March 24, 2011
March 24, 2011
State Treasurer asks Legislature to increase the savings in Oregon’s ‘rainy day’ reserves
— Senate Bill 553 would dedicate the interest earnings from state’s general fund
By Oregon State Treasurer
SALEM – State Treasurer Ted Wheeler on Monday asked legislators to increase the state’s ‘rainy day’ reserves, which will help to save more money in good times as a buffer against budget downturns.
Oregon relies on the notoriously volatile income tax for the lion’s share of funding for state programs such as schools, public safety and public healthcare. Allowing more money to be saved in good economic times will help to reduce the budgetary deficits in times when the economy sours.
In addition, more robust reserves will help to solidify the state’s credit ratings, which can translate into lower interest costs for public borrowing, Wheeler said.
“Maintaining a strong Rainy Day Fund is essential to the financial well-being of our state,” said Treasurer Wheeler. “It makes good common sense to force fiscal discipline by identifying a new specific source of dedicated funding for the rainy day fund, and by holding our feet to the fire to make sure the fund is adequate.”
The Treasurer’s testimony was in support of Senate Bill 553, sponsored by Sen. Chris Edwards, D-Eugene. The central provision of the legislation would require interest from the state’s General Fund to be deposited in the Rainy Day Fund. That’s a state savings-related reform that Wheeler touted during his campaign for State Treasurer in 2010.
The legislation does not enact any additional taxes. It also includes a provision that ensures state interest earnings will be available to spend in a budgetary downturn. The General Fund earns roughly $10 million a year in interest.
In the state’s recent credit rating upgrade by Standard & Poor’s, which was issued on March 9, the firm noted that Oregon’s “reliance on personal and corporate tax revenues” gives some cause for concern. Stronger reserve funds will help to alleviate some of those pressures, credit rating firms have said.
“Our current fiscal challenges demonstrate why having a robust savings plan is so important,” said Senator Edwards. “In order to protect our schools, our neighborhoods, and our most vulnerable, we have to have a better and more adequately-funded reserve fund to go to during tough times.”
The State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. The office also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices.