Oregon’s positive budget outlook leaves more funds for essential programs

Oregon’s state budget paints a more positive picture than what was previously anticipated by budget writers, state agencies and the Governor’s recommendations in December. 

In December, Gov. Kate Brown released her $25.6 billion recommended budget for the 2021-2023 biennium. In this budget projection curated in the months before December, Brown was calling for “strong cost controls” in the Oregon health system, which includes cuts to hospitals and reduction of the CCO quality pool. 

However, things have changed since the release of Brown’s budget. According to Tom Holt, managing partner of the Holt Company, Oregon is an income tax state and most of the income tax comes from the top three quintiles of taxpayers, who are still faring well in the pandemic economy. Funds from the American Rescue Plan Act (ARPA) also provide some extra cushion for the upcoming biennium.

“On the one hand you have this huge human problem of lots of people out of work and small businesses hurting. But from a state revenue standpoint, the trend lines are pretty close to what was expected before the pandemic.”

 

Get the latest state-specific policy intelligence for the health care sector delivered to your inbox.

 

Currently in the budgetary process, the Joint Way and Means Committee is looking into small state agencies and how their budgetary asks compare to the projected revenue forecasts, of which the latest was released in March 2021

The final revenue projection in late May is projected to be positive, according to Holt, and will inform the legislature’s final decisions for the 2021-2023 biennium. 

Since the status of the revenue forecast has changed since Brown’s recommended budget, legislators are waiting for the late May forecast to make any crucial decisions, according to Holt. Budget writers are also revisiting state agency budgets due to the positive revenue projections. 

The Oregon Health Authority (OHA) is likely affected by these new findings in positive ways, as well. According to Holt, it is a little too early to be monetarily certain with the OHA budget. 

“We can’t make any predictions on what big decisions they are going to make about what they are going to fund or not fund, since it is just a little early. But, it is at the point where [legislators] are getting in their budget groove.”

However, Holt expects the Cover All People initiative to get most of what it needs. Other initiatives, like the institution of a public option, are still working on more solid plans of implementation and are not expected to be funded.