Budget, revenue update & Oregon plan

Making the necessary adjustments to rebalance the current budget Senate Bills 581-A and 5552-A passed out of the Joint Ways and Means Committee on Feb. 27, to reduce spending  for the next four months by $855 million dollars.

 

Oregon’s state revenue is largely dependent upon personal and
corporate income tax. The rapidly deteriorating economy and sharp
increases in unemployment have resulted in very rapid decline of tax
receipts. We now expect that revenue shortfall to be as much as one
billion dollars for the current budget period.
   
The Ways
and Means Co-Chairs and the subcommittee chairs have done an excellent
job of distributing the reductions across the agencies with one
critical exception. The reductions in
funding for the Judicial
Branch of government were so severe that they will result in the
closure of all state courts every Friday from March 13, 2009 through
June 30, 2009.
   
I met with Supreme Court Chief Justice Paul
De Muniz on Feb. 27 regarding those budget reallocations. He stated
that for the need of only $3 million he will be forced to furlough all
Judicial Branch employees for 16 days between now and June 30.  The
chief told me this morning that there are no other available options,;
87 percent of their entire budget is in employees.
   
This
rebalance reduction to the Judicial Branch of government is untenable
and unsustainable. It will wreak a degree of havoc on the Judicial
branch not visited by either the Legislative or Administrative branches
of government. For this reason I was not able to support the bills in
committee last Friday. I will not support the bills on the senate floor
unless the bills are not amended to include the necessary funding to
keep the Judicial branch of government functional.
   
The
next work for the Ways and Means committee will focus on the $3 billion
deficit that we know exists in the 2009-11 budget. Many of us  believe
that the shortfall will be significantly greater. I believe that our
task must include an attempt to completely redesign how state
government serves the people.
   
The Republican Caucuses have
introduced several concepts that we believe will help close the revenue
gap by stimulating job growth. These concepts are all predicated on the
proven model that reducing taxes stimulates business growth and results
in increased state revenue.
   
Reducing Oregon’s income tax by
doubling the income level under each bracket would provide about $375
million in immediate tax relief. Our Legislative Revenue Office (LRO)
estimates that this action will create as many as 20,000 new jobs. The
income taxes generated by those 20,000 jobs would negate the loss in
revenue resulting from the tax bracket change.
   
Reducing
the state income tax withholding by 4.2 percent would put more than
$100 million directly into the private sector economy this year. LRO
estimates this would result in as many as 2,500 new jobs. It would be 
virtually revenue neutral because any taxes due would be collected the
following April 15. Income taxes generated from the 2,500 new jobs
would be additional state revenue.
   
The "Main Street
Incentive Program" consists of Oregon tax credits to encourage home and
business owners to engage in immediate capital improvement projects.
The program would cost less than $200 million in tax credits while
creating nearly 6,000 private sector jobs.

Another concept is
to provide state backed loans or loan guarantees to businesses for
operating capital during the current credit fiasco.
      
The
work required to balance the next budget is daunting. Having said that,
we believe that the only way out of this economic crisis is to create
jobs and put people back to work.
   
Please remember, if you don’t stand up for rural Oregon no one will!
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Find a list of all Senator Whitsett’s Newsletters and Press Releases on
his website.
<http://www.leg.state.or.us/whitsett/>By Sen.Doug Whitsett (R)Distr 28)

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