Oregon News

Lawmakers plan on $10.2 billion state school fund

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By PETER WONG
Oregon Capital Bureau

A $10.2 billion state school fund for the next two years — up from the $9.9 billion originally proposed by Gov. Tina Kotek and legislative budget writers — is likely to emerge soon for a vote of the full Oregon House.

The proposed increase was made possible by the state’s latest economic and revenue forecast, released May 17, which now projects almost $2 billion more available for lawmakers to spend in the next two-year cycle that starts July 1.

Democratic legislative leaders also announced $140 million, slightly more than Kotek sought, for schools to focus on improving reading skills of students. That will go into the Oregon Department of Education budget.

“We are giving our educators the tools they need to best support our young learners as they develop critical reading and writing skills, helping our students thrive in school and life,” said Rep. Jason Kropf, a Democrat from Bend who has led the effort on literacy programs.

Combined with anticipated local property taxes, Oregon’s 197 school districts will have an estimated $15.3 billion for operations in the next two years. The state school fund, drawn largely from income taxes and Oregon Lottery proceeds, provides roughly $2 for every dollar from local property taxes excluding bond issues.

Excess corporate income tax collections, also known as the corporate kicker, are projected to add another $1.8 billion into the state school fund. That amount is excluded from calculating the base for future budgets. Schools also get federal aid, based largely on the number of students from low-income households.

Schools sought more

School advocates had sought a state school fund of $10.3 billion.

But as the Legislature’s education budget subcommittee prepared Tuesday, May 30, to approve the larger state school fund in House Bill 5015, the unanswered question is whether the continuing walkout of Republicans from the Oregon Senate will derail that and other pending budgets. The walkout — which denies Democrats the two-thirds majority required to conduct any business — passed the three-week mark as the Memorial Day weekend approached.

No sooner did House Speaker Dan Rayfield of Corvallis and Senate President Rob Wagner of Lake Oswego announce the new amount on May 23 that majority Democrats and minority Republicans jockeyed for political position as to which party should get more public credit for boosting the number. The jockeying was similar to what happened two years ago, when all House Democrats voted for and all House Republicans voted against the amount proposed by legislative budget writers. (Because of a similar but smaller corporate kicker, the state school fund got $851 million more in 2021.)

The 2023 session is scheduled to end by June 25, its 160th day. The session can be extended in five-day increments, but only by two-thirds majorities — a provision of the 2010 annual sessions measure that has never been invoked and is unlikely to gain support from dissident Senate Republicans. Kotek or simple legislative majorities can call a special session, though it would require bills to be reintroduced anew, since unlike an extended session, there is no carryover.

When he met with reporters on May 23, Rayfield said the increased state school fund and spending on reading skills represent the first of several proposed spending enhancements for the top priorities Kotek and Democrats have listed since the start of the session. Others to come, he added, are for homelessness and housing, behavioral health, climate change, and rural development and drought relief.

“The increased revenues allowed us more flexibility to deliver on some of those priorities,” Rayfield said. “Here’s the first in a tranche of things we are going to do as we wind our way out of here.”

Walkout effects?

The Senate walkout has resulted so far in nine Republicans and one independent originally elected as a Republican being ineligible to seek re-election under a constitutional amendment that Oregon voters approved last year in an effort to thwart walkouts — although they may be positioning themselves to challenge the measure in court. One Republican (Fred Girod of Lyons) has been on medical leave, and Republicans Dick Anderson of Lincoln City and David Brock Smith of Port Orford have not joined all the walkouts. Democrat Chris Gorsek of Gresham also has been out on medical leave, so there are just 16 Democrats.

“When you have 10 Republicans in a situation who are refusing to come back, that jeopardizes much of the agenda of the things Oregonians are looking for to pass. So I think that is the reality on the horizon,” Rayfield said. “But in the House, we have been keeping our heads down. Our job is to communicate our vision for Oregon in the next couple of weeks.”

The House, in votes falling largely on party lines, has approved bills to safeguard access to abortion and other reproductive and gender-affirming care, ban guns made with untraceable parts and limit some sales to people between 18 and 21, and use Medicaid records for automatic voter registration starting in June 2026. The first two bills originated with work groups named by Rayfield and House Democrats last year. But Senate Republican Leader Tim Knopp of Bend, an ardent opponent of abortion, says he considers the first two bills extreme and has vowed to block Senate votes on them.

Because they have already gone through the joint budget committee, the Senate can take only up-or-down votes on those bills.

Knopp has also announced that Senate Republicans are willing to return on June 25, the scheduled final day of the session, to deal with budgets. But in effect, it would give a veto to minority Republicans, because two-thirds majorities are required to suspend rules and advance bills at the close of sessions.

He said in a statement: “We guarantee that we will be back before constitutional sine die to address the issues most important to Oregonians — homelessness, affordable housing, public safety, cost of living, job creation, and fully funded education.”

In 2019, Senate Republicans declined to take up legislation creating a corporate activity tax until Democrats dropped other priorities, such as requirements for firearms storage and a narrowing of exemptions from vaccination requirements. Democrats did so, although the Legislature did pass gun-storage requirements two years later. The corporate activity tax did pass, though without Republican support, and took effect in 2020.

In 2020, Republicans in both chambers walked out to thwart a vote on climate-change legislation, and Democratic leaders shut down the short session a few days ahead of the constitutional deadline, although Republicans offered to return to complete action on budgets. However, most bills and budgets were left on the table — and then the coronavirus pandemic emerged, prompting three special sessions of the full Legislature and a record 13 sessions of the Emergency Board, the group that makes budget decisions between sessions.

“That is not negotiating in good faith. That is hostage taking,” Rayfield said of Knopp’s announcement.

“It is frustrating. But it does not change how we operate in this building. We still have a job to govern and communicate our vision for all Oregonians.”

Spending questions

Because of a measure that Kotek signed in mid-May, agencies have spending authority at current levels through Sept. 15, plus the spending authority contained in homelessness-and-housing packages ($217 million) and semiconductor siting aid ($210 million) that lawmakers passed and Kotek signed earlier this session.

But most agencies still await action on their next two-year budgets, which start July 1.

The governor recommends a single budget for state government, but lawmakers approve a series of agency budgets and other spending bills that fit a framework devised by legislative budget writers. There is a budget reconciliation measure at the close of each session to tie up loose ends.

Kotek’s recommended state budget totaled $32.1 billion from the general fund and lottery proceeds — state government spends more, but from federal grants and other earmarked sources — and proposed to divert a 1% contribution from the budget’s projected ending balance into a state reserve fund. That change would require approval by simple majorities in each chamber.

But legislative budget writers instead proposed a 2.5% across-the-board cut in agency budgets, excluding debt repayments, for a budget framework of $31.6 billion.

Rayfield, himself a two-time House co-chair of the joint budget committee, said budget subcommittees are revising their initial spending plans.

“You are still going to have some reductions,” he said. “But they won’t be to the degree we were initially thinking.”

Still, he added, even the large unanticipated boost in available tax collections will not result in the funding of every budget request.

“I have never had anyone come into my office and ask for less money,” he said. “The need is great when it comes to housing, behavioral health, and education. But as a state, we have to live within our means.”

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