Mark Hass: The Importance of Boring, Wonky Governance.
Fiscal responsibility doesn't grab headlines nor win votes, but Oregonians are better off because of those who readied us for rainy days.
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Mark Hass is a former Oregon State Senator.
Most Oregonians don’t know or care if their state has reserves to draw from in budget shortfalls—like the one looming. But they might kick up a fuss if one of the programs they do care about—say, education, state parks, or courts—is cut.
That’s the nature of savings accounts. You don’t need one until you do.
The good news is Oregon has more than $3 billion in reserves today.
Twenty years ago, when a recession squeezed Oregon tight in its grip, there was nothing saved for a rainy day. Tax revenues fell as unemployment numbers soared. School funding was cut, prisons were closed, and employees—like health inspectors and DMV clerks—were laid off.
There were five special sessions of the Oregon legislature in 2002—all of them called to deal with collapsing revenues and accelerating costs. Oregon had painfully learned the double whammy of a recession: Revenues fall while demand for services explodes. And in 2002, this dynamic hit Oregon’s finances like a hurricane.
It didn’t seem like the best time to set up a savings account. Yet that’s what emerged. Republicans controlled both chambers of the legislature but a bipartisan majority of lawmakers sent Oregon voters a constitutional amendment to create the Educational Stability Fund, funded by siphoning off a small slice of lottery profits. Voters passed it in September 2002 by a 62-38 margin.
It wasn’t a feel-good, bipartisan thing to do. It was more of a non-partisan acknowledgement that saving money for lean years is a necessity of a stable government.
What brought people together was the harsh, unrelenting recession. Legislators simply found themselves on the same side, fighting to stop a reoccurring enemy: the boom-and-bust cycle of Oregon’s economy that hammered schools and drained budgets.
Five years later, with Democrats now in control, the legislature voted to create a second reserve fund—one that could be used outside of education. They actually called it the Rainy Day Fund and paid for it through existing corporate taxes. While there were protests from public employee unions about setting money aside instead of spending it on current needs—this too was passed by Democrats and Republicans.
Again, there was scant news coverage and no one deemed it a major legislative accomplishment. It fell into the yawning category of fiscal responsibility.
Over the past ten years, with little fanfare, these funds grew and grew and grew.
Today the Office of Economic Analysis reports Oregon has $3.163 billion in reserves – about 15 percent of the general fund budget. The PEW Research Center estimates Oregon could run its government for 137 days with this balance. Only five states rank higher.
More importantly, Oregon’s budget writers are in good shape as they construct the 2021—23 State budget. This cushion will prevent the collapse Oregon historically experiences in tough economic times. In the Great Recession ten years ago, for example, the Beaverton School district cut 420 jobs. Class sizes doubled. The school year shortened.
Dark scenarios of that magnitude are much less likely today because Oregon lawmakers—Democrats and Republicans—took prudent steps to stabilize Oregon’s finances. The word governance wasn’t used, but that’s what won the day. Boring, wonky governance.
Nobody got elected by supporting these reserve funds. There were no celebratory dinners or plaques handed out.
It was just people who found themselves on the same side against a powerful external force.
And today, years later, Oregonians are better off.
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