Legislature addresses budget shortfall, other policy issues

The Oregon Legislature convened Monday, Aug. 10, for a one-day special session to address looming budget shortfalls brought on by the COVID-19 pandemic.

The session started a marathon day at 8 a.m. with the House and the Senate opening work on the floor. The Senate concluded its work after 10 p.m., and shortly after 11 p.m. the House followed.

The day’s work focused mostly on the budget but included contentious policy bills and testy discussions among legislators.

The Legislature patched the roughly $1 billion hole resulting from reduced revenue during the COVID-19 pandemic. A suite of bills did the heavy lifting and made the budget adjustments necessary to balance the state’s books. Three bills focused on bonding (Senate Bill 5721), statewide capital investments (SB 5722), and the state budget across agencies (SB 5723). 

A fourth bill, House Bill 4303, transferred $400 million from the state’s education reserves, the Education Stability Fund, to the State School Fund. The State School Fund will remain fully funded at $9 billion for the biennium, providing school districts with crucial budget stability.

Procedurally, it was necessary to break up these actions into separate bills, as the diverse topics they deal with are distinct enough to require individual consideration. Furthermore, the three budget bills required only a simple majority for passage, but HB 4303 required a three-fifths supermajority for passage, meaning 18 votes in the Senate and 36 in the House.

OSBA supports the ratification of HB 4303 and the vital funding it will provide to school districts and students throughout Oregon. The bill now awaits Gov. Kate Brown’s signature.

On Tuesday, Brown told reporters she is uncomfortable with such a large drawdown of education reserve funds. She did not specify how she would address the situation but said that “all options are on the table.”

If she vetoed HB 4303, it would represent an immediate $400 million hole in the State School Fund and the Oregon Department of Education would have to adjust payments. The Legislature could override the veto, or it could return to discussions with the governor to find a new path forward.

Brown has until Sept. 9 to act on the bill. State officials and education advocates say a veto is unlikely because of the series of budget complications it would unleash with an already fractious Legislature.

Republicans in both chambers loudly decried the session’s procedures. As with the first special session, and in keeping with best practices for the COVID-19 pandemic, only legislators and a few legislative staff personnel were present. There was no in-person public testimony, and the drafts of bills were released relatively near to the session’s onset. Republicans also decried the number of policy bills passed, including bills on policing, mining and unemployment benefits. All in all, 11 measures were passed:

• HCR 221: Modifies obligation to make conduct reports under rule.
• HB 4301: Provides that peace officers or corrections officers may not use force that impedes normal breathing or circulation of blood of another person by applying pressure on the throat or neck except in specified circumstances.
• HB 4302: Establishes and modifies fees and requirements relating to permits for mineral exploration, mining operations, exclusion certificates, gas and oil drilling and exploration, and geothermal well drilling operation.
• HB 4303: Directs the state treasurer to transfer money from the Education Stability Fund to the State School Fund.
• HB 4304: Modifies requirements relating to certain fiscal reports.
• HB 5221: Modifies amounts of lottery funds allocated from the Administrative Services Economic Development Fund to state agencies.
• SB 1701: Provides that individuals receiving unemployment insurance benefits who have earnings from less-than-full-time employment may earn the greater of $300 or one-third of an individual's weekly benefit amount before the individual's weekly benefit amount is reduced.
• SB 1703: Provides temporarily that during a statutorily declared emergency the governor may authorize the Revenue Department director to disclose certain information set forth in a tax report or return to the Employment Department director if the Revenue Department director determines that administration of any federal or state law or program requires disclosure to enable the Employment Department to verify identity or income level of any person for purposes related to the emergency or any consequences of the emergency.
• SB 5721: Modifies amounts and purposes authorized for issuance of general obligation bonds and revenue bonds for biennium.
• SB 5722: Modifies limits on payment of expenses from specified funds by certain state agencies for capital construction.
• SB 5723: Appropriates money from the General Fund to the Emergency Board for allocations during the biennium.

For a one-day session, that is a break-neck pace. Democrats countered these Republican complaints by citing the multiple weeks of committee meetings leading up to the special session.

The Legislature’s next steps are unclear. A number of topics, notably liability protections for schools and other employers, are still under discussion. All eyes in Salem are now on the Sept. 23 revenue forecast. Another downward trend in revenue could necessitate further cuts. The expectation is that this will be another tough revenue quarter for Oregon.

- Richard Donovan
Legislative Services specialist