Where Does The State Spend Money?
Why does Oregon’s budget crisis matter to me?
What does “education, health care and public safety” really mean?
Where does the money in the Oregon budget come from?
What kinds of taxes do Oregonians currently pay? Is this similar to other states?
Is Oregon a high-tax or low-tax state?
Why are we in this budget crisis?
I’ve heard that the state budget has actually grown 25% since the recession. Is that true?
What is the projected General Fund budget for the current budget?
If we have a billion dollars more this year than we had last year, why is there a problem?
Are public employees overcompensated?
Lots of people in the private sector have been laid off–shouldn’t we lay off public employees too?
Why is Oregon’s unemployment number so high?
What about Measures 66 and 67, which passed last year?
Did Measures 66 and 67 chase away businesses and high-income taxpayers?
Why does Oregon’s budget crisis matter to me?
More than 90% of the state budget goes to education, health care and public safety. Deep cuts to the Oregon budget necessarily impact these services, affecting every Oregonian.
The effects of this recession aren’t letting up. Despite record corporate profits, Oregon’s unemployment remains above the national average. That means that more and more Oregonians are having to turn to emergency services just to make ends meet. Cutting these services just when they’re needed most is unfair and irresponsible.
In December 2010, demand for food stamps grew to a new record. The number of Oregonians receiving food stamps now stands at 748,886.
Massive budget cuts will also mean thousands of lost jobs, affecting our local economies. This will be felt most in Oregon’s rural communities.
What does “education, health care and public safety” really mean?
Education, health care, and public safety include:
- K-12 education for 550,000 children
- 85,000 university students and over 400,000 community college students
- In-home care, community-based care, and nursing homes for over 25,000 seniors and people with disabilities
- Oregon Project Independence, which helps seniors stay in their homes and live with dignity and independence
- Health care for between 240,000 and 320,000 children (as the recent expansion of health insurance for children gets phased in)
- Health care services that Medicare does not pay for, like over-the-counter drugs and transportation to and from medical appointments for 105,000 seniors and people with disabilities
- Addiction and mental health treatment for 167,000 Oregonians, including 5,400 Oregonians with severe conditions that require them to be civilly committed
- Financial assistance to 22,000 families in poverty – a number that has increased by 20% as more families fall into poverty as a result of the national recession
- Caseworkers, investigators, foster parents, adoption assistance, and other care for more than 21,000 children who have been victims of abuse and neglect
- Keeping 14,000 convicted criminals off the streets and providing mental health and addiction services to at least some of the 6,000 inmates with mental health problems and 10,000 with a history of substance abuse
Where does the money in the Oregon budget come from?
Oregon state revenue comes from several funds: the General Fund, the Lottery Fund, Other Funds, and Federal Funds.
The General Fund is mostly made up of personal and corporate income taxes collected by the Oregon Department of Revenue. During the 2009-2011 biennium, personal income taxes accounted for 83% of projected revenue. Corporate income taxes made up 7% of the General Fund. The remaining 10% came from things like cigarette taxes and estate taxes.
The Lottery Fund gets its monies from lottery game tickets and Video lottery.
Other Funds come from government agencies which collect money for services, like state driver’s license fees or state parks passes.
Federal Funds come from the national government. The 2009-2011 Oregon state budget included $16 billion in Federal Funds; unfortunately, these were one-time funds from the American Recovery and Reinvestment Act, and Oregon is unlikely to receive revenue of that scope again.
What kinds of taxes do Oregonians currently pay? Is this similar to other states?
Marginal income tax rates in Oregon range from 5% to 11%. The top rate applies to households that make more than $500,000. The range will fall to 5% – 9.9% after 2011. Most Oregonians pay 9% on most of their income.
Oregon is one of only five states in the nation that levies no sales tax.
Oregonians’ property taxes are set by counties.
Is Oregon a high-tax or low-tax state?
In a report for the Council on State Taxation, accounting experts at Ernst & Young compare overall business tax burdens from state to state. The report found that Oregon has the second lowest business taxes in the nation, and the lowest on the West Coast.
While we have higher than average personal income taxes, our overall tax burden is low due to the lack of a sales tax.
Why are we in this budget crisis?
Like every state across the nation, Oregon suffered when the nation-wide recession hit. Many jobs across the state and the nation were lost. Since Oregon has no sales tax, the bulk of general fund revenue comes from income taxes. In fact, 90% of the general fund comes from personal and corporate income taxes.
Despite record corporate profits, Oregon’s unemployment rate remains above 10%, which has a significant impact on tax revenues.
I’ve heard that the state budget has actually grown 25% since the recession. Is that true?
The state’s General Fund–the budget that our tax dollars fund and that legislators make decisions about–fell in real dollars since 2007. The 2007-09 General Fund budget, plus Lottery Fund money, was $14.4 billion. The 2009-11 budget was $13.4 billion.
Some pundits—either intentionally or mistakenly—confuse the General Fund budget with the “All Funds Budget,” which includes Federal money sent to the state to pay for things like Medicare and Food Stamps. Those Federal dollars increased during the recession, because more people were forced to turn to these basic emergency services. Unfortunately, some politicians manipulate this fact as a way to claim that Oregon’s budget is growing.
What is the projected General Fund budget for the current budget?
Current projections for the 2011-13 General Fund and Lottery Fund budget show an increase in revenue, to $14.7 billion.
If we have a billion dollars more this year than we had last year, why is there a problem?
Oregon will have more money in real dollars, but because of inflation, population growth, and rising health care costs, it’s not nearly enough to cover the increased cost of just maintaining current service levels.
That means that to prevent further teacher layoffs, cuts to school days, and seniors being denied basic care, the General Fund would require $18.1 billion to maintain current service levels—nearly $3.5 billion more than we’re expected to have.
Are public employees overcompensated?
Most state employees and university workers make less than $40,000 a year. More than a quarter make less than $30,000.
Total compensation for public employees is lower than in the private sector when comparing educational levels. Starting salaries for some state workers are barely above the federal poverty line for a family of four.
In 8 of the last 20 years–including 2009–state employees have given up cost of living increases in order to preserve health care and retirement benefits. In 2009-11, state employees agreed to an average of 13 furlough days—an average pay cut of 2.5%–in addition to giving up cost of living increases and making other concessions.
Across the state, teachers and educational employees have made salary concessions in order to preserve school days and class sizes in the 2009-10 school year. School districts reduced their staff by an average of 6% in 2009-10.
Lots of people in the private sector have been laid off–shouldn’t we lay off public employees too?
A race to the bottom doesn’t benefit anyone. Public employees are on the front lines, forming the safety net that protects the unemployed, uninsured, and most vulnerable among us. Cutting services will simply shift the burden onto emergency care and law enforcement.
Why is Oregon’s unemployment number so high?
Oregon saw a large increase in unemployment due to the national recession — like every state in the nation. Oregon’s unemployment numbers are slightly higher than average, though. The Oregon Employment Department has conducted many studies to determine additional causes of Oregon’s unemployment numbers. They determined that the two biggest factors are:
- Oregon’s lack of large urban concentrations. Businesses set up shop in states with more populous counties to take advantage of the large labor force.
- Oregon’s mild climate. A mild climate is welcoming to those who have little or no employment and therefore cannot afford a comfortable home.
What about Measures 66 and 67, which passed last year?
Passing Measures 66 and 67 protected our state from an even deeper budget deficit, but Oregon is still feeling the effects of the Great Recession and times are tough. We need to find ways to protect vital services for our most vulnerable neighbors while balancing the budget.
Did Measures 66 and 67 chase away businesses and high-income taxpayers?
Absolutely not. In fact many companies have moved to Oregon or expanded here in the past year.
Check out http://www.oregonopenforbiz.org/ for a list of businesses that have created jobs in Oregon since voters approved Measures 66 and 67.