Oregon Legislature’s budget ‘rebalance’ includes big new spending

In most budget years, the wonky budget “rebalance” is a process that draws little remark. It’s typically concerned with truing up Oregon’s many accounts prior to the official end of the budget cycle at the end of June. This year, with the state still digging out of multiple crises, the Legislature took up a more ambitious package.

A series of bills that passed out of a budget subcommittee Wednesday morning includes $20 million to create or bolster homeless shelters around the state, more than $5 million in wildfire relief for impacted cities and counties, and a $250 million package meant to help students socialize and catch up on missed learning.

“Every two years we close the books on the current biennium [budget],” said state Rep. Dan Rayfield, D-Corvallis, one of the Legislature’s chief budget writers. “Normally that process is very technical. This year the budget reconciliation process is also a part of our response to wildfire, the pandemic and the housing crisis.”

Lawmakers also eased one controversy in the five-bill package, while potentially paving the way for another. The rebalance package offers roughly $20 million to help the state implement Ballot Measure 110, the voter-approved measure that decriminalized low-level drug possession in the state and seeks to ratchet up addiction treatment and services.

Gov. Kate Brown and state lawmakers have repeatedly raised issues with funding set forward in the measure, which they say is set to be dispersed to treatment providers sooner than it could be spent and would come at the expense of other agencies and programs. Proponents of the measure have pushed back, saying the voter-approved funding needs to be available so that treatment, housing assistance and other help can be scaled up. Possession of small amounts of drugs was decriminalized in February.

“It’s really important to get this money to providers right away,” said Tera Hurst, executive director of the Health Justice Recovery Alliance, which pushed Measure 110.

Under the compromise considered Wednesday, the Oregon Health Authority would distribute roughly $20 million to providers to assist patients with rent stabilization, peer mentorship, harm reduction programs and other badly needed services, Hurst said. The funding would also help treatment services that have struggled during the pandemic keep their doors open.

The $20 million in the package is well under the more than $65 million that stood to flow toward Measure 110 implementation from January through June under language passed by voters. Hurst acknowledged that a committee set up to create rules and distribute grant money still had work to do before it could fully function. Under the budget package, a deadline to begin distributing grants to treatment clinics around the state would be delayed from October 2021 to January 2022. Funding for that process will be decided as part of the upcoming 2021-23 budget.

“What we’re saying is we recognize all the money is not going to go over there,” Hurst said. “But we need money in the fund because there are services that really need to be funded right now.”

Lawmakers also took a step that has raised concerns in the past. The committee voted to move roughly $15 million into a series of funds controlled by the state’s Department of Administrative Services and the Department of Justice. The transfer was designed to ensure the agencies did not run into budget trouble, after lawmakers had taken money from the funds in past votes.

But the $15 million shift also ensured that the money will not be transferred to the state’s general fund as scheduled. That could decrease the amount of a projected $570 million “kicker” refund to taxpayers, Legislative Fiscal Officer Laurie Byerly said. If a forecast issued last month remained the same, the amount returned to taxpayers in next year’s tax returns would be reduced to $555 million, but Byerly noted many other factors could impact the size — or even existence — of a kicker refund.

In 2019, a similar funding shift drew outcry, after it decreased a “kicker” refund set to flow back to taxpayers by $108 million.

Republican lawmakers on the budget subcommittee were clearly on guard about the transfers. While none raised an issue with the reason for moving the $15 million in question, Senate Minority Leader Fred Girod, R-Lyons, and House Minority Leader Christine Drazan, R-Canby, questioned whether a set of other scheduled transfers into the state general fund could be delayed in order to reduce the amount eligible to flow back to citizens.

Byerly said a delay of those transfers could reduce the ending general fund balance enough to eliminate the kicker. “If all things were to stay the same as of the March forecast, it would be enough to stop the kicker from kicking,” she said.

It’s unclear whether lawmakers have any plans to push transfers out past June, which would make them ineligible for inclusion in the kicker. Legislators did vote Wednesday to delay a series of shifts to the general fund from May to June 30 as part of the rebalance package.

The rebalance package included a series of other big investments, paid for by roughly $307 million sitting in the Legislature’s emergency fund. Among them:

• $250 million would flow to a summer school package top Democrats have touted in recent days as a way to help students catch up on learning hampered by the COVID-19 pandemic, as well as to help younger children socialize. The package has largely been applauded, but also subjected to questions from some rural lawmakers who worry money will not flow to their districts. The Oregon Education Department will report to the Legislature in May about its plans for the fund.
• $20 million would be spent to set up “navigation centers” — shelters that help homeless people connect with services — in Eugene, Salem, Bend, Medford, McMinnville and Roseburg. Money for the centers had been part of a bill being pushed this session by House Speaker Tina Kotek, D-Portland. Approval of the budget package would speed it up. The package also includes $2 million for the Bybee Lakes Hope Center, a shelter that set up shop last year at the site of the formerly unused Wapato Jail in Portland.
• Roughly $5.2 million would help 11 cities and counties pay for costs related to the 2020 wildfires. “I see this as merely a small start to a huge problem,” Girod, who lost his home in Lyons during the September blazes, said of the funding. “To be honest the dollar amounts for me, especially into some of these small cities, if anything is not adequate.”
• Nearly $3 million would go to the Oregon Food Bank for “emergency food purchases.”

The subcommittee votes Wednesday were only a first step in pushing the budget package through the Legislature. The bills are slated to go before the full budget committee on Friday, and will then move to the full House and Senate.