Oregon lawmakers need to trim $563 million from the state budget in the next year, according to a state revenue forecast released Tuesday.
State Economist Tom Potiowsky predicts the state will collect $511 million less in revenue this fiscal biennium than he predicted two months ago.
The revenue forecast is $900 million lower than the state's original 2009-11 budget, which runs from July 1, 2009 to June 30, 2011.
Kulongoski immediately unveiled a plan that would reduce state agency and schools spending by 9 percent. The plan would effectively address the $563 million shortfall, he said.
Kulongoski’s plan exercises an “allotment authority” that reduces spending equally among the state’s agencies and schools.
Among his strategies:
- He’ll extend the salary freeze for executive service, management and unrepresented employees through June 2011, when the current biennium ends. The move would save $7.9 million.
- He’ll ask union employees to accept freezes that would save another $12 million.
- Public employee benefits changes could save another $30 million.
“We could gamble and hope that the next forecast in September delivers a rebound and the hole is diminished, but the longer we wait, the deeper the cuts that will be needed to rebalance the budget in the remaining months of the biennium if that does not occur,” Kulongoski said in a statement.
The agencies must present their reduction list to Kulongoski’s office within two weeks. He’s also asked the agencies to meet with their union representatives to explore alternatives to layoffs.
Sen. Ted Ferrioli, a John Day Republican and the state Senate’s minority leader, noted that a Kulongoski committee had already warned that the big deficit was coming.
“(Kulongoski’s) ‘Reset Cabinet’ has confirmed what Republicans have long been saying, that unsustainable spending will result in decades of deficits no matter how much the revenue forecast decreases,” Ferrioli said in a statement. “Oregon’s rate of spending is simply impossible to maintain, regardless of the revenue forecast. The way government budgets is so badly broken that the revenue forecast has become just another talking point for the next government-sponsored tax increase.”
Potiowsky’s report did offer some bright news. The first quarter marked Oregon’s first positive quarterly job growth since 2008’s first quarter.
Even that news came with a caveat.
“We are hesitant to conclude that this is the turning point we have all been waiting for,” Potiowsky said in his report. “Given this is an initial estimate of jobs and a seasonally adjusted measurement, we believe this latest quarter is further evidence of bottoming out of the recession as it relates to the job market.”
The state's primary sources of revenue are personal income taxes and corporate income taxes.
Read the complete forecast here.
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