Oregon budget begins to solidify with revenue forecast

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SALEM, Ore. (AP) — When they passed an education budget last month that was roundly criticized as inadequate, Oregon lawmakers promised to add extra money if economists grew more optimistic about the state's forthcoming tax collections.

The next state budget begins to solidify this week when economists deliver the quarterly revenue forecast, telling lawmakers how much money they're expected to be able to divvy up. The forecast will also give a strong indication of whether Oregonians can expect to get rebates when they file their 2015 income tax return.

Even before the numbers come out, a wide variety of interest groups are clamoring for a share of the pot. But senior legislators are warning that no matter what the forecast shows, there will be very little money to spend on new or expanded programs.

"We are going to be largely addressing base needs, and there's only going to be a modest amount of funding out there for quote-unquote new initiatives," said Sen. Richard Devlin, D-Tualatin. "In fact, I think very little, to be frank."

The last forecast, released in February, projected the state will take in nearly $18.8 billion during the two-year budget cycle that begins July 1.

That's up nearly 11 percent from the current budget. But because employee salaries and other costs of government are also rising, budget writers still feel the squeeze.

In April, Democrats — who control the House and Senate — approved $7.255 billion in state aid for K-12 schools, despite complaints from education interests that the budget would require some school districts to cut teachers or school days. The funding plan included a promise that schools would get 40 percent of any increase above the February's projection.

"We made this commitment when we passed the K-12 budget because education is our top priority," said House Speaker Tina Kotek, a Portland Democrat.

That leaves very little money for anything else.

Legislative leaders cite a variety of small demands on the budget that add up, from insufficient prison staffing to a shortfall in the budget for employment-related day care.

Further complicating the budget process is the Supreme Court's decision invalidating a large chunk of cuts in the Public Employees Retirement System. While the impact won't affect budgets until 2017, lawmakers may be reluctant to add staff whose retirement costs will rise in the long run.

Among the loud voices pushing for more money is Oregon's higher education community. University and community college administrators say years of declining state funding has forced them to lean more on their students through higher tuition.

In a letter to legislative leadership, the presidents of all seven universities and 17 community colleges say the opportunity for a higher education is out of reach for too many people.

"Like never before, Oregon's public universities and community colleges are aligned to advocate the imperative of improved funding for higher education," the presidents wrote. "Beginning to restore funding after a decade of disinvestment is the right thing to do for students and, ultimately, it is the right thing to do for Oregon's future."

The forecast will also give a much clearer indication whether Oregonians will get tax rebates. Under Oregon's "kicker" law, when the Legislature takes in more money than expected during a two-year budget cycle, the excess money gets kicked back to taxpayers. The February forecast projected a kicker worth about $350 million.

The final determination won't be made until the budget cycle closes at the end of next month and the state tallies the tax revenue. But this week's forecast will show the number after the most volatile period of the year — the April tax-filing season.

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