Budget proposals call
for more spending
The Associated Press
PORTLAND — Gov. John
Kitzhaber is expected to release a
1999-2001 budget proposal on
Tuesday that boosts spending by
about 14 percent over the current
two-year period.
But he’s not the only one think
ing big.
Under orders from Senate Presi
dent Brady Adams, R-Grants Pass,
Senate Republican leaders — who
repeatedly have bashed Kitzhaber
as a big spender — have devel
oped a budget proposal that calls
fora 13.5 percent increase.
Kitzhaber has talked of spend
ing about $10.7 billion, and
Adams countered with $10.6 bil
lion.
The current budget is about
$9.35 billion.
In each case, the increase is well
above the 11.6 percent growth rate
needed to maintain current ser
vice levels, according to a Septem
ber forecast by the state Budget
and Management Division.
The similarities are due in part
to increases in the two fastest
growing parts of the budget: the
Oregon Health Plan and the state
prison system.
Kitzhaber and Adams fought
two years ago about whether to ex
pand the health plan to include
the working poor. Adams now
says it would be politically impos
sible to yank coverage now that
the state has granted it.
And, although Kitzhaber has
been critical of the 1994 measure
that expanded prison terms, he
has grudgingly supported the ad
ditional prisons and staff neces
sary to carry out the voters’ man
date.
“There’s going to be something
in this budget for everybody to
dislike,” Adams said.
Senate Majority Leader Gene
Derfler, R-Salem, who came into
the Legislature a decade ago look
ing for big reductions in govern
ment, emerged from the Republi
can budget exercise with a more
sober opinion.
“It really is tough to cut spend
ing,” Derfler said.
The Legislature will convene
Jan. 11. Budget decisions, made by
the Joint Ways and Means Com
mittee, generally come down to
the wire, and the revenue picture
might be very different by May’s
revenue forecast.
Even if Kitzhaber and the Legis
lature sought no new spending for
1999-2001, the budget probably
would balloon under the weight
of existing programs.
Consider, for instance, the cost
of human resources, which the
Budget Division estimates will
grow by a whopping 28.4 percent
in 1999-2001.
The chief culprit is the Oregon
Health Plan. The state’s version of
Medicaid will cost much more in
1999-2001 because of a big expan
sion in coverage is slowly being
phased in.
Previously, the health plan fo
cused on people at or slightly
above the poverty line. The 1997
Legislature and Kitzhaber extend
ed coverage to pregnant women,
newborns and uninsured children
in families with incomes 70 per
cent higher than the poverty lev
el.
But because many of the
changes occurred midway
through the current budget cycle,
the full cost won't hit until 1999
2001.
The state’s other big expendi
ture is public safety, primarily due
to 1994’s Measure 11. The mea
sure set minimum sentences for
violent crimes, driving up the
state’s prison population.
The latest prison growth projec
tions, to be released Tuesday,
probably won’t be as high as Sep
tember’s. The number of state
prisoners held in local jails, for
which counties must be reim
bursed, is lower than expected.
Still, corrections is expected to re
main a large part of the budget.
The budget proposals were
based on a rosier picture of the
state’s economy. By June, esti
mates showed that the state could
Finance all programs at their cur
rent levels and still have $455 mil
lion left.
That surplus evaporated as the
economy began to slow, and the
state Supreme Court ruled the
state no longer could tax the pen
sions of federal retirees.
State economist Paul Warner to
day gave a new quarterly revenue
forecast to a House panel, project
ing a $103 million decline in esti
mated revenue for the 1999-2001
budget.
That’s less than a 1 percent
change from the last forecast, in
September. The general fund-lot
tery state budget for 1999-2001 is
expected to total $10.8 billion.
Warner said he sees little
chance Oregon taxpayers can ex
pect a so-called kicker income tax
refund in late 1999.
State law requires that surplus
revenue be refunded to taxpayers
when it exceeds 2 percent of fore
cast. Warner said the current rev
enue outlook is 1.9 percent more
than the appropriate forecast, in
mid-1997.
At the same time, Warner told
the House Revenue Committee
that Oregon’s economy is growing
very little and is expected to re
main weak through 1999.
But the state economist’s office
“believes Oregon's economic
growth rate will move back above
the national average in 2000.’’
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