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Highlights of the 2007-09 Legislatively Adopted Budget

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Highlights of the 2007-09 Legislatively Adopted Budget Budget Highlights 2007-09 Legislatively Adopted Budget LEGISLATIVE FISCAL OFFICE SEPTEMBER 2007 STATE OF OREGON LEGISLATIVE FISCAL OFFICE 900 COURT STREET NE KEN ROCCO STATE CAPITOL, ROOM H-178 LEGISLATIVE FISCAL OFFICER SALEM OR 97301-4048 PHONE 503-986-1828 FAX 503-373-7807 September 25, 2007 To the Members of the Seventy-Fourth Oregon Legislative Assembly: Following is the Budget Highlights: 2007-09 Legislatively Adopted Budget. This document provides summary information of the 2007-09 legislatively adopted budget by examining program areas, legislative actions affecting the budget, technical assumptions, capital construction and state bonding debt, substantive bills with budget effects, potential budget risks, and 2009-11 tentative budget issues. New this biennium is a section entitled “2007 Fiscal Impact Statements,” as well as appendices on “2007-09 Capital Construction Projects” and “2007-09 Certificates of Participation.” A detailed analysis of the budget by program area and agency is also available. We hope you find this resource useful and invite you to call the Legislative Fiscal Office if you have any questions. Ken Rocco Legislative Fiscal Officer Legislative Fiscal Office 900 COURT STREET NE STATE CAPITOL, ROOM H-178 SALEM OR 97301-4048 PHONE 503-986-1828 FAX 503-373-7807 Administration Ken Rocco, Legislative Fiscal Officer – Emergency Board Theresa McHugh, Deputy Fiscal Officer – Legislative Branch Gina Rumbaugh, Committee Manager Budget Analysts Sheila Baker – Human Services, Children’s Programs Steve Bender – Higher Education John Britton – Human Services, Health Plan Michelle Deister – Housing, Employment Daron Hill – K-12 Education, Secretary of State Susie Jordan – Transportation, Parks and Recreation, Land Use Robin LaMonte – Judicial Branch, Economic Development, Consumer Services Deborah Manthe – Health-Related Licensing Boards Paul Siebert – Natural Resources Dallas Weyand – Administrative Services, Revenue, Public Employees Doug Wilson – Public Safety Fiscal Analysts John Borden – Economic Development, Consumer Services, Human Services Dawn Farr – Natural Resources Adrienne Sexton – Education, Administration, Legislative Branch Tim Walker – Judicial Branch, Public Safety, Transportation Table of Contents Summary of 2007-09 Legislatively Adopted Budget ..........................................................1 Summary of Legislative Actions Affecting the 2007-09 Budget ......................................14 Technical Assumptions in the Legislatively Adopted Budget...........................................22 2007 Fiscal Impact Statements ..........................................................................................26 Program Area Summaries..................................................................................................28 Education Program Area..............................................................................................28 Human Services Program Area....................................................................................36 Public Safety/Judicial Program Area...........................................................................41 Economic Development and Consumer Services Program Area ................................46 Natural Resources Program Area.................................................................................49 Transportation Program Area......................................................................................55 Administration Program Area......................................................................................56 Legislative Branch.......................................................................................................57 Emergency Fund..........................................................................................................57 Capital Construction and State Bonding Debt...................................................................59 2007 Substantive Bills with Budget Effects ......................................................................63 Potential 2007-09 Budget Risks and 2009-11 Tentative Budget Issues............................71 Appendix A: 2007-09 Capital Construction Projects ..................................................... A-1 Appendix B: 2007-09 Certificates of Participation .........................................................B-1 Appendix C: Number of Full-Time Equivalent Positions ...............................................C-1 Appendix D: Summary of Expenditures by Program Area and Fund ............................ D-1 Appendix E: Summary of Expenditures by Program Area, Agency, and Fund ..............E-1 Summary of 2007-09 Legislatively Adopted Budget ____________________________________________________________ Budget Overview The legislatively adopted budget (LAB) for the 2007-09 biennium is $48 billion total funds. The adopted budget includes $15.1 billion in combined General Fund and Lottery Funds, $23.6 billion Other Funds, and $9.3 billion Federal Funds. The 2007-09 total budget represents an 11% increase over the 2005-07 biennium’s legislatively approved total budget of $43.3 billion. 2007-09 Legislatively Adopted Budget Totals $48.005 Billion 11.0% Increase from 2005-07 Legislatively Approved Federal Funds General Fund $9.295 Billion $13.955 Billion 19.4% 29.1% Lottery Funds $1.152 Billion 2.4% Other Funds $23.605 Billion 49.2% The 2007 Legislature completed their work within the timeframe outlined in Senate Concurrent Resolution 1 (SCR 1) and adjourned on June 28, 2007. SCR 1 also outlines the timeframe for the Legislature to meet in a special session in February 2008. This special session is a pilot to determine the efficacy of annual sessions with a deadline for the Legislature to complete its work and adjourn. The final $48 billion budget adopted by the Legislature for the 2007-09 biennium continues the return to a more typical growth rate with less reliance on shifting program financing from General Fund to Other Funds that began in 2005-07. The approved General Fund expenditures for 2007-09 represent a 19.9% increase and Lottery Funds expenditures were budgeted at 37.5% higher than the previous biennium (General Fund and Lottery Funds combined is a 21.1% increase over the 2005-07 level), Other Funds and Federal Funds experienced relatively slight changes, 7%, from the 2005-07 budget period. Even with the substantial increases in General Fund and Lottery Funds, the 2007 budget left larger ending balances in these funds than in previous biennia. Despite the growth patterns discussed above, the Other Funds category remains the largest funding source in the budget, representing 49.2% of the total expenditures. Other Funds are revenues received by the state from fees for registration or licenses, charges for services, specific taxes (such as gasoline and tobacco), and loan programs. These funds are restricted by law for specified purposes. The largest increase in the Other Funds category in the 2007-09 budget is the increase in tobacco taxes which were 2007-09 Budget Highlights 1 increased and dedicated to provide tobacco use reduction programs and health care services for children. Approximately 19.4% of the 2007-09 legislatively adopted budget is made up of revenues from the federal government. Federal Funds increased by 7.3% in the 2007-09 budget, following an increase of 8.7% in the 2005-07 budget. For the decade prior to the 2005-07 biennium, the average growth in Federal Funds was about 19% per biennium. Nearly 75% of Federal Funds are received within the Human Services program area and are dollars that match state funds. Not surprisingly, the Federal Funds increase is primarily due to General Fund and tobacco tax investments approved in the Human Services program area which are then matched by the federal government at approximately a 2 (federal dollar) to 1 (state dollar) match rate. Oregon Budget History -- General Fund and Lottery Funds (Billions $) $16.0 $15.0 $14.0 $13.0 $12.0 $11.0 $10.0 $9.0 $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $.0 1 3 7 9 1 3 9 3 5 8 -8 8 -8 9 -9 -9 0 -0 1 5- 7 1 7 3 LAB 8 9 9 977-79 98 98 993-95 999-01 00 Aprvd 1 1979- 1 1983-85 19 1 1989- 19 1 1995-97 19 1 2001- 2 7 -0 7-09 5 0 0 20 20 General Fund Lottery Funds Budget Process With respect to budget development, highlights of the 2007 session process were: • A timeline that facilitated the budget being completed to meet the June 29th sine die date. • A continued focus on agency performance measures and priorities. • The release of a balanced budget proposal by the committee Co-Chairs on March 22, 2007 to guide the Joint Committee on Ways and Means process. • A series of public hearings on the budget held throughout the state by the Joint Committee on Ways and Means. Hearings were held in seven communities across the state; the Committee also held a teleconference to allow testimony from three additional sites. • An expedited process was established for selected agency budgets where the agency met certain criteria including a history of being well prepared and managed. 2 2007-09 Budget Highlights As in previous sessions, legislative leadership engaged in intensive negotiations over the final budget bills. General Fund and Lottery Expenditures General Fund and Lottery Funds expenditures, which total $15.1 billion for the 2007-09 biennium, represent 31.5% of the total legislatively adopted budget. Although this percentage is higher than the 28.9% share in 2005-07, it is still below the average 34% for the period from 1993 through
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