Clarity on the state of the 2021-2023 budget came to fruition during the February revenue forecast. The forecast brought positive light, showing an improvement of nearly $2 billion above the December report. Economists expect for the state to see continued growth in upcoming revenue forecasts.
Personal income revenue is up, despite 160,000 Oregonians still being out of work, underscoring the reality of a “k-shaped” recession, where low wage earners have suffered and high income households have prospered and saved.
An unexpected result of this uptick in revenue means a personal income kicker anticipated at $571 million.
The co chairs of Oregon’s Joint Committee on Ways and Means recently released the principles they plan to use when crafting the state’s budget for the 2021-2023 biennium. In their principle overview, Senator Elizabeth Steiner-Hayward (D-Portland), Senator Betsy Johnson (D-Scappoose), and Representative Dan Rayfield (D-Corvallis) highlight ongoing and uncertain costs related to natural disasters and COVID-19, but also the state’s work to create strong reserves for emergencies.
Oregon’s emergency reserves currently sit at $1.37 billion through the Rainy Day and the Education Stability funds. Additionally, federal support is expected to help bridge the gap to address wildfires and pandemic related needs.
While there is a surplus and the outlook is now positive generally, the “k-shaped” recovery, as a result of the pandemic, means communities will see an increase in need of services for Oregon’s vulnerable populations.
For counties, providers of a number of critical services for Oregonians, budget impacts are on the horizon beyond the rippling effect of the pandemic. AOC staff is working with the Legislature, advocating for support of county programs and funding needs to address the overall impacts.
Oregon’s county governments face structural threats to their state-shared revenue streams. The passage of Ballot Measure 110, in particular, will result in counties and cities taking a 72 percent hit to discretionary cannabis revenue as those dollars instead get diverted to fund the addiction recovery centers outlined by the measure.
Additionally, Ballot Measure 108 will lead to a gradual erosion of tobacco revenue as fewer Oregonians take up the increasingly expensive habit of smoking.
AOC staff continues to advocate for the special purpose appropriation called for in the governor’s budget to ease the burden on local governments imposed by Ballot Measure 110. Staff is also working with the Oregon Health Authority to identify ways in which the impact of Ballot Measure 108 on local government funding can be mitigated.
Fewer tourists and travelers combined with shuttered restaurants and bars means that lodging tax, gas tax, and lottery receipts are all reduced as well.
While the state’s revenue forecast illuminated a surplus, AOC and members are pushing for adequate funding for everyday critical services that counties deliver, as well as funding to address increased service needs for vulnerable populations through the ongoing pandemic and emergencies.
Even with the surplus, it is anticipated that the Joint Committee on Ways and Means co chairs will be cautious in preserving and strengthening the state’s emergency funding, particularly with an eye on the impact of the state’s bond rating. A flurry of funding requests are anticipated.
AOC is committed to working with state, local, and federal partners to address these ongoing financial challenges.
Contributed by: Tyler Janzen | Legislative Affairs Manager