Forty budget binders line the shelves of my Capitol office. I have been pouring over the Governor’s Recommended Budget (GRB) for three months, trying to understand how in these times of diminishing revenues he can propose huge expansions of the Oregon Health Plan. At times I feel like the banker in the old picture, who sits next to his lamp, scrutinizing columns of figures while wearing a green visor and rolled up sleeves.

I am disgusted with what I have discovered. It is clear to me the GRB’s budgetary strategy is to (1.) ignore the economic recession burdening average citizens, (2.) drastically cut programs serving Oregon’s most impoverished citizens, and (3.) enable restoration of those desperately needed programs, only through new taxation.

Instead of cutting bloated bureaucracy, retracting 30% pay raises ($358 million) for his top lieutenants, and prioritizing core government functions--statewide public safety, education and vital services for Oregon’s most impoverished--the Governor’s Recommended Budget was designed to coerce compliance. As you will see from the examples below, such political shenanigans violate public trust, discriminate against the disadvantaged, and give public service a bad name. In my opinion, irrespective of party, it is every legislator’s duty to expose such “trash and tax” budgeting schemes and work to curtail them. (See Footnote 1)

Consider the following:

Governor Cuts Prescription Benefits from Oregon Health Plan.
The Oregon Health Plan (OHP) provides health benefits for low income Oregon residents. Approximately 450,000 Oregon residents are currently covered by OHP Plus at a cost of $5 Billion (See Footnote 2) . One of the OHP’s vital life-saving benefits to chronically ill patients is payment for prescription drugs. Hundreds of thousands of men, women and children rely on the OHP for their live-saving medications. Notwithstanding the dire consequences, the OHP prescription drug benefit will be terminated for all (non-pregnant) adults under the Governor’s Recommended Budget (GRB). These OHP Plus patients will lose their medications as of July 1, 2009, unless there is a way to avoid this catastrophe. There is.

Buried in the Division of Medical Assistance Programs (DMAP) budget binder is the following:

“The DMAP GRB includes two reductions…that would eliminate OHP prescription drugs for a combined General Fund savings of $110 million.

…These reductions are restored…by using $100 million from a new tobacco tax and $10 million from [additional] health care provider taxes." (OMAP 2009 Budget Binder, EBL-GRB, p. 21.)

In other words, this prescription drug benefit will be terminated unless the Legislature passes and voters ratify, (1.) a 60 cent per pack cigarette tax increase, (2.) a corresponding additional tax on other Oregon tobacco products, and (3.) a new “provider tax” on Oregon’s largest hospitals that will increase the cost of medical care.

What is the Governor thinking? If the Governor’s cigarette tax increase is added to the new federal cigarette tax hike implemented on April 1st, the cost of cigarettes would increase by $12.10 per carton. Such a cost increase would cause a dramatic drop in retail purchases of cigarettes in Oregon. Consequently, the Governor’s dream of generating an additional $100 million of new revenue will go up in smoke. What happens when there is not enough revenue to restore this $110 million drug benefit? Oregon’s chronically ill, poverty-stricken citizens are the ones who will suffer…NOT the Governor.

Governor Cuts 83% of Community Alcohol & Drug Treatment GF Funding
Alcohol and drug addiction is a terrible blight on our society. The costs of addiction to individuals, marriages, families, neighborhoods, schools, businesses and communities are incalculable. Approximately 500,000 Oregonians need help to overcome alcohol and/or drug addictions, and 62,773 are currently receiving state-funded residential or out-patient addiction treatment. Unfortunately, the Governor has proposed an 83% cut in A & D treatment programs in his budget. Imagine what costs to society would result by effectively defunding our community-based A & D programs. Family abuse, drunk driving fatalities, criminal arrests and shattered lives will all rise. Why would the Governor propose such a high cut from the A & D Treatment budget, while leaving many other human services budgets with much lower reductions? The answer…coerce the state into passing a Beer Tax. Under current distribution formulas, every penny of new beer tax would result in $12.7 million of restored funding for the Alcohol & Drug Treatment programs. Thus, the first three cents of a new beer tax would fully restore current levels of state funding for alcohol and drug treatment. The remainder of the new beer tax would be gratis.

Governor Cuts Health Care for 28,000 Oregonians and “Redirects” $97 Million.
There are 28,000 impoverished Oregonians who have health benefits in the OHP’s “Standard” plan. The costs for OHP Standard coverage have been paid by “Provider Taxes” willingly paid by health organizations since 2005. This Provider Tax will sunset on October 1, 2009, and when it does there will be $97 million of Provider Tax revenue sitting in the OHP Standard account—enough money to extend coverage for all 28,000 Oregonians for nearly two additional years. Instead of allowing the provider tax revenues to pay for the intended health coverage, the Governor’s budget eliminates the health coverage for all 28,000 Oregon citizens as of September 30, 2009. The entire $97 million will then be taken and spent on other programs. BUT, the Governor has proposed a way to maintain the health insurance for these 28,000 Oregonians. All we have to do to fund the OHP Standard Plan is pass a new “Hospital Provider Tax” on Oregon’s largest hospitals. If passed, the Hospital Provider Tax would generate the funds necessary to maintain OHP Standard health benefits for the 28,000, plus tens of thousands of other uninsured Oregonians.

The three examples above are all from just one agency, DHS. I hope I have made my point. In two years we will have a new governor. He or she will be elected in November and will be expected to publish the next “Governor’s Recommended Budget” less than one month later. Obviously, a new governor will be relying in great measure on the assistance of experienced state advisors from the agencies and from the Budget and Management division of DAS. These experienced state advisors have the opportunity in the interim to meet with leaders from the Legislative Fiscal Office and work together to determine an improved GRB format. The Legislature has a constitutional mandate to craft a balanced budget that reflects the realities of the economic times in which we serve.

The Legislature will do a better job for Oregon if the next Governor’s Recommended Budget provides a well-reasoned and rational starting point, and not a “trash and tax,” wish-book policy budget, balanced on multiple and mythical tax increases.

In the current legislative session we have wasted months of valuable time working around instead of building on the GRB. Next time, with prior planning and a new governor, it could be a much more effective and efficient process. This newsletter is a request to our seasoned state and legislative economic advisors to change the way Oregon’s budgets are drafted, crafted, and implemented. We can do better.

Sincerely,

Dennis Richardson
State Representative

Footnotes
1. I am not commenting on the advisability of the proposed tax increases mentioned in this newsletter. My focus here is on the Governor’s tactic of placing vulnerable citizens in peril in order to coerce his desired tax increases.

2. Since the OHP includes federal Medicaid, TANF and CHIP patients, most costs are shared--the federal government pays approximately 62% and Oregon taxpayers pay about 38%. The federal payment is referred to as the “federal match rate” and is higher for children health insurance and some other plans. In addition, Oregon may qualify for a 9.13% temporary federal match bonus payment under the President’s Stimulus Plan.

Eliminate Gas Taxes: New Solutions for Oregon’s Roads & Bridges,” surveyed the issue of how best to deal with increasing costs of maintaining Oregon’s bridges and roads, while gas tax revenues in the years ahead will decrease as a result of vehicles getting better gas mileage or using alternative sources of energy. Nearly two hundred readers responded with ideas and opinions.

As you can see, the survey responses spanned the spectrum from those who want no taxes at all, to those who have well-reasoned, thought-provoking concepts addressing the issue of future funding for transportation infrastructure. A summary of the responses can be accessed by clicking here.

Finally, an interesting and thorough analysis of the issue of mileage-based transportation tax can be found at the Road User Fee Task Force website.

Know Your Legislators: Representative Sherrie Sprenger
Representative Sherrie Sprenger serves the citizens of House District 17, which includes Marion and Linn counties, and the communities of Sublimity, Waterloo, Gates and Detroit.

Representative Sprenger grew up in Lacomb, Oregon--south of Stayton. She currently lives with her husband and son, not far for where she grew up. Representative Springer is the owner of a small business, Springer Radio Communications. Her business sells two-way radios. After years as a law enforcement officer, in 2007, Rep. Sprenger graduated from Corban College with a Bachelors of Science Degree in Management and Communications.

In addition to her business responsibilities, Representative Sprenger has a history of serving her community. She has chaired the New Hope Pregnancy Center Board, served as a member of the Oregon School Boards Association’s Legislative Policy Committee, and has taught Sunday school at her church. She also served as chair of the Lebanon Community School Board.

Representative Sprenger was sworn in on February 4, 2008, the opening day of last year’s Special Session. Linn and Marion county commissioners appointed her to replace Representative Fred Girod who was appointed to the Oregon Senate. Rep Sprenger was elected to her first full-term in last November’s general election. This session Representative Sprenger serves on two committees. She is the vice-chair of the Education Committee and a member of the Revenue Committee.

Contacting Your Elected Officials
To contact your elected officials, click here.

Tracking Current Legislation
To track legislation currently being considered by Oregon 2009 Legislature, click here.

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