Money, Prisons, and Politics: An Oregon Budget Primer
Article by David Rogers
As this article is being written, we are days away from the release of a state revenue forecast designed to show just how deep an economic hole Oregon is in. The projected budget deficit for next biennium is likely to be somewhere between $3 and $5 billion. Those are very big numbers and sometimes it is difficult to get a tangible sense of what it means when talking about hundreds of millions or billions of dollars. This article is meant to provide a basic overview of Oregon’s budget and how the budget climate may impact efforts to pass safe and sensible sentencing reform.
What is a “biennium” anyway? The Oregon Legislature creates biennial budgets, which means a two-year budget. The next biennium is July 1, 2009 to June 30, 2011.
How big is the state budget? On the expenses side of the budget, the Governor’s Recommended Budget for 2009-11 is roughly $54 billion dollars, but that number includes four categories of funds.
1. The General Fund: The General Fund is the only money that can be used for general purposes of state government. It is not dedicated to a specific agency or program. Most of this money comes from personal and corporate income taxes. Some revenues from liquor, cigarettes and other sales go into the General Fund.
2. Lottery Funds: Money the state receives when people play state lottery games is called Lottery Funds. By law, the state may use Lottery Funds for economic development, education, and natural resources. Part of the Lottery Funds is dedicated by law to specific uses.
3. Federal Funds: Dollars from the federal government sent to state agencies to pay for specific services or programs.
4. Other Funds: Money received by state agencies that does not come from the General Fund, Lottery Commission or the federal government is called Other Funds. This money comes from sources such as gasoline taxes, professional license fees, building permits, hunting licenses, etc. This money is usually “dedicated,” thus requiring that it must be spent for specific purposes.
Since Federal Funds and Other Funds are incredibly restrictive, most of the budget conversations and legislators’ decisions focus on what to do with the General Fund and Lottery Fund dollars.
How does the budget development process work? The Governor, working with all the state agencies, creates a budget. The Governor communicates his/her priorities by releasing the Governor’s Recommended Budget (GRB) on December 1 of every even-numbered year. This is considered a starting place.
The process is then in the hands of the state legislature. The legislative committee in charge of the budget is the Ways and Means Committee, which has issue-specific subcommittees like Education, Human Services, and Public Safety. The Public Safety Subcommittee reviews, revises and recommends final budgets for the following agencies: Department of Corrections (DOC); Oregon Youth Authority; Oregon State Police; Department of Justice; Oregon Military Department; Board of Parole and Post Prison Supervision; Oregon Judicial Department; District Attorneys; Department of Public Safety Standards and Training; and the Oregon Criminal Justice Commission.
The Ways and Means Committee has co-chairs, one from the Senate and one from the House. Currently the co-chairs are Senator Margaret Carter and Representative Peter Buckley. The co-chairs usually don’t release a draft budget of their own until after the May revenue forecast. This forecast is released by the state and estimates how much money the state is likely to have over the next biennium. The forecast for the 2009-11 biennium is going to be very grim. We could be looking at a $5 billion deficit.
The Ways and Means Committee receives public comments and then has the very difficult task of proposing a final budget to be voted on by both legislative chambers. The legislatively adopted budget is usually one of the last things to happen during the legislative session.
To get a sense of the size of General and Lottery Fund expenditures as well as how the money is traditionally divided among issue areas, take a look at this chart reflecting the GRB for 2009-11.
Public safety is the third largest focus of our general fund dollars. To see how public safety spending breaks down, look at the following chart of the GRB for the public safety sector:
As you can see, the DOC budget is by far the largest focus of Oregon’s public safety dollars. The DOC budget has experienced dramatic growth. Fifteen years ago, the DOC budget was $377 million; now it is $1.4 billion dollars and is the fastest growing state agency budget.
The growth of the DOC budget has been primarily driven by Measure 11 and prison expansion. Since 1995, Oregon has built four new prisons and expanded five. Each time Oregon builds prisons, it borrows the money to pay for construction, mortgaging the state’s ability to pay for vital services over the next 20 to 25 years. In the 2007-09 biennium, Oregon taxpayers are paying over $130 million just on the interest for past prison construction.
It is important to note that whenever DOC discusses the cost of future prison construction it fails to mention the cost of interest payments – a practice that is misleading about the real cost of Oregon’s prison build up. For example, DOC is proposing to build the next prison in Junction City and has included it in their budget for the 2009-11 biennium. If the total construction costs are around $350 million, the total cost to taxpayers will be closer to $600 million including interest payments.
What does all this mean for the next two-year budget? Oregon is about to be hit hard by the country’s economic recession. To put it in perspective, if the state projects a $4 billion dollar deficit, that is 25% of the $16 billion that the Governor’s budget planned to spend from General and Lottery Fund dollars. Can you imagine the impact of what 25% cuts to schools and human services might look like?
The federal stimulus money Oregon received softens the blow a little but many of the community services and infrastructure we care deeply about are on the chopping block. We could see some programs disappear altogether while others will only be able to offer a fraction of the resources and support they once did.
In this tough economic climate, budget development is an incredibly challenging task for legislators. It is impossible not to make cuts to important and popular services when facing such a huge deficit. So now policymakers are likely to turn to both revenue generation ideas and cost saving ideas that, for political reasons, they historically tried to avoid. There seems to be little choice but to discuss the need for some sort of increased taxes so we don’t see Oregon’s social safety net completely disappear. Also, legislators are beginning to discuss whether we can find some real savings in the $1.4 billion (and counting) we are spending on prisons.
Although it saddens us that it takes an economic recession to generate some real political will for smart criminal justice reform, PSJ certainly recognizes the opportunities this moment presents.
The Chairs of the Senate and House Judiciary Committees (Senator Prozanski and Representative Barker) convened a workgroup encompassing a broad base of public safety policy stakeholders early in the session. The goal of the group was to brainstorm ways Oregon could maintain public safety while saving the state money. There was no consensus among the diverse group about what options should be prioritized, but the work was successful in providing a wide range of options.
At this point in the legislative session, the Judiciary Committee Chairs and the Co-Chairs of the Public Safety Subcommittee of Ways and Means are discussing which cost-savings options they might package together and try to pass at the end of the session. The hope is that they can find a combination of criminal justice reforms that could generate $100 million of savings or more.
The politics around this possibility are thick. The District Attorneys Association is a real barrier to thoughtful conversations about reform. Their public stance has been that they do not want to see Oregon engage in any long-term criminal justice reform when the discussions are being driven by a budget crisis. That position seems indefensible when there has been an acknowledgement for quite some time that the growth of Oregon’s prison system is on an unsustainable trajectory and is costing us dearly. Nevertheless, the DAs Association has significant political influence. Their power is built in part by their ability to threaten legislators with public accusations of being soft on crime and labeling legislator’s positions as public safety threats.
Ultimately, in order for the political dynamics around public safety policy reform to improve, legislators need to feel more comfortable rejecting tough on crime rhetoric. One way to help create a more conducive environment for reform is the promotion of a Smart on Crime framework. PSJ is promoting a Smart on Crime agenda as an alternative to the policies that has Oregon spending a greater percentage of its general fund budget on prisons than any other state in the country. Perhaps, the Smart on Crime framework can blunt the need for legislators to appease the tough on crime lobby.
It is unclear what criteria legislative leadership will ultimately use to decide the best approaches to corrections savings. It is possible that even in the face of such a devastating budget deficit, they still don’t have the courage to pass safe and sensible sentencing reform, which would be disheartening. That said, there are two probable criteria:
1) What are big ticket items that can save large amounts of money? In this category, the policy that stands out the most is Measure 57. So far, a wide range of forces have been successful in pressuring the legislature to consider delaying or modifying Measure 57. We think this is a very likely outcome. Of course, retroactive earned time for people currently incarcerated would also generate big savings, but the viability of that reform is limited by the next criterion.
2) What reforms can the legislature pass without raising strong opposition from Oregon’s tough on crime lobby? In this instance, we already know that groups like Crime Victims United and the DA’s Association oppose smart reforms like increasing access to earned time. So this particular criterion that legislative leadership is likely to use in developing an approach to correctional savings severely limits the possibility of some safe and sensible policy reforms.
As we near the end of the legislative session, we are working to amplify the pressure on legislators to be Smart on Crime. We have been successful in building a broad base of support such as education advocates, the Human Services Coalition of Oregon and the Oregon Business Alliance.
The core message is: when faced with difficult budget choices and a severe deficit, we need to be much smarter with our public safety spending. Oregon has been spending too much money on prison expansion – the most expensive and least effective means of maintaining public safety. Our state’s future will not be found behind bars. The legislature, if acting responsibly, needs to pass sensible sentencing reform that not only protects cuts to schools, human services, victim services, and the state police, but also begins to shift the unsustainable growth of the Department of Corrections.
We are seeing optimistic signs that the legislature gets it, combined with reminders of their apprehensions. Various elected leaders have suggested that perhaps we do need to look at policies like Measure 11, which have thrown the system off balance. But they have added that it might be more prudent to wait until the short legislative session in February 2010 to examine change. They need to hear that deferred reform means a much more painful budget. So far, we have had some real success building a diverse coalition and mobilizing our own members across the state to deliver the message that the DOC budget should not be held harmless in these difficult economic times.
Our efforts are strengthened by the successes of other states and the growing research that demonstrates that there are effective ways to maintain public safety without committing hundreds of millions of tax dollars to building and filling prisons. To maintain public safety, we need to be smart on crime. The verdict is still out on just how smart Oregon’s legislators will be.
David Rogers is Executive Director for Partnership for Safety and Justice.
This article originally appeared in the Spring 2009 issue of Justice Matters.
