The November 2010 campaign season couldn't ask for a more dramatic kickoff than the gloomy budget outlook released last week by the Governor's Reset Cabinet. The report starkly describes Oregon's looming bottom-line challenges. And through its timing and its conclusions, it nudges voters to ask the following question: Which gubernatorial and legislative candidates should be sent to Salem for the crucial 2011 session?
The answer begins with the nature of the problem, which, simply stated, is that Oregon probably won't have enough money to provide services at current levels for many years. The general fund shortfall for the 2011-2013 biennium alone could hit $2.5 billion.
Two and a half billion is a big, scary number. But the most meaningful element of the budget equation is the "current service level" concept, which the Reset Cabinet's report describes as a "business-as-usual benchmark." It assumes that the state government will continue not only to provide the same services, but also to cover, unchallenged, the ever-escalating costs of doing so.
Costs increase for a number of reasons, including the salaries and benefits earned by the people who provide services. Thus, according to the Reset Cabinet, will "current service level" spending in 2011-2013 reflect an increase of almost $800 million in personnel costs. These include the elimination of furlough days and accumulation of tenure-related ("step") pay hikes ($148 million); maintenance of current health benefits for state workers ($104 million); potential 2011 "cost of living" pay hikes ($114 million); and, of course, increased state and school district PERS costs ($430 million).
Meanwhile, the demand for safety-net services, frequently cited as a reason for government growth during difficult times, is expected to account for an increase of only $350 million.
The anticipated shortfall, again, simply reflects the gap between anticipated revenues and anticipated "current service level" expenditures. That gap can be narrowed or eliminated either by collecting significantly more money, which the Reset Cabinet doesn't consider likely, or by clamping down on spending. And to control spending, the state must cut services or rein in the pay and benefits earned by people who provide those services.
None of these options is pleasant, yet the next governor and the 2011 Legislature will have the unenviable task of making the state's expenditures match its revenues. It will, in fact, be the most important - and difficult - task state leaders face next year. And that means legislative and gubernatorial candidates should embrace it as a campaign issue. How would they address the state's budget shortfall, and how is their approach better than their opponent's?
Voters should recognize, too, that in November they'll be selecting people not only to address the shortfall, but also, in doing so, to reshape state government. Gov. Kulongoski created the Reset Cabinet, but his successor - Chris Dudley or John Kitzhaber - and next year's Legislature will consider the options the panel ultimately develops.
The five months between now and November should give candidates plenty of time to think and talk about the problem.
- Wescom News Service (Bend Bulletin)