State spending on unsustainable path
Huge budget shortfalls have become a tradition for Oregon's state government - and the latest prediction from Salem is that they will continue for as far as the eye can see.
State Rep. Peter Buckley, co-chairman of the Legislature's Joint Ways and Means Committee, recently said state economists are projecting enormous budget shortfalls for the next three bienniums.
This troubling forecast is not new information. Research late last summer by independent economists for the Oregon Business Council made it clear that dire times were ahead for state government. Unfortunately, few took heed until similar doom-and-gloom predictions were offered from within state government.
No prize should be awarded for first identifying the problem. Instead, the sole priority should be fixing this mess. The remedy for such shortfalls won't be found in ever-increasing demands for new revenue.
Rather, Oregon leaders must commit to decrease an unsustainable rate of growth for state government. Only after applying brakes on spending can Oregon have a reasoned discussion about tax reform or building tax revenues.
Clearly, the problem is not about how much state government collects, but how much it spends. State experts expect Oregon's general fund expenses to grow from their current level of $14.2 billion for the 2009-11 biennium to $18.2 billion in the 2011-13 biennium; to $20.1 billion in 2013-15; and to $22.4 billion by 2015-17.
Increases of such a staggering magnitude are not supportable under Oregon's current tax structure.
Start by slowing growth
Moving from a $14.2 billion general fund budget to a $22.4 billion budget in just six years represents a 58 percent increase in spending at a time of very low inflation in the general economy. Admittedly, the state must make up for federal stimulus dollars that helped backfill the current budget. But when the long view is taken, it's undisputed that state government expenditures have grown at a faster rate than the private sector or the incomes of everyday Oregonians.
As a result, Oregon has stumbled from budget cycle to budget cycle, most of the time short of money to continue operating at what government calls the 'current service levels.' It's time for responsible legislators to end to such dysfunction and implement long-range budgeting that more fully projects the future costs of programs and the resources available to pay for them.
In a fashion, Buckley has launched that conversation by showing what Oregon will confront if it stays on its current course. These shortfalls of billions of dollars will make the recent debate about $733 million in new taxes look like child's play. What's needed instead is a very mature discussion and proactive, not reactive, leadership that addresses what Oregon can afford - not how much it can tax.
Discipline is needed
Slowing the growth in state government spending will require a much more disciplined look at every state agency and program and at the budgets for K-12 and higher education.
It will require concessions from state employees, including asking them to pay for a share of their health benefits - as public school teachers already do. It will require further reform of the state's Public Employees Retirement System.
And Oregon leaders must be singleminded in promoting and investing in the state's economy. The best way to increase revenue for state government is to help ensure the expansion of private-sector jobs and incomes in Oregon. If more people are working and paying taxes, state resources will grow and remain stable.
This year, Oregon will elect a new governor and fill most of the seats in the Legislature. Citizens should only award their votes to candidates for these positions who demonstrate an understanding that Oregon government is on an unsustainable path - and who have specific ideas, a commitment to correct that course and a deadline to get the job done right before the next crisis hits Oregon.