The Speaker, Ways & Means Co-Chair and House Revenue Committee Chair Offer Proposal for Long-term State Budget Fix

Fits into Framework for Business Tax Reform of Joint Committee on Tax Reform

On May 4th, Speaker of the House Tina Kotek; Representative Nancy Nathanson, co-chair of the Joint Ways & Means Committee; and Chair Phil Barnhart of the House Revenue Committee presented a package of actions to the Joint Committee on Tax Reform for discussion. They stated that the package would provide a long-term fix to the structural shortfall faced by the 2017-19 state budget.

Including current Oregon Health Plan caseloads and the three ballot measures passed in November, 2016 ($357 million for veterans services, continuing technical education, and outdoor school), and notwithstanding continuing accumulated reserves, the three legislators see the budget gap growing to over $2 billion in 2021-23.

They stated a goal of $400 million in cost containment and $250 million in targeted cuts in 2017-19, including future cost-sharing by employees under PERS, avoiding the need for new prison beds before 2025, and managing employment vacancies and new hiring more effectively. Assuming success of cost-containment, the budget gaps fall to $350 million in 2017-19, $1.285 billion in 2019-21, and $1.537 billion in 2021-23.

Arguing against “band-aids” of one-time resources and program cuts, the three legislators stated that the realities of the “current service level” budget is inadequate resources for K-12 (short school year, large class sizes), cost of higher education grows, and rising homelessness; and the uncertainty of the federal budget. Their solution is $2 billion in new revenue for 2017-19 – $1.4 billion education investment; $350 million to pay for the three new ballot measures; and $250 million to invest in essential services.

Using the framework of the Ohio-style Commercial Activities Tax (CAT)