On March 19 Oregon’s legislative budgeters released a framework for state spending for the next two years.
It brought to mind a famous response in the movie Jaws, to the appearance of the giant shark: You’re going to need a bigger frame.
By conventional standards the budget proposal, released by Joint Ways and Means Committee Co-Chairs Sen. Kate Lieber, D-Portland, and Rep. Tawna Sanchez, D-Portland, was, well, conventional, and their calling it “prudent” made sense. Along with some increases for education and human services, there were limitations and even cuts in safety, transportation and other areas.
It’s worth noting that the process is still in early stages. Budget work is likely to take two months or more, and much of the picture ordinarily does not settle until after the May revenue forecast.
But the real, big-storm impact that could come from federal cuts or policy adjustments could make a hash of many current assumptions. Legislators should be prepared for Oregonians looking to the state as a provider and protector of last resort if Trump Administration cuts and policy changes, some not yet in place or in uncertain status but strongly hinted at, come to fruition.
Almost a third of Oregon’s state budget, and large chunks of local government budgets, come from federal agencies. The Trump Administration appears intent on slashing large parts of that pass-through money. In some cases, that could mean putting off or abandoning planned-for projects. In others, it can mean an inability to pay for what long have been considered basic services.
The federal developments did not escape notice in Salem, and budgeters already have been considering them – to a point. Lieber said “Oregon’s budget is not designed to plug federal holes,” Lieber said. “If the federal government cuts programs, they are inevitably going to hurt Oregonians.”
There has nonetheless been reaction at the Statehouse already. One very visible piece of extra state activity has come in Attorney General Dan Rayfield’s office, which has initiated or participated in a long list of lawsuits against the Trump Administration. That extra activity, not really planned for a year or two ago, is not likely to slow.
On January 29, the White House Office of Management and Budget issued a statement that “Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance.”
Oregon State Treasurer Elizabeth Stein responded, “Through the state’s responsible fiscal management, the state treasury has an adequate balance of funds to sustain vital federally funded programs in the short term. Oregonians depend on federal funds to ensure public safety, keep early learning programs and schools open, deliver health care, support farms and small businesses, maintain roads, care for seniors and other vulnerable people, fight wildfires and more. These funds support thousands of jobs in Oregon.”
All of that and more soon will be dumped in the lap of the legislature.
Small amounts – tiny in the context of the federal budget, but sometimes large and critical locally – are implicated for museums and libraries, and a long list of other organizations.
Cuts at the National Weather Service can affect the whole country, of course, but reported cuts among weather watchers on the Oregon coast can have drastic impacts locally.
Like many other states, Oregon state government spends much of its revenue on education. In the 2024 fiscal year, federal agencies gave the Oregon Department of Education $1.8 billion, and about 95% of it went to school districts. There’s no telling what that amount will look like now, especially with the projected demolition of the Department of Education.
Funding for the University of Oregon and Portland State University has been threatened.
The Trump Administration is likely to press for local law enforcement agencies to work on immigration issues. Oregon state law argues the other way. What happens to federal funding when the two conflict?
Local governments have been scrambling to find out if federal funds which had been expected for streets, water and sewer systems and more will actually materialize.
Many of these areas of federal fallout are well within the normal scope of state government activities.
The Trump Administration has proven so unpredictable that no one realistically can say what the federal funding picture will look like in three or four months. But if it resembles the administration’s impulses, there will be calls for Oregon’s government to do more to fill in gaps. Maybe much more.
This session is likely to get more difficult as it goes – and may become very difficult toward the end.
This column originally appeared in the Oregon Capital Chronicle.
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