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What the exploding Oregon budget looks like

June 14, 2010

By Patrick Emerson
Oregon Economics Blog

Kaboom!  Went the Oregon general fund.

The Office of Economic Analysis blog has a nice picture that does a good job describing the torpedo they good ship Oregon took to her hull.

This is net receipts from February though April for the last 14 years.  Note how Oregon is $400,000 in the red in 2010, meaning we refunded $400,000 more than we took in during that period, and this is with 66 and 67.

What is going on?

…preliminary numbers show that the biggest culprit was capital gains. Following a 60 percent decline in capital gains income from the 2007 tax year to the 2008 tax year, we were expecting an additional 10 percent decline for the 2009 tax year. This was in line with what many other states were projecting (5 percent to -20 percent) based on an informal survey conducted early last winter. Unfortunately, preliminary estimates show that capital gains income likely dropped at least another 50 percent for the 2009 tax year. Going forward we believe that we will see an uptick in capital gains income, but carry forward losses and low levels of business transactions will limit growth.

Sigh.

Which brings me to another topic. Polictical football is being made of the decision not to call a special session and institute a 9% across-the-board cut. But, of course, as OPBs Chris Lehman reported lots of agencies only rely partly on general fund monies.  In fact K-12 education makes up more than 40% of general fund spending thanks to Measure 5.  Higher ed. another 10%. Mandated Medicaid about another 12%.  After that the only other significant portion is corrections and we see what a 9% cut will do there.   Given the dire state of K-12 in particular it seems difficult to understand why we wouldn’t want to try and protect it.  But the reality of the numbers is stark: there just isn’t a way to protect K-12 without totally gutting other state programs.  So while I like the idea of being more nuanced about cuts, there just aren’t many degrees of freedom here.

Which of course brings me back to kicker reform and a rainy-day fund.  Yes, it does not fix long run trends that Tim Duy has very clearly explained, but a substantial rainy-day fund would allow us to avoid these types of draconian cuts to basic services in recessions.

  
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Anonymous June 29, 2010

Here I see a typical “hey we have to cut everything” statement, but it always comes down to what will cause the most pain for the people who actually pay the tab. Never, EVER, is it mentioned that the people who bleed the system dry have to pitch in and do something. From personal experience I know for a fact that we have tons of capable, able bodied people collecting welfare for their entire lives. I’ve personally seen three generations of welfare recipients living in the same government subsidized housing complex. They sit there and complain that the Government never does enough for them. Remember, I’ve seen it with my own eyes, heard it with my own ears. Then, in the same complex, unlawful entry into the US for the sole purpose to plant an anchor baby garners foreign nationals copious benefits including free housing, food stamps and cash money for the next 18 years. Why is it so hard to figure out? Is it so terrible to ask the people on welfare to work for their keep? They can’t find a job, so they just sit there, months…years…decades. They all seem to have enough money to buy a car, pay for cell phones and cigarettes, but they don’t seem to be able to find a job. Here, it’s easy: Everyone on welfare MUST do a state mandated job such as janitorial work, city landscaping, receptionists or ANYTHING that the city and state currently pay for. In return, they get “daycare” and their benefits. It’s time we got tough on long term welfare recipients. And for that matter, it’s time we stopped paying the way for foreign nationals who work under the table AND get their welfare checks. You can’t tell me foreign nationals don’t get welfare, I’ve seen the paperwork, I’ve seen them get their benefits and if nothing else, you can watch them make Oregon Trail purchases at the local 7-11 on their lunch break from their under the table job.

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