Details of Governor’s budget reveal bright spots; final decisions long way off

A 5.3 percent general fund increase for Oregon State University and the other members of the Oregon University System is part of Gov. Ted Kulongoski’s recommended budget for the new biennium, released last week.

(To see OSU President Ed Ray’s comments on the Governor’s budget, click here.)

Much of the proposed increase would go to a larger capital construction program, including renovations at Strand Agriculture Hall and completion of work at Education Hall, and a phase-in of debt service from prior biennia capital projects.

The governor’s proposal, which goes to the state Legislature for consideration when it convenes in January, includes a 1.7 percent reduction in OSU’s statewide public service programs (Agricultural Experiment Station, Extension Service, Forest Research Lab).

A glass-half-full view of the budget, said Jock Mills, OSU government relations director, is that the Governor’s proposal has $53.1 million more in general and lottery funds than the budget approved by the Legislature for the current biennium ($949.5 million vs. $896.4 million). Many other state agencies faired far worse, especially considering their increased case loads and costs.

For a glass-half-empty view, Mills said, the general funds devoted to higher education classroom services are 4.3 percent below the essential budget level – the level of funding necessary to provide the current level of service.  The Governor’s overall budget also relies on a number of tax proposals such as increasing the corporate minimum and cigarette taxes, both which were included in the Governor’s budget last biennium, but were rejected by the Legislature and Oregon voters.

The Dec. 1 budget release by the Governor is a first step in a long process that is largely dependent on future economic forecasts.  In the midst of a national recession, the proposal demonstrates an intent to minimize the damage to education programs across the entire spectrum, from pre-kindergarten through graduate school, Mills said.

But whether the proposal sticks will depend on an economy that is far more turbulent and uncertain than in previous biennia, he said. “With no expectation of a favorable forecast on the horizon, it is probably safe to say that it won’t get any better than this, and it could get far worse.  Nevertheless, given the prudent actions we have taken in the past, and our focus on managing our funds, OSU is about as prepared as we can be to address the upcoming challenges.”

The next significant step will be in late February when the state economist delivers the next quarterly revenue forecast.  It will indicate whether further cuts need to be taken during the current biennium while also will guiding the development of an alternative budget to be crafted by the Joint Ways and Means Committee chairs.

Legislators will not make any final decisions until May when the next quarterly forecast is issued.  That forecast will include information about income tax receipts based on the April 15 tax deadline, and will be used to guide “final” budget decisions, Mills said. “I use ‘final’ because it is likely a number of decisions will be postponed to February 2010, when the Legislature is likely to reconvene in another supplemental session.”

To read the press release that outlines the Governor’s Recommended Budget, click here.

For more detailed information, use this link to the higher education section in the Governor’s Recommended Budget. (Once in the PDF, go to page B-14. While you will find a number of interesting elements in the document, you will not find a definitive way to determine the extent of reductions from the current level of spending — the Essential Budget Level which is the amount that would be required if the same level of service provided this biennium were to be extended to the next one.)

For a summary of the Governor’s Recommended Budget prepared by the Oregon University System, click here.

For a link to a release from Senate President Peter Courtney (D-Salem) and Senator Margaret Carter (D-Portland) taking the budget to task for its cuts to human services and corrections, click here.

A press release from Senate Republican Leader Ted Ferrioli (R-John Day) criticizing the taxes included in the Governor’s proposal and calling for greater fiscal restraint appears here.

For a link to a release from Speaker of the House designee Dave Hunt (D-Clackamas County) calling the effort a good first step but in need of work, click here.

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