Oregon Legislature Completes Act I of Rebalancing the State Budget

Oregon Legislature Completes Act I of Rebalancing the State Budget

Oregon lawmakers convened in a marathon one-day special session yesterday to address a mounting budget deficit created by the coronavirus pandemic and its ensuing economic crisis. Legislators have known since the early days of the pandemic they would be called into special session to recalibrate the state’s budget. In May, state economists projected an extraordinary loss of income tax and lottery revenues, the primary funding sources for government programs, signaling an inevitability for a special budget session over the summer.

In the weeks leading up to the special session, many, including lawmakers, wondered if the legislature would tackle policy matters as part of the special session. In June, the legislature convened in a special policy session to begin a conversation on policing reforms and provide targeted relief to individuals and employers affected by the pandemic. The legislature tabled many issues, including a contentious debate over limited liability protections for businesses abiding the governor’s public health rules and guidance, leaving many to wonder if the special budget session would also entertain the same flavor of general policymaking. Ultimately, the legislature settled with a narrow focus for this special session, with discussions ongoing over a possible special policy session in September to address lingering issues.

The legislature formally introduced 12 measures for the special budget session. Those measures rebalance the budget, enhance state unemployment insurance benefits, and build on the earlier efforts for policing reform. Nonetheless, it would not be the Oregon legislature without a few brief moments of controversy and at least one dead bill. In an afternoon committee meeting, Sen. Betsy Johnson (D-Scappoose) joined her Senate Republican colleagues in voting down a measure forgoing the adjudication process required for certain educational employees to receive unemployment insurance between terms, holiday breaks, and school years. Democrats in support of the bill argued the streamlined approval would ease the claim processing backlog at the Oregon Employment Department, freeing up staff time for other claims. Meanwhile, Republicans objected the special treatment would be unfair to everyone else and amounted to “cutting in line” for unemployment insurance. In the beginning moments of the Senate’s evening floor session, the governor’s office sent out a press release criticizing Republicans saying, “It’s appalling that Senate Republicans today voted down a common sense fix to the unemployment process.” Republicans, frustrated over the statement’s failure to acknowledge the measure died because of bipartisan opposition, ignited a tense floor debate over rhetoric, procedural rules, and the protests in Portland.

After a long evening of floor proceedings and votes that extended until nearly midnight, the legislature completed its business for the special session and adjourned. Lawmakers rebalanced the state budget through targeted reductions, resource adjustments, and reserve allocations. These maneuvers allowed the legislature to balance a nearly $1 billion budget deficit without significant cuts to core government services. Nonetheless, the special session is likely only the beginning of the legislature’s work to balance the budget. In September, the state economists will provide an updated revenue outlook, and, given the ongoing economic volatility, the legislature may need to revisit the state budget. Needless to say, the fiscal debates over the budget and its funding mechanisms are likely to be the dominant political issue for the foreseeable future.