by Julia Shumway, Oregon Capital Chronicle
December 2, 2024
Oregon Gov. Tina Kotek wants the state to spend more than $2 billion on homelessness and housing and send a record $11.4 billion to public schools as part of a budget focused on maintaining existing programs with little cash to spare for new initiatives.
Her total spending plan, including federal funding that the state doesn’t have much control over, is $137.7 billion for the two-year period from July 2025 to June 2027. Her proposed general fund and lottery funds budget, where Kotek and lawmakers have more discretion, is $39.3 billion.
That’s a sharp increase from the $33.5 billion general fund and lottery funds budget lawmakers approved in 2023, but it doesn’t reflect much new spending. Instead, the state is grappling with the same budgetary pressures as many Oregonians: Revenue is higher, but so are costs.
“People understand this from their own household budgets,” Kotek said at a press conference in Astoria last week. “While our economy is strong and wages are up, and people, if you just look at the numbers, are making more, their expenses are up. And in the case of the state, our expenses for health and human services have really grown, so the expenditure line is outpacing the money coming in the door.”
Initial reactions to her recommended budget were mixed, with some advocacy groups saying it didn’t go far enough and Republicans criticizing it as squandering money.
Her recommended budget doesn’t include layoffs or cuts to services, but it also has few new programs. When state agencies crafted their budget requests, Kotek limited them to a 1% increase over 2025-27 levels. She also asked them to prepare lists of where they could cut by 10% by focusing on core services and making sure to maximize federal funding.
“It was a hard exercise for some folks,” Kotek said. “But I believed, and do believe, that Oregonians, in this moment, would be better served by committing time and energy to practical considerations rather than well-meaning hypothetical wish lists. Developing my budget was an effort grounded in the reality of our state and our resources.”
Housing and homelessness
Oregon’s twin housing and homelessness crises have long been top of mind for Kotek, who declared a homelessness emergency on her first full day in office. Early executive orders, and an infusion of hundreds of millions from the Legislature during the past two years, are on track to lead to about 3,300 families moving into permanent homes, 4,800 shelter beds across the state and 24,000 Oregonians receiving support needed to remain housed by July, her office estimated.
But more than 20,000 Oregonians were homeless on a single night in 2023, according to the U.S. Department of Housing and Urban Development’s latest point in time count, and most of those people still sleep outside or in cars.
Kotek plans to make the case that her budget requests will reduce the state’s homelessness crisis, while not solving it.
“By the end of the current biennium next July, the actions related to the homelessness emergency I declared are projected to rehouse and shelter thousands of Oregonians, while preventing thousands more from becoming homeless in the first place,” she said. “If we continue at this pace, the equivalent of nearly one in three Oregonians experiencing homelessness on my first day in office will be rehoused by the end of my first term.”
Kotek is seeking $217.9 million to maintain Oregon’s existing shelters and $188.2 million to rehouse currently homeless people. She’ll also ask lawmakers to approve $173.2 million for eviction prevention services to keep people from becoming homeless in the first place and $105.2 million for long-term rental assistance for individuals and families who need more than short-term emergency help.
Her longer-term goal of building 36,000 homes per year to get Oregon out of a housing shortage that drives up rents and home prices remains. Kotek’s asking lawmakers to approve $880 million in state bonds for more affordable homes, with most of that sum for rental homes, as well as $100 million for infrastructure needs related to homebuilding. Lawmakers last year allocated close to that amount for water, wastewater and other upgrades needed before developers could build homes in cities across the state.
Education and children
Kotek is seeking $11.4 billion for the State School Fund, an increase over the current $10.2 billion. That comes as a result of changes in how she wants to calculate school funding and as skyrocketing pension costs threaten school budgets.
“Not every school district is equally situated, but I’ve heard from a lot of our districts that this is really helpful,” she said. “It’ll help us meet our goals and actually provide that stability that has been lacking.”
She’ll also ask lawmakers to approve $127 million for early literacy programs, with grants to school districts, community organizations, tribal nations and Dolly Parton’s Imagination Library, which sends free books to families for children up to 5. Another $78.5 million would go toward ongoing spending on summer learning programs, which have struggled to find consistent funding in Salem.
Her proposed budget reflects a spring settlement in a class-action lawsuit over Oregon’s child welfare system. Kotek will recommend $23.6 million in new funding for Oregon’s child welfare system to implement the settlement agreement, including $10 million to end the practice of placing children in temporary lodging in hotels and $4 million to help youth aging out of foster care.
She’ll also seek $25 million for youth behavioral health, including $6 million for mental health services and substance use disorder screening in schools and $17 million for residential and community-based services for young people struggling with addiction or behavioral health.
Her budget doesn’t include a meaningful increase to funding for the state’s popular Employment Related Day Care program, which has a waitlist of thousands of families seeking child care subsidies. Kotek’s budget aims to keep families from losing services, but she said expanding the program will be “very challenging” given current budget constraints.
Behavioral health
Keeping behavioral health workers and training and hiring more are top priorities in Kotek’s budget, which includes a proposed $130 million for provider rate increases aimed at retaining Oregon’s Medicaid workforce and increasing inpatient psychiatric rates.
“Just like we cannot solve homelessness without building housing, we cannot close our gaps in services without more places to get treatment and more people to provide that treatment,” she said.
Her budget calls for using tens of millions in remaining American Rescue Plan funds to train behavioral health workers and build 336 more treatment beds, adding to a goal of 465 new beds statewide by 2026. Kotek will also seek $40 million for counties to continue deflection programs that allow people charged with drug possession to receive treatment instead of jail time.
Responding to Trump
While president-elect Donald Trump isn’t mentioned by name in budget documents, his election and fears that he’ll slash federal spending and programs developed by the Biden administration triggered millions in proposed new spending for reproductive health, climate change and federal lawsuits.
That includes an extra $2 million for attorneys in the state Justice Department to defend state laws, including access to reproductive health care, Oregon’s environmental standards, protections for immigrants and trade agreements. Kotek also calls for another $2 million for Oregon’s Bias Response Hotline, run through the Justice Department.
“I have heard from a lot of folks since the election (who are) worried about their safety, worried about who’s going to respond,” Kotek said. “They feel unsafe in their communities, and so it makes sense to make sure the Department of Justice has some more resources to respond and really look at what the patterns are, if there are patterns, coming into the hotline to address that.”
Her recommended budget also includes $7 million to help immigrants living in the state navigate the immigration system and find legal representation as Trump vows to deport hundreds of thousands of immigrants and potentially threaten sanctuary cities. Oregon for decades has been a sanctuary state by law, with state and local governments barred from assisting the federal government from enforcing immigration law.
Kotek also wants to add $2.5 million for grants to expand reproductive health services, including programs that help patients find services and state funding for providers to upgrade facilities in response to an increase in patients seeking abortions. Clinician-provided abortions in Oregon — which does more to protect access to abortion than all other states besides Vermont — are up 40% since 2020, according to the Guttmacher Institute, which tracks reproductive health policy.
Another $2.5 million in Kotek’s recommended budget would be reserved to protect Oregon from disruption in care if federal reproductive health funding declines under the next administration. The state has already added to its stockpile of the abortion drug mifepristone, which has been targeted by anti-abortion groups.
Other potential federal disruptions require a “wait-and-see” approach, she said, as leaders in Oregon and elsewhere don’t know what programs could be affected by federal changes.
“The good thing about here in Oregon, we’ll have six months to see what’s coming out of the new administration next year,” she said. “There will be a session the following year, and we’ll just have to adjust as we go.”
Other priorities
Kotek’s proposal includes $1.75 billion for the State Highways Fund, which she described as the minimum needed to maintain and repair existing roads and bridges. Lawmakers and her office will spend the next several months hashing out a larger transportation package that will likely involve tax or fee increases to pay for hundreds of millions of dollars in transportation needs over the coming decade.
“I don’t think we can do anything less than that ($1.75 billion investment) to have a functional agency, to meet the basic needs of some of the project work that’s out there,’ Kotek said.
Her budget proposal also calls for diverting $150 million that would otherwise go to the state’s reserves to the Department of Forestry and Office of the State Fire Marshal to pay for wildfire costs. Oregon’s record wildfire season burned more than 1.9 million acres and cost the state more than $350 million upfront. While the federal government will reimburse more than half of that, Oregon is still on the hook for $151 million and lawmakers will convene in a one-day special session next week to pay those bills.
Kotek also wants an ongoing $130 million each year for fire mitigation and firefighting, with details to be worked out by a wildfire funding workgroup her office convened.
Other leaders react
Kotek’s recommended budget drew criticism from advocacy groups, which said it doesn’t spend enough, and from Senate Republicans, who said it spends too much.
Senate Minority Leader Daniel Bonham, R-The Dalles, panned Kotek’s budget as “completely disconnected” from the state’s revenue forecast.
“Governor Kotek’s proposal doubles down on the same failed strategies that have left Oregonians struggling. More government spending and bureaucracy won’t fix Oregon’s housing crisis, homelessness epidemic, health care affordability or students’ success — it’ll make these issues worse,” he said. “They say, ‘the governor proposes, and the legislature disposes.’ Thankfully, this political statement of a budget will face legislative scrutiny because it ignores the real needs of Oregonians.”
The Oregon Community College Association said a $70 million increase to community college funding in the proposed budget will still lead to cuts and tuition hikes because of increased costs.
“At the proposed GRB funding level, community colleges will still struggle to meet the needs of students and their communities,” association executive director Abby Lee said. “Without adequate investment, we risk limiting access to education and workforce training at a time when enrollment trends are rebounding and Oregon’s economy needs skilled workers.”
A coalition of environmental and climate groups also urged the Legislature to spend more than Kotek proposed on energy efficiency programs, disaster preparedness and other environmental initiatives.
“Governor Kotek’s budget is a strong proposal and we are heartened that the governor recognizes that we are facing a catastrophic threat to clean, affordable energy and climate resilience at the federal level,” Lindsey Scholten, executive director of the Oregon League of Conservation Voters, said in a statement. “But now Oregon’s legislature needs to do even more to
invest in keeping Oregonians’ energy bills down, preventing climate disasters and protecting our clean air and water.”
Updated at 2 p.m. Monday, Dec. 2, with additional comments and information from Kotek’s press conference, and at 4 p.m. with reactions.
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