The Oregon Capitol in 2021.
Kristyna Wentz-Graff / OPB
Oregon lawmakers are crafting a budget for the next two years. They’re facing a lot of uncertainty since nearly a third of the state’s funding comes from federal dollars and budget committee members have offered several scenarios.
Meanwhile, hundreds of bills failed to meet a legislative deadline last week. But one proposal that narrowly passed the Senate would give workers who go on strike access to unemployment benefits.
We get an update on what’s ahead for lawmakers from OPB political reporter Dirk VanderHart.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: From the Gert Boyle Studio at OPB, this is Think Out Loud. I’m Dave Miller. We are now two months into Oregon’s legislative session. Lawmakers are crafting a budget for the next two years, but they’re facing a ton of uncertainty since nearly a third of the state’s budget comes from the federal government. Meanwhile, hundreds of bills failed to meet a legislative deadline last week. Plenty of others are still alive.
OPB’s Dirk VanderHart covers state politics, and he joins us now. It’s good to see you.
Dirk VanderHart: Great to be here.
Miller: I’m gonna start with the state budget, the only thing that constitutionally state lawmakers have to pass this session. For a second, let’s put aside this big thing which is the federal questions. What does the state specific picture look like right now?
VanderHart: It’s relatively positive, especially when considering that other states, Washington being a good example, are facing some pretty big shortfalls. So top budget writers, last week, unveiled their very high level budget framework for the next two years. It’s pretty OK. Especially if you take out that federal picture, things look good. The state expects general fund revenues will be up by quite a bit, even though we’re expected to pay out something like a $2 billion kicker. They say we still should have enough to fund our current services and invest in some of the big priorities that lawmakers are cooking up.
Miller: So let’s look at those priorities. What are budget writers saying they would do for K-12 schools?
VanderHart: They are basically following the lead of Governor Tina Kotek who, in her proposed budget, asked for about $11.4 billion in the state school fund. That’s about a 10% increase over what lawmakers allocated in the last budget. As we often say with school budgets these days, it would be a record amount to K-12 schools. But there will be debate, as I’m sure you’re not surprised by Dave, about whether it’s enough. There are studies that say Oregon needs to spend quite a bit more to dig ourselves out of this hole state schools are in, just in terms of low test scores.
We also have Kotek and top lawmakers saying they’re serious about bills that are going to place new requirements on schools, particularly low performing schools, about what they do with the money. [It’s] some real control by the state in a way that we haven’t seen in Oregon.
Miller: What about the Oregon Health Plan and the foster system?
VanderHart: Yes, we are told, there’s gonna be, we think, quite a bit more money for those things. And that’s just because there’s a lot more demand, at least that’s what the top lawmakers who write the budget, Tawna Sanchez and Kate Lieber said. So their proposed budget framework includes about $2 billion more in the human services category. That’s where Medicaid is. That’s where foster children and DHS are. They say that’s needed, as I say, because of higher demand on state services. But again, I know you want to put the federal aside, but huge, huge questions, particularly in this region, about whether the money is going to be enough.
Miller: The governor has also asked for lawmakers to continue to put more money toward her other big priorities: housing and homelessness. Do they seem prepared to do that?
VanderHart: Maybe. I think this is a little point of tension between the governor and the budget writers. So Sanchez and Lieber’s plan holds about $1 billion unspent, as a bit of insurance amid federal uncertainty. They say that is money that theoretically could go to at least some of Kotek’s housing priorities. Those include rental assistance, shelters, creating more affordable housing. I think the governor has around $800 million in asks, which is a lot of money obviously.
But Sanchez and Lieber are not ready to commit to that, at this point, given all that uncertainty we’re talking about. Actually, the governor told reporters yesterday she disagrees with them about how much money the state has and where it should put its priority. She says that there’s enough money to fund her budget if they make some tweaks. So clearly, a bit of a tension point, as I say.
Miller: Are lawmakers talking about cuts of any kind?
VanderHart: They are, but it’s not clear that any of them are significant. There are agencies and spending areas that are gonna lose one time money, ARPA money, COVID money. There are some reductions there. There’s about $270 million in other reductions that have been discussed. Lieber and Sanchez told reporters those would not impact services, so no bloodletting, we are told.
Miller: OK, so we should get back to the issue of federal funding because it is a big one. How much federal money is a part of state budgets?
VanderHart: It is about a third of the budget we have. The state gets money for all sorts of areas. The state budgets, often, with an aim toward putting money in certain areas so there’s money to draw down federal money … we’re going to give this agency money to pay the federal match. So the state is very used to strategizing like that [but] not so much in terms of what we might lose.
Miller: We’ve talked a lot about the possibility of cuts to Medicaid, which could have a huge impact on the Oregon Health Plan. We talked a lot about that in the last couple of weeks. But what are some of the other budget areas where federal money plays a really big role?
VanderHart: Yeah, I think education is unquestionably a big one. Transportation is a big one, especially when you talk about major projects. So think about a new interstate bridge on I-5 or widening the Rose Quarter. Those are projects that both contemplate huge federal grants. And projects that we’re hearing yesterday, even from the Senate president, he’s more and more worried might not come to fruition, given no one really knows what’s happening with federal money.
Miller: Are there specific areas where budget riders are most focused in terms of federal funding, or is it just generalized anxiety about the possibility of fewer federal dollars?
VanderHart: I think Medicaid is unquestionably the big one. We saw the framework that Congress passed, and that includes what many people think would be very, very serious reductions to that. I think that is largely where people are focused. But the framework that actually dropped last week focused on two pieces. It focused on that human services piece and also on schools. It laid out what the state’s finances might look like if there were 10%, 20% and 30% reductions in just those two areas.
What that said is the impact to the state would be between $3.5 billion at the 10% cut to $10.7 billion if there was a 30% cut in those two areas. That’s a lot of money. Even in the context of state budgets, [it’s] a very large piece of money that the state would not be able to backfill. It wouldn’t be able to find the money to restore those services. And so if we get into that kind of situation, we are going to be having a very different budget discussion.
Miller: The timeline I’m curious about … the budget has to be finalized by the end of June, as I understand it. Do lawmakers think they’re going to have a really clear picture by then about what’s happening in D.C.?
VanderHart: No, I don’t think so. I think clearer is the hope. I don’t think anyone expects certainty. And really the final fulcrum point here is going to be the revenue forecast that comes out in May. That’s the document that lawmakers are going to look at and say, here’s what we can count on for the budget. We assume that the state economists will be looking at all these federal factors and trying to divine what might impact federal funding. But [they] almost certainly won’t have an extremely clear answer there.
Miller: We talked about this before, but this is an important point, especially when there’s this much federal uncertainty – they have to not just do this for the coming year, but it’s a two-year budget which they’re figuring out in May and early June. So that, I suppose, just makes it even harder?
VanderHart: Yeah, it’s a peril in a normal budget.
Miller: Which is why we have so many kickers.
VanderHart: Exactly. And now we’re looking at, essentially, budget chaos, at least from people here’s standpoint.
Miller: We’ve spent a lot of time on the budget, but I did want to turn to some policy bills. One that narrowly passed the Senate would give striking workers unemployment pay. What’s the argument for this?
VanderHart: Yeah, this is proposed and really backed very strongly by labor unions, as you can imagine. They’re making the central argument that when workers go out on strike, it is too easy, often, for employers to wait them out. As some proponents put it, they say, workers can sort of be starved essentially into accepting an unfair deal just because they’re not getting that money.
So this bill would allow striking workers to get weekly unemployment pay after strikes lasting longer than two weeks. We would be the first state in the nation to do this for both public sector and private sector unions. Right now, New Jersey and New York allow private sector workers to get unemployment pay when they strike.
Miller: What did Republicans and two dissenting Democrats say in opposition?
VanderHart: There’s a variety of arguments against this. The first is that they believe this is going to lead to more frequent and longer strikes. People have the stability to wait it out and get a deal that they like. They think that’s going to potentially pose problems for the state’s very robust Unemployment Insurance Trust Fund – it’s about $6.4 billion.
The two Democrats who opposed this, when it came up for a vote in the Senate, were worried specifically about how it would impact public employers, so school districts, city governments, entities that are facing budget questions right now in a lot of ways. Public employers, when their former employees go on unemployment, have to reimburse the state system dollar for dollar. And the question for these folks is, if we get all these huge [strikes], a Portland Public Schools teacher strike, is that going to create millions of dollar holes in these city and school budgets?
Miller: What’s happening with the push by a bunch of cities for lawmakers to enact a stronger anti-camping law?
VanderHart: We think it is dead. After the Supreme Court decision in Johnson v. Grants Pass last year, a lot of cities were really hot on trying to get a change to state law that would give them a little more clarity, a little more authority on where they could really restrict camping.
Miller: And what’s reasonable?
VanderHart: Yeah, exactly, and where they could sweep people most easily. Some Democrats were for that. All Republicans were for that. But the Democrats, in essentially the decision-making functions on this, were not interested in having the discussions. We had a bill deadline, as you said on Friday, and all the bills that were aimed at doing this quietly went away.
Miller: What are some other bills you’re paying attention to right now?
VanderHart: Yeah, it is a very, very busy part of the session. Even with one deadline behind us, lawmakers are still really trying to winnow down what policies they want to move forward. And there are really just an exhausting amount of public hearings and work sessions that I’m trying to pay attention to.
Some of the things I’m watching for though … We’re looking toward a discussion that might revamp the state’s civil commitment laws. I think that’s a very important thing that people should pay attention to. There’s a bill to enact far more state regulation over rideshare companies. There are at least five bills creating new gun regulations. And Democrats are now being pretty candid that they will take at least some of those up. So we expect that to be a fight in the latter part of the session.
[There are] bills to raise taxes on tires, beer and jet fuel; bills to rein in utility rate increases. I could clearly go on, Dave. There’s a lot going on. Maybe we’ll discuss more of that in the future.
Miller: I look forward to it. Dirk, thanks very much.
VanderHart: Yeah, my pleasure.
Miller: Dirk VanderHart covers state politics for OPB.
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