a special SD 23 constituent attending this one: Senator-Elect Khanh Pham!!! We look forward to hearing your priorities, concerns, and thoughts for the future.
Hope to see you there!
Coming Soon: December Legislative Days
The final round of Legislative Committee meetings will be held in two weeks: December 10-12. December “Leg Days” are particularly noteworthy because that’s when the first round of committee bills are presented to committees and thereby become available in draft form to the public. I’ll have more details on committee agendas in my next newsletter, but for now, here’s the meeting schedule for the week.
Agendas will be posted throughout this coming week. As they appear, you'll find them listed here.
Governor Calls (my final) Special Session
Just when I thought the experience of serving during a legislative session was behind me, the stars have aligned to give me one more chance to experience (the joys of?) a session. We’ll be meeting on December 12, the final day of December Legislative Days (our periodic week for committee and task force meetings), to release funds to pay our bills from the recently-concluded wildfire season.
We’ll be voting to send $218 million to the Oregon Department of Forestry (ODF) and the Oregon Department of the State Fire Marshal (OSFM) to cover our share of the costs from this season.
Calling a special session to do an appropriation so soon before the beginning of a legislative session (which will begin on January 21) is unusual. We generally have wildfire bills to pay at this time. We owe them, and we must pay them. Normally, we would just use the Interim Emergency Fund to cover most of these costs. But this year is different for several reasons.
- This was an extremely expensive fire year. A record 1.9 million acres burned this wildfire season, far exceeding the state’s 10-year average of 640,000 acres per season and incurring costs upwards of $350 million.
- What was unusual this year is that most of these fires occurred not in forests but rather in frontier rangelands hard hit by the progressive effects of climate change: drought and the proliferation of invasive grasses and weeds that lack resistance to fire.
- We can generally count on the federal government to reimburse us for most of the costs. That’s because much of the acreage is traditionally on federal forest land and because FEMA reimburses for costs used to protect homes and prevent loss of life. This year, fortunately, only 42 homes burned (obviously painful for those involved but overall a lower number than usual), and less federal money will come in to cover those expenses. The state is on the hook for more, and that number far exceeds what’s left in the Emergency Fund.
- Meanwhile, we have the vendors and contractors that the state uses to feed, house, transport, and pay the firefighters who have bills to pay. They generally are asked to wait patiently until the state receives its federal payments and then appropriate the money. As you can imagine, this places an enormous burden on them.
- As articulated in the press release from the Governor's Office calling for the special session, we simply must fulfill “the state’s financial obligations to small, medium, and large contractors who worked tirelessly to protect and support Oregonians for more than five months.” Speaker of the House Julie Fahey put it particularly well: “Fighting wildfires of the magnitude we saw this season required a tremendous level of resources that even wildfire experts couldn’t foresee. Now, as we approach the end of the year and the holiday season, we need to make good on our commitments and pay our bills so that the contractors who fought fires in Oregon can be made whole. Convening now will enable us to do so, and to chart a bipartisan path forward to address our state’s most pressing needs.”
- The revenue forecast that we just received (more on that below) makes it clear that we will finish the year with enough revenues to cover these obligations, so there’s not a good reason to keep these people waiting.
As I understand it, all four caucuses (Senate Ds and Rs, House Ds and Rs) met and agreed last week that a special session was the right thing to do—as long as the agenda is limited to this one topic. So, at this point it should go pretty quickly on the 12th.
Here’s reporting from the Capital Chronicle and from OPB.
Governor Releases Her Recommended Budget: Let the Budget Battles Begin!
Monday morning the Governor released her proposed budget for the 2025-27 biennium. In one sense, this is the culmination of a long and arduous process that began last spring. In another, it is just the very beginning of a long and arduous process that will last through next June, i.e., to the end of the 2025 long session. In many ways that final budget, the Legislatively Adopted Budget (or LAB) will resemble the Governor’s proposals; in other ways they will be very different. That’s generally how it goes.
The process began early in 2024 with the Department of Administrative Services (DAS) analyzing each of the agency budgets and determining what their “Current Service Levels” (CSL) will be going forward. CSL is what it will cost to continue all the current permanent programs (i.e., excluding those that were temporary programs funded with one-time dollars) after a standard inflation factor is added. The Governor then directed each agency to develop budgets under two scenarios: one that would increase their overall program costs by no more than 1% (i.e., new programs would need to be offset by reductions in existing programs) and one that assumed an overall reduction of 10% (to prepare for the possibility of revenues suddenly plummeting).
Those Agency Request Budgets (ARBs) were submitted to DAS during the summer, and since then it’s been a process of prioritization and fine-tuning, with a close eye on the September and December revenue forecasts. The result was today’s GRB, the real starting point to the legislative budget process.
Thanks to the healthy revenue forecast that we received a couple of weeks ago, the GRB is able to go beyond CSL and proposed more substantial investments in three major areas of pressing need:
- Housing and Homelessness
- K-12 Education, Early Learning, and Child Welfare
- Behavioral Health
For those of you particularly concerned about the need to increase K-12 education funding, you will be happy to hear that school districts would see record increases in this proposed budget, increases amounting to over a billion dollars at this point (moving from $10.2 billion in the current biennium vs. $11.36 billion in the next.) K-12 education fortunately has access to the corporate kicker, which, as you'll see in the revenue forecast discussion, will continue to bring in a lot of money, at least one more time.
As I’ve reported in the past, a new and more correct way of calculating the State School Fund CSL increased the CSL by $515 million. Additional changes to reflect increased PERS costs raise that amount further, up to an additional $600 million. Plus, there is an additional $80 million going to summer learning programs and $127 million to continue work on early literacy.
Here's an initial response from the Oregon School Boards Association.
This is of course very dynamic. I know that legislators will have further requests to improve funding for special education, minimum pay for educators, and improved support for substitute teachers. In January we’ll be receiving the results of a comprehensive analysis of school funding in Oregon, which is likely to recommend changes to our Quality Education Model, but which is also like to show that many districts could be doing a better job with the dollars that they are receiving.
I know that we’ll hear continued calls for additional school funding beyond what’s in the GRB. To the extent that legislators can find additional dollars, I support those calls. But I believe that any additions to the newly adjusted CSL need to be tied to specific priorities, not just across-the-board increases. We have many other needs in the education space that remain underfunded in this budget—state support for our colleges and universities, financial aid, early learning, and childcare. In our quest for a balanced budget, those needs must also be considered.
In the steps leading up to yesterday’s release of the GRB, all the preparatory work has been done behind closed doors. Once it enters the legislative sphere, the process becomes much more public and transparent. There will be opportunity for lobbying, advocacy, and constituent input, individually to legislators and via written and oral testimony to committees. There will be amendments and votes, debate and deliberation for the next seven months. A chance for you to engage with the issues you believe most crucial.
To begin that process, here is the link to the full budget. It starts off with the Governor’s opening message and a useful overview of Oregon’s current economic picture, then moves on to the top-level appropriations for each agency, starting with education.
And here is a narrative summary of what she considers to be her key investment areas.
The link to view the recording of the Governor’s press conference is here and her press release is here.
Here’s reporting from OPB.
And from the Capital Chronicle.
As always, please let me know if you have any questions.
December Revenue Forecast: Economy Continues to Be Strong, Revenues Up, Kickers Up (for the last time???)
On November 20 the members of the House and Senate Revenue Committees received the latest quarterly Revenue Forecast from the economists at the Office of Economic Analysis (OEA). Though released at the end of November, it is technically known as the December 2024 forecast. It’s the result of analysis by Oregon’s State Economist and the members of his team, with input from a panel of national economists. It gives us both the big picture of how the U.S. and Oregon economies are doing now and a prognosis of what that suggests for the future. Similarly, it examines patterns in Oregon’s current tax collections and predicts what we can expect for future tax revenues.
The December forecast is an important one because it includes data on the taxes paid by late filers, so it provides a more complete picture than the two previous forecasts.
This is the sixth of eight quarterly forecasts since the current biennium’s budget was set by the Legislature in June 2023. We will have two more (in February and May) prior to the approval of the next one (2025-27) in June. These forecasts are particularly important for Oregon because of our (crazy, but locked in the Constitution) kicker law—which requires the Office of Economic Analysis to have their final projection to have been on target (within 2%) two years later. If not, the “kicker” kicks, none of the additional revenues can be saved or spent, but must be returned to taxpayers. In the case of the corporate kicker, they go to K-12 education.
What was unique about this particular meeting was that it featured our brand-new Chief Economist, Carl Riccadonna. He came to us in September from Wall Street, where he has been a much-admired economist and analyst. Since coming to Oregon, he and his team have been doing a deep analysis of the model that has been used in the past to forecast revenues and which has led to under-projecting of revenues and a consequent parade of kickers. Looking back, they now see two reasons for the under-projections: (1) past forecasts were overly pessimistic in projecting growth to Oregon’s economy and tax collections (this was something that the previous OEA team acknowledged in their August forecast, as I reported in my September 2 newsletter); and they’ve come to realize that the model itself didn’t appropriately account for the influence of the kicker. As a result, the greater the kicker, the more it distorted the model. This technical problem has now been eliminated.
A less cautious forecast will mean more money available to be budgeted for investments in Oregon’s priority needs. Looking back over time, less cautious (but ultimately more accurate) forecasts would likely have meant more money for schools and for colleges and universities.
On the other hand, projecting high runs the risk of insufficient funds if the economy goes into a downturn. The last time that happened--at the onset of the Great Recession and my first session in the Legislature--we had to cut $4 billion from the budget and lay off many teachers and other public employees. However, we’re in a very different position now because in that same year we committed to a process of building our reserves (the Rainy Day Fund and the Education Stability Fund) each biennium. Even if the projections turn out to be too high, our reserves should be able to protect us from such Draconian cuts.
Since the forecasts that led to the current biennial budget were too low, the kicker will kick again at the end of this biennium, as you'll see below. But if in fact the new methodology is successful, this may be the last one, or at least the last of this magnitude.
OK, on to the forecast itself.
The economists are again predicting a successful transition out of the post-pandemic inflationary boom, with the likelihood that the Federal Reserve will continue to cut interest rates as a result of slowing inflation and a more stable labor market. So far, the Federal Reserve appears to have been successful in steering us to a “soft landing” away from hyper-inflation. This forecast again reflects the belief that Oregon’s economy will continue to grow slowly and steadily. This is also what we’re seeing in Oregon’s tax collections this biennium.
As a result of the changes that Riccadonna has instituted (as well as the continuing strong economy), this forecast is projecting significant increases in revenues coming in during the current 2023-25 biennium and the next 2025-27 biennium. Riccadonna believes that 60% of the increases are due to the changed methodology and 40% due to the ongoing improvements to the state economy.
The Governor’s Recommended Budget (released yesterday) reflects these additional revenues.
2023-25
They are now predicting that by the end of this biennium personal income tax revenues will be $945 million higher than was projected in September.
- The 2023-25 General Fund ending balance is now $2.79 billion versus September’s projected ending balance of $1.840 billion.
- The Rainy Day Fund is projected to receive $329 million following the end of the 2023-2025 Biennium. It is now projected to end the biennium with just under $2 billion.
- The Education Stability Fund will end the biennium with a little over $1 billion.
- Total reserves (Rainy Day + Ed Stability + Ending Fund Balance) at the end of the biennium will be $5.7 billion, or 20.5% of the General Fund.
- The 2025 individual kicker (paid via a tax credit in 2026) is now projected at $1.9 billion.
- The 2025 corporate kicker (going to K-12 education in 2025-27) is now projected at $1.02 billion.
2025-27
- Revenues Increased $1.3 billion* • Beginning balance up $945 million • Available resources increased $2.27 billion
- Calculation of projected revenues increased by $1.3 billion since September.
- The 2023-25 ending fund balance rolls over to become the 2025-27 beginning fund balance. Thus, the next biennium’s beginning fund balance is projected to be $945 million higher than was projected in September. The beginning fund balance is now projected at $2.79.
- The 2025-27 General Fund ending balance is now projected at $500 million (after payment of the $1.8 billion in kicker payments projected to be due at the end of this biennium).
- The Rainy Day Fund is projected to receive $656 million following the end of the next biennium. It is now projected to end the biennium with $2.554 billion.
- The Education Stability Fund will end the biennium with $1.25 billion.
- Total reserves (Rainy Day + Ed Stability + Ending Fund Balance) at the end of the next biennium will be $4.3 billion, or 12.2% of the General Fund.
- No kicker payments are projected following the end of the next biennium (assuming that these projections are not exceeded with additional revenue).
For more details, here are some links for you to pursue if you want to dig into the forecast:
Environmental Quality Commission Approves Restart of the Climate Protection Program
Following action taken by the EQC, the public commission that oversees Oregon’s Department of Environmental Quality, the stalled Climate Protection Program is back in business. The program was created by an executive order following the 2020 walkout that prevented the Legislature from moving forward on Cap and Invest, our comprehensive climate action bill that was on track to passage during that short session. After a great deal of planning work, the program was put on hold due to a lawsuit that halted implementation on technical grounds. Those technicalities have been worked out, and the program now moves forward. Whether or not we’ll see further litigation by fossil-fuel interests to stop it is yet to be seen.
Here's reporting from the Capital Chronicle's Alex Baumhardt and from OPB's Monica Samayoa.
Oregon University Tuition Highest in the West (and CC Second Highest)
The Western Interstate Compact on Higher Education (WICHE) has just released its annual report on tuition and fees at public colleges and universities in the West. As you’ll see, tuition for Oregon residents at our public universities is the highest among the Western states and territories. It’s second highest (behind South Dakota) for community colleges.
Tuition rates at our public higher ed institutions are directly related to the level of state budget support, as our costs are similar to those in the other states. The Legislature has been modestly increasing funding to post-secondary education each biennium since 2013 (when funding was slashed following the Great Recession). But, as you can see, it has not kept up.
Based on what I expect to see in the Governor’s Recommended Budget, if the Legislature does not increase its level of funding to colleges and universities, we’ll again be facing large tuition increases. I hope that legislators will make this a top priority for the next session.
Additional Links of Interest
- I've been asked to serve on the volunteer advisory committee for an exciting new national project to improve access to prison education and reentry for the formerly incarcerated. It's with Jobs for the Future (jff.org), whose agenda is workforce development and economic mobility. Here's the announcement and description of the "Fair Chance to Advance" project from Jobs for the Future.
- On a related note, OPB has a story about Worksource Oregon Reentry, a program that brings training and employment services directly into prisons, creating a smooth pathway to employment post release. The funding for this program came from the big workforce package that we passed in 2022—Future Ready Oregon. I’m proud to say that I had a hand in making sure that current and formerly-incarcerated Oregonians were included in that package. However, that funding is about to run out. One of my final bill requests—to find continuing funding for this valuable program—has just been drafted.
- And here’s a story about the final $42 million in new Future Ready Oregon grants being distributed around the state for workforce training in manufacturing, technology, and health care.
- A little over ten years ago, the Legislature set as a goal that 40% of Oregonians would possess 4-year degrees. How are we doing in reaching that goal? As this recent article from the Oregonian’s Mike Rogoway shows, not bad: we're now at 38%, up 9% since then.
- Despite well-founded concerns about the cost of higher education, a recent study shows that students of color continue to strongly believe in its value.
- So it’s good news to see that enrollment at Oregon’s colleges and universities is rebounding this year. Here’s reporting from the Capital Chronicle.
- After last year’s FAFSA debacle, the U.S. Department of Education has been field-testing this year’s form before releasing it to the public. They promised to have it ready by December 1. Legislators just received word that the form is ready and available ten days early.
- Meanwhile, in an attempt to prevent last year’s delayed roll-out from ever happening again, Congress has just passed legislation requiring the rollout to begin by October 1 of each year.
- I’ve written before about the wonderful Bike Bus program, encouraging kids to ride their bikes or walk as a group to school. Here's a piece of good news: Portland has just received a $1 million grant to expand the program.
- The Oregon Department of Education has just released the most recent At-a-Glance School and District Profiles. You can look up individual schools and districts to see how they’re doing on a number of indicators. Results vary by school, district, and region, but overall the results show improvement in attendance and kids being on track to graduate. We may finally be moving out of the pandemic setbacks. Here's reporting from OPB.
- As Oregon (along with the rest of the nation) struggles with a dearth of special education teachers and paraprofessionals, a program to distribute one-time bonuses to educators working in this field is coming to fruition.
- Oregon Housing and Community Services (OHCS) has just released its first State of the State Housing Report. Housing affordability continues to decline in Oregon and homelessness continues to rise despite significant efforts by the state and local governments.
- We ended our last bike town hall at the Dharma Rain Zen Center, a lovely natural site across the 82nd Avenue from McDaniel (formerly Madison) High School. There we were told in confidence that an adjacent property was going to become the site of the Bird Alliance (formerly Audobon) of Oregon’s new Wildlife Care Center. Well, it’s now been announced publicly. Read about the project here.
- Oregon Department of Human Services has published a new website listing some of the state’s most problematic long-term care facilities—facilities you or your loved ones should avoid. And here's reporting from Willamette Week.
- Although we’re about to head into the winter holiday season, when people tend to be most vulnerable to respiratory infectious diseases, recent polling shows that 60% of adult Americans say they probably won't get the updated COVID-19 vaccine. And here are the most recent vaccine statistics from the CDC, showing that only 18% of all adult have received a vaccine so far. For nursing home residents, the most vulnerable to severe infection, that number is just 30%.
- Meanwhile, many of us are worried that we'll no longer have access to affordable COVID vaccines under the new administration. How should that affect our plans? Here's what the Washington Post's Dr. Lenora Wen advises.
- The Food and Drug Administration is soliciting research on the presence of PFAS, the so-called “Forever Chemicals,” in seafood. We know that large quantities of chemical microfibers are finding their way into our waterways and oceans. This study will help assess the risk of contamination in our food supply. Here's the FDA announcement.
- Margaret Atwood, author of The Handmaid’s Tale and many other novels and stories, was scheduled to speak in person at Oregon State University last week. That had to be switched to zoom, first because she didn’t want to feel she was crossing a picket line (OSU graduate workers are currently on strike in pursuit of living wages) and then due to threats of violence directed at her. This reporting in the Oregonian includes lively commentary from Atwood herself. [BTW, I believe that in the end Atwood WAS able to attend in Corvallis.]
IMPORTANT DATES FOR THE 2025 LEGISLATIVE SESSION
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Dec. 2 (Monday)
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Governor releases her recommended budget (GRB)
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Dec. 4 (Wed.)
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Legislative Counsel returns drafts for presession filing.
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Dec. 10-12 (Tues. – Thurs.)
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December Legislative Days
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Dec. 13 (Fri.)
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Deadline to submit LC drafts to Chief Clerk of the House or Secretary of the Senate for pre-session filing.
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Jan. 12 (Sunday)
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MY FINAL FULL DAY as a State Senator
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Jan. 13 (Mon.)
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January Organizational Days
- Adopt rules
- Elect officers
- Introduce pre-session filed bills
- Convening & Swearing In
- Member & Staff Trainings
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Jan. 21 (Tues.)
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2025 Legislative Session Begins
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June 28 (Saturday)
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Constitutional Sine Die (End of Session)
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And here’s a link to the calendar of key dates in the session itself.
Until next time,
Senator Michael Dembrow District 23
email: Sen.MichaelDembrow@oregonlegislature.gov web: www.senatordembrow.com mail: 900 Court St NE, S-407, Salem, OR, 97301
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