The state might cut a wide range of programs and services if voters reject a $1.2 billion tax package next month.
State agency administrators outlined the potential cuts this week in contingency plans they submitted in case Measure 30 is defeated Feb. 3.
At stake is nearly 10 percent of the state’s general fund and other discretionary revenue for the remainder of the 2003-05 budget cycle. That was after several rounds of budget-cutting through five special legislative sessions in 2002 and last year’s marathon regular session.
Potential reductions include:
•More than 50,000 low-income people, plus 2,000 pregnant women, could be cut from health insurance coverage under the Oregon Health Plan.
•Schools could face two more years of disruptions, including teacher layoffs, larger class sizes and early shutdowns in the spring of 2005.
•University and community college tuition could rise, and course offerings might shrink.
•State police forensics labs could lose more than half their staff, making it harder to solve crimes.
The proposals represent agency administrators’ first attempt at slicing their spending.
Plans have not been reviewed by budget analysts or the governor’s office. Plans could change if the economy recovers or lawmakers approve different cuts or find new funds.
Nevertheless, the budget-cutting scenarios give Oregonians a concrete idea of what to expect if they reject the 2003 Legislature’s money-raising package, and lawmakers don’t return to Salem to redo the state’s two-year budget.
“The question that Oregonians have to ask themselves is, ‘Is this the kind of state they want to live in?’” said Sen. Kurt Schrader, D-Canby, a chief architect of the Legislature’s 2003-05 budget.
The cuts are straightforward, Schrader said, because the Legislature passed a companion bill along with its tax package, spelling out where to reduce spending if the package is overturned in a voter referendum.
Mostly, the cuts are things lawmakers restored to the budget after they agreed to the tax-raising package, Schrader said. As a result, he said the cuts return the budget to the bipartisan “co-chairs budget” released last spring, after months of hearings and debate by panels of House and Senate members from both parties.
There were no scare tactics or “hostage-taking” by administrators in the proposed cuts, Schrader said.
Rep. Randy Miller, R-West Linn, disagreed. He opposed the tax hike and was co-leader of the legislative budget committee along with Schrader.
“I think it was a clear calculation by the supporters of the tax increase to make the cuts as painful as they could make them,” Miller said.
The cuts would take effect May 1, during spring primary races for legislative seats. That also is a month before lawmakers agreed to return for a special session on tax reform.
Miller predicts lawmakers will return to Salem in late March or April to OK alternate cuts if Measure 30 fails. They might also approve some less-controversial elements of the $1.2 billion tax package, such as an expiring 10-cents-a-pack cigarette tax, Miller said.
Miller acknowledged lawmakers won’t return unless they reach consensus on a budget-balancing plan. Lawmakers say they dread the idea of an open-ended session in the midst of re-election campaigns.
There’s no political consensus in the Capitol right now to pursue an earlier special session, said Chuck Deister, spokesman for House Speaker Karen Minnis, R-Wood Village.
Defeat of Measure 30 would put a $780 million hole in the 2003-05 general fund. House Bill 5077 spelled out dollar-for-dollar cuts if voters rejected the entire tax package.
However, one provision limited the cuts to $545 million if part of the tax package survives, under the assumption opponents might only overturn the $545 million income-tax hike in the plan.
The referendum crafted by Citizens for a Sound Economy and other anti-tax groups wound up challenging the entire tax package except for two industry-supported health-care taxes. As a result, HB 5077 requires only $545 million in automatic cuts. The remaining gap might have to be plugged with reserves and $85 million in across-the-board cuts, unless lawmakers redo the budget.
At a minimum, the law requires $299 million cut to education, $188 million to human services and $58 million to public safety.
The Oregon Health Plan potentially is hardest hit, because of the way the law was worded and because it gets all the tobacco tax money.
The cuts essentially would leave Oregon with a standard health-plan mandated by federal Medicaid rules, without the added services of the Oregon Health Plan.
“There isn’t anything we can do that isn’t painful any more,” said Jean Thorne, Department of Human Services director. “We’re forced to put on the table cuts that will end up costing us elsewhere, and will not be the best policy.”
Most coverage not required by Medicaid rules would be ended, Thorne said.
That includes the basic benefits offered to 50,000 people not part of the traditional Medicaid population, plus children and 2,000 pregnant women who are above the poverty level.
Roughly 250,000 remaining people on the plan, mostly the traditional poor, disabled, and single mothers on welfare, stand to lose dental coverage, vision, mental health and substance-abuse services. They also face higher prescription drug costs.
Thorne will ask the Legislature to protect drug benefits by shifting money left in the senior services budget. Lawmakers hoped to restore services to 1,200 seniors, but Medicaid officials have not allowed that, for fear a successful referendum would yank them off services after Feb. 3.
Public school districts face the loss of at least $285 million, or $364 million if they take their share of across-the-board cuts, Legislative Revenue Officer Paul Warner said.
If districts wait and take all the spending cuts in the 2004-05 school year, they would lose $1 out of every $7 in state aid for that year.
“It once again creates chaos in terms of how they plan,” said Susan Castillo, state school superintendent.
Each district will cope in different ways. Some school districts are holding back money this year, presuming the tax hike will go down.
“A lot of districts have been living with larger class sizes because they didn’t know what to expect,” Castillo said. They’ll have less of a hit next year.
Castillo’s office calculated if the minimal state cuts are absorbed solely via higher class sizes, that would raise class sizes by two to three students, on average. If all the loss was absorbed by cutting the school year, that would lop nearly three weeks off the calendar come May and June of 2005.
That is going to make it even tougher for Oregon to meet the stiff quality improvement goals of the No Child Left Behind Act passed by Congress, Castillo said.
No layoffs are projected in the state’s Department of Corrections. However, there might be a huge impact on counties who agreed to jail low-level felons under a 1996 agreement with the state.
Counties would lose one-third of their state funds to house those criminals in the second year of the budget cycle. Some counties may decide simply to ship those felons back to state penitentiaries, along with the insufficient state aid to house them. Other counties might reduce or eliminate mental-health treatment, sex-offender treatments, or post-release supervision.
The Oregon State Police estimates its forensics program would lose 60 positions. That would make it harder to prosecute and solve crimes, especially in rural areas that depend on the state’s sophisticated crime labs, officials said.
Possible budget cuts
Partial list of cuts proposed by agency chiefs if voters overturn Measure 30 on Feb. 3
$299 million in state aid to school districts and educational service districts.
Additional across-the-board cuts could bump that to $338 million. That’s equal to $503 per student next school year.
If all the cuts were absorbed with layoffs, that would mean two to four more students per class, on average.
If all the cuts were absorbed by shortening the school year, it would mean roughly a three- week-early closure in May-June 2005.
Oregon University System
Undergraduate studies: $7.5 million
That includes $563,701 for Western Oregon University, $1.8 million for University of Oregon, and $2.1 million to Oregon State University.
$6.8 million (including $813,211 for Chemeketa Community College), resulting in fewer classes and higher tuition.
Oregon Health Plan
Push 50,000 people off OHP Standard health coverage plan.
End coverage for 2,000 pregnant women above the poverty level.
End coverage for children above the poverty level.
End dental, vision, mental-health, and substance-abuse coverage for roughly 250,000 elder, disabled and poor people remaining on regular health plan.
Possibly trim prescription drug benefits for people left on plan.
Other human services
Serve 500 fewer families under the Healthy Start program.
Reduce children’s foster care services.
End gambling addiction services.
End day-care assistance for 325 college students and their 600 children.
End employment assistance for people at risk of going on welfare.
Oregon State Police
$3.9 million for state forensics labs; eliminates 60 positions, or 56 percent of staff.
$6.8 million, achieved by eliminating nonessential spending.
$17.8 million cut in community corrections grants given to counties to house low-level felons.
Reduce district attorney funding $762,440.
Oregon Youth Authority
Scale back plans to re-open youth detention facilities in Warrenton and Burns.
Steve Law can be reached at (503) 399-6615.