LOC News
2021-2023 Governor’s Recommendation Budget Released
This week, Governor Kate Brown released her recommended budget for the 2021-2023 biennium. While your LOC Government Relations team is still looking at details, it’s important to point out the state goes through several steps before reaching a final budget agreement in the spring of 2021 during the full legislative session. This budget effectively becomes a starting point for discussion and debate over what the state’s financial priorities should look like for the next two years.
In general, this budget is still responding to the Coronavirus, estimating an additional $700 million in pandemic response that includes testing, contact tracing and vaccine delivery. According to Governor Brown, there is no additional state funding to cover this cost; so unless the federal government steps up with additional resources, Oregon will have to adjust the overall budget to cover it.
The recommended budget also contains substantial investments in housing, providing funding for community projects lost in 2020 due to shortfalls in lottery funds, as well as funding for wildland fire fighting and a response to the late season catastrophic fires. Finally, there are plenty of concerns for local governments as well, particularly the loss of shared revenue dollars.
The following is intended to provide an initial snapshot of the budget priorities as we at the LOC understand them. A deeper dive will likely uncover a better understanding of the impacts.
Housing:
LOC Contact - Ariel Nelson: anelson@orcities.org
The Governor’s Recommended Budget continues historic levels of funding for housing, homelessness, and related services, and brings a strong focus on serving Black, Indigenous, and other communities of Color that have been historically excluded from access to housing and disproportionately impacted by Oregon’s current housing crisis.
The budget proposes a total $65.9 million increase from 2019-21 investment levels, including: $50 million for the state’s core emergency housing and shelter assistance programs; $250 million in Article XI-Q bond resources for the development of affordable housing and permanent supportive housing; and $30 million in lottery bond resources for land acquisition and affordable housing preservation. It also includes: $22 million in additional investments to develop and increase access to affordable homeownership and address racial disparities; $6 million for manufactured homeowner support and preservation of manufactured home parks; and $4.5 million to launch a long-term rental assistance pilot for youth at risk of homelessness, including those aging out of foster care.
In addition to the proposed state investments, the governor’s budget calls on the U.S. Congress to deliver a substantial aid package following up on the 2020 CARES Act, and identifies the first priority of federal stimulus as $350 million in rent assistance.
Of note to cities: the Governor’s Recommended Budget continues funding to support the implementation of HB 2001 and HB 2003, which bring new requirements for cities with a population of 10,000 or more to plan for middle housing and develop housing production strategies. This funding will support the housing planning staff at the Oregon Department of Land Conservation and Development, as well as critical technical assistance grants for local government.
Shared Revenue:
LOC Contact - Mark Gharst mgharst@orcities.org
The Governor’s Recommended Budget includes both positive and negative changes that would affect what cities receive in state shared revenue. The budget includes a Special Purpose Appropriation of $22.5 million to help cities and counties mitigate losses in state marijuana taxes due to Measure 110. There are no details on how these funds will be distributed. At the Oregon Liquor Control Commission (OLCC), there are two items that would reduce distributions of liquor revenue. The first is a new warehouse and office, to be funded through bond sales. The existing warehouse from which the OLCC distributes liquor to stores across the state is expected to be at capacity in late 2022, and there is a risk to future revenue growth without some solution. The second item is a proposal that would significantly increase the agent compensation paid to liquor store operators and distillery tasting rooms, and the budget indicates a 22.2% increase from 2019-21. The LOC has been in communication with the OLCC on this proposal, and is not convinced that it is necessary.
Economic Development:
LOC Contact - Mark Gharst mgharst@orcities.org
The Governor’s Recommended Budget increases the Business Oregon budget by 44% to nearly $500 million. Most of this increase is due to general obligation bonds and lottery bonds. Major bonding investments described in the proposed budget will be helpful to cities and include the following:
- $110 million in General Obligation bonds, for the seismic retrofitting of schools;
- $50 million in General Obligation bond for the seismic retrofitting of emergency service buildings;
- $100 million in General Obligation bond for broadband Infrastructure;
- $50 million in Lottery bonds to respond to critical public works and regional infrastructure needs around the state through the Special Public Works Fund;
- $40 million Lottery bonds for projects chosen by Regional Solutions, an innovative 121 collaborative approach to community and economic development in Oregon;
- $50 million in Lottery bonds for unreinforced masonry buildings;
- $47 million in Lottery bonds for wildfire recovery projects due to the recent Labor Day wildfires; and
- $10 million Lottery bonds for the Brownfields Redevelopment Fund.
Behavioral Health Investments:
LOC Contact - Scott Winkels swinkels@orcities.org
Improving behavioral health services is once again a top legislative priority for the LOC, and Governor Brown’s proposed budget makes the following significant investments towards that end:
- $118 million in substance abuse disorder treatments;
- $29.5 million towards community based behavioral health services; and
- Additional investments in the judicial system to improve outcomes for defendants with behavioral health issues.
Broadband:
LOC Contact - Jenna Jones jjones@orcities.org
COVID-19 has shown that broadband is a necessity. The Governor’s Recommended Budget makes many investments in broadband, authorizing the issuance of $1.5 billion of General Fund supported general obligation bonds for various programs, and $101.2 million of COPs for broadband projects in communities throughout the state. These dollars will provide grants for broadband projects to expand broadband infrastructure into rural and remote areas of the state, increase transmission capacity, increase affordability, and better connect community support organizations such as schools and higher education institutions. Notable highlights include:
- $100 million in funding for the Broadband Office in Business Oregon to coordinate broadband infrastructure deployment, broadband service infrastructure loans and grants;
- $17.5 million in capital funding to leverage federal matching funds for the Connecting Oregon Schools program to expand broadband connectivity for schools. This fund was created in 2018 and has yet to be funded by General Fund dollars;
- Fees paid by utilities on their gross operating revenue will be increased. The fee increase will be used to adjust the Oregon Telephone Assistance Program (OTAP) discount from $3.50 to $10.00 for eligible Oregonians with low incomes subscribing to phone or broadband internet access services. The OTAP program is administered by the Oregon Public Utilities Commission;
- Other non-bonding related investments - some of these are providing funding for the Rural Opportunity Initiative, funding modernization of IT systems, creating a Broadband Office; and
- $6.4 million broadband service assistance in the housing budget for those who cannot afford service.
Last Updated 12/4/20