Oregon’s economic and revenue forecast looks positive for health care
Oregon’s May 2021 Economic and Revenue Forecast released on Wednesday presents a bright outlook. The 2021-2023 forecast paints a better picture than what Governor Kate Brown’s budget reflected in December when the state was projecting “strong cost controls” in the health care system.
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COVID-19 federal aid and tax revenue played a major role in the state’s monetary outlook. According to a summarized report, available resources have increased since the last forecast by more than $1 billion per biennium through 2025-2027. The personal kicker is projected at over $1.4 billion.
Tom Holt, managing partner at The Holt Company, says the additional money will give legislators some breathing room as they work to craft the new state budget.
“It takes the pressure off in being able to meet immediate needs. It is a very substantial upside.”
Legislators expressed relief and excitement with the extra funds the forecast projects. Oregon House Speaker Rep. Tina Kotek said in a press release:
“Today’s forecast is stunning. A year ago, the world was in a free fall. Oregon’s decisions and investments in the face of converging crises have started an incredibly strong recovery.”
According to Holt, HB 2164, known as Cover All People, and wildfire recovery are the highest priorities for this surplus. He says Cover All People was likely to get most of its needed funding before the forecast, but is now expected to be fully funded.
Holt said that giving one-time funds to a continuous program is risky. However, the initial funding could be used to kickstart the program for the future.
“It begs the question, what do you do down the road? If you do fund it all, then you have to figure out where the funds are going to come from when things flatten out more.”
According to Holt, the 988 crisis line behavioral health emergency infrastructure, proposed by HB 3069, could see more support due to the increased available funding. Holt is hoping to see a kickstart to this program and see potential drawn down federal funds as the program rolls out.
More health care related bills that were unlikely to pass due to lack of funding now have a greater chance of being passed into law, says Holt. However, according to Holt, the Legislature is most concerned about wrapping up the session, which will put pressure on legislators to act quickly.
Holt expressed interest in funding one-time infrastructure needs. He suggested potential improvement of government IT systems.
“There are opportunities like that [critical infrastructure], where you can take advantage of it not being a rainy day.”
According to Holt, budget writers are concerned about potential inflation as a result of upcoming higher production costs and strong consumer demand. The summarized forecast report said:
“Some analysts are expressing fears of runaway inflation due to loose fiscal and monetary policy.”
Holt said this surplus is going to make the job harder for budget writers, legislators and lobbyists as they work through the allocation of these funds. The additional funds will make allocation more challenging due to the increase in decisions needing to be made, which will call into question the importance of many non-essential bills and programs.
Using this forecast as a reference, the Legislature will start to pass budget bills and have discussions about fund allocation in committee. Their bills will need to pass before the end of the session on June 27th.