Salem, OR—If you would like to know more about Oregon's financial situation, this newsletter is for you. Every two years, the Secretary of State's Audits Division compiles and releases the State of Oregon Financial Condition Report. The report covers a 10-year period from fiscal year 2007 through 2016, and it provides information on current and historical financial trends to assist lawmakers and the public in making important decisions about the state's future. As your Secretary of State, it is my mission to ensure that these reports are easy to read and understand. This is another way to increase government transparency and help keep state government accountable to the people.
What the Audits Team Found
In brief, the audits team found that Oregon employment levels are high, tax revenues have increased, and unemployment expenditures have declined dramatically. All three of these indicators tell a story of an economy in recovery.
Notwithstanding Oregon's booming economy, the costs for Human Services (welfare) have continued to rise, and comprise the largest expenditures in state government at $12.5 billion ($7 billion of which is federally funded through Medicaid reimbursements). Drilling down a little more, the auditors discovered that Human Services expenses have risen 25% since 2007. The largest spike in this spending came in 2014 when Oregon expanded its Medicaid program as part of the Affordable Care Act (also known as Obamacare). For comparison, in 2007 Oregon spent 18 cents of every dollar in the state budget on Medicaid. By 2016, this ratio had nearly doubled to 35%. Viewed in real dollars, the difference is even more dramatic as tax revenues and federal funds for Medicaid have both increased.
Education is the second largest state expenditure at $5.6 billion, and has increased 9% since 2014. Public university enrollment and expenses have also increased dramatically since 2007.
Transportation expenditures have remained relatively stable after a slight bump owing to the American Recovery and Reinvestment Act (also known as Federal Stimulus Money) that was provided by the federal government from 2009 to 2011. The Oregon Department of Transportation should be commended for its discipline in debt reduction, and for a slight uptick in the funds it has been able to distribute to local governments for transportation needs.
In sum, the recession forced Oregon leaders to make difficult budget decisions in the 2011 legislative session that brought spending in line with revenues. However, even more difficult decisions will be required in the future as costs continue to increase dramatically for social services and for the state retirement plan (PERS) as it continue to grow. For details, read the report: http://sos.oregon.gov/audits/Documents/2017-14.pdf