Oregon’s structural deficit

It is time for straight talk. It is time for the Governor and Legislature to have an honest discussion with Oregonians. Someone must take the leadership to deal with Oregon’s structural deficit because sustainable revenues are oversubscribed by unsustainable costs. General Fund and Lottery Fund dollars simply cannot support all the demands placed on them by Legislative policies and populist budgeting.

The time for solutions is now. To continue to think and act as though new fees, taxes, one-time sources and tomorrow’s economy will save us is shear folly. It is time to decide how much we have to spend, set our priorities and budget accordingly. The governor’s ’05-’07 proposed budget dodges the structural nature of our problem and unfortunately Senate Democrats have fallen prey to the same thinking. The Senate Democrats’ recent unilateral announcement demanding $400 million more for K-12 funding is perplexing, not because the level of funding is inappropriate, but because there is no regard as to the source of the money.

It is often said that government cannot be run like business. However true this may be, if we do not apply sound business principles we will doom Oregon to the ranks of mediocrity or worse. The problem is quite simple. We have policies and programs that cannot be sustained. The solution is also quite simple, but one that few are willing to confront. It is time for the governor and legislature to emerge from a severe case of denial and create the framework to thoughtfully eliminate programs.

In the business world, when revenues of complex companies do not cover expenses, several things are done. Costs are contained, efficiencies are pursued, the company’s lines of business are analyzed to refocus on core business activities, and the least productive lines of business are either sold or closed. For Oregon, it is clear that the wage and step freezes of the ’03-’05 biennium will not continue. It is also clear that efficiencies will never eliminate our structural deficit. What has not been addressed is the most difficult of all. What lines of business are we going to do without? While across the board cuts, or "thinning the soup" can be sustained in the short term, what we now need is a long-term business solution.

The recent announcement of a $202 million increase in estimated revenues for the ’05-’07 biennium is good news, but is far from sufficient to close the structural deficit we face. We remember the sincere and painful efforts made through five special sessions to reduce costs. The 2003 Legislative Session held to the belief that a temporary tax increase would provide a bridge to better times. Well, better times never came with Measure 30, and even if Measure 30 had passed, we would now be confronting an even greater structural deficit. Voters have made it very clear. Increased taxes and fees will not be available to solve our structural deficit. We have no choice but to thoughtfully eliminate programs.

Creating the process to obtain agreement on what now to eliminate may well be the greatest challenge in the history of the Oregon Legislature. Senator Kurt Schrader (D-Canby) and I have introduced a plan (SB 470) that creates a template for fiscal discipline and could be the model to thoughtfully craft the state’s budget. It requires that a "size of the pie" General Fund/Lottery Fund appropriation bill be passed no later than March 31.

Once the total available revenue or "size of the pie" is set, our budgeting subcommittees then would know the maximum dollars they have to allocate to the many programs and agencies. The Joint Ways and Means Committee process would determine what stays and what goes. The committee’s final budget bills would then be referred to the House, Senate and Governor for approval.

The task before the Ways and Means Committee, all legislative members and the Governor will be painful. We must focus on creating excellence in the core government functions that will truly build a strong Oregon. In this process we must have compassion and discernment. We must distinguish between those who "need" and "cannot" and those who "need" and "can." However difficult the task, we must eliminate programs and live within our means.

Senator Frank Morse (R-Albany/Corvallis) can be reached at [email protected]