Andrea Henderson

Executive Director
503-399-9912 ext. 202
andrea@occa17.com

John Wykoff
Legislative Director
503-399-9912 ext. 204

jwykoff@occa17.com

Karen Smith
General Counsel
503-399-9912 ext. 203
ksmith@occa17.com

Joe Johnson
Policy Director
503-399-9912 ext. 207
jjohnson@occa17.com

ACCT 2012 Legislative Summit
Community college presidents and board members attended the ACCT Legislative Summit in Washington DC last week, attending the summit conference sessions and visiting with representatives and senators on Capitol Hill.

From left to right: Ron Pittman (board member, Chemeketa); Dave Shields (board member, Mt. Hood); Tony McCown (board member, Lane); Susie Johnston (board member, Lane); Senator Jeff Merkley (D - OR) ; Brett Rowlett (director of government relations, Lane); JoAnne Beilke (board member, Chemeketa); and Michael Hay (president, Mt. Hood)

Latest Revenue Forecast Down Slightly - February 8, 2012

According to the Office of Economic Analysis, Oregon’s projected revenue for the 2011-13 general fund will be down $28.6 million (-0.2%) from the December forecast and lottery resources will be down $6.5 million (-0.6%). Senate President Peter Courtney issued a press release about the forecast, noting that “[R]evenue is down a little, but it will fit within the co-chairs’ budget proposal. That means we can move forward with a budget rebalance that will keep our schools open and criminals behind bars. It means we will take care of our seniors and provide services for people with disabilities and our children.”

While addressing a joint meeting of the House and Senate Revenue Committees, the Office of Economic Analysis pointed out that Oregon’s economy is expanding but the job creation pace remains “glacial.”  The most encouraging sign is that the unemployment rate continues to decline. Since the end of the recession, Oregon’s unemployment rate has decreased 2.7%, from 11.6% in June 2009 to 8.9% in December 2011. Oregon businesses are again profitable and the Office of Economic Analysis believes this will lead to “modest” job growth. Although all signs point to Oregon’s economic expansion becoming a more self-sustaining one, the recovery is fragile, with the risk of a return to recession remaining uncomfortably high. The two major threats to economic recovery are European economic instability and the reduction of federal aid to states. Oregon will lose $120 million in federal grant-in-aid income this biennium. In addition, federal support for timber payments and Medicaid continues to be debated in Congress.

Lottery income is essentially flat (down $6.5 million from the last projection) and revenues are “crawling up very slowly, with revenues projected to increase 0% to a slightly positive 1% in this biennium.”

Overall, it was a cautiously optimistic revenue forecast, with the caveat that it will be a slow recovery that could be easily derailed. However, the threat of a double-dip recession has certainly declined and there is strong potential for greater growth as the flow of positive news continues to gain momentum.

State Economics Forecast State Revenue Down Slightly - September 2011

Oregon’s Office of Economic Analysis forecast state revenues would be down slightly from their May estimate as the state’s recovery continues, but slowly. 

Mark McMullen, from the Office of Economic Analysis, met with the Senate and House Revenue Committee and released an economic forecast today projecting general fund resources for the 2011-13 biennium will be $192.6 million below the close-of-session forecast. Lottery resources are projected be $6.6 million lower than anticipated.

However, state economists were quick to point out the dip is only a 1.3 percent decline from their original 2011 estimate. They attributed the decline to recent volatile market activity that may push back Oregon’s economic recovery by two quarters. They forecast there is a risk of another recession in the range of 30 to 40 percent based primarily on whether there is a second national and international recession.

There are two bright spot in Oregon’s economic recovery. Exports are up for the first 6 months of this year and Oregon still ranked 13^th in the nation in job growth. Adversely effecting recovery are a weak housing market, a drop in government (local, federal, and state) employment, and economic volatility that reduces personal disposable income. 

This forecast does not require any action at this time.  Legislators and the Governor are likely to wait until the December forecast before deciding if changes will need to be made to the 2011-2013 budget.  Any decisions regarding the 3.5 percent “holdback,” which state agency budgets faced this biennium, will also likely be held off until the December forecast.

The Governor also issued a statement that the state has reserves to offset a drop like this, but that he will hold conversations with legislative leadership about possible contingency plans in case there are further drops. 

Below is the executive summary of the September forecast:
http://www.oea.das.state.or.us/DAS/OEA/docs/economic/executive.pdf

Ways and Means Committee Budget Hearings - Update

The dates of the community college budget hearings have changed to March 22, March 23, and March 24. CCWD will present on March 22 and 23 and public testimony will now be held on Thursday, March 24.

February Revenue Forecast

On February 15, the state’s Office of Economic Analysis provided an updated forecast on Oregon’s projected revenue for the current and 2011-13 biennia.  The Office now forecasts that revenue for the current 2009-2011 biennium will increase by $3.3 million (essentially, will remain flat) and will be $81.2 million lower for the 2011-13 biennium.  These numbers are subject to some interpretation.  For example, when the decrease in lottery revenues is taken in to consideration, the combined resources for 2009-11 are down by $1.5 million and down by $109.3 million for 2011-13.

Tom Potiowsky, Oregon State Economist, was fairly upbeat in his presentation. He noted that the national economy continues to grow and that the chances of a double-dip recession are declining.  On the downside, the housing market will remain fragile, but this is offset by the positive factors of increases in consumer spending, manufacturing, exports and low inflation. Because the Oregon economy is growing, there is a stronger possibility of more revenue in future forecasts. 

The December forecast appeared to be right on target, except that a policy decision to re-connect the Oregon tax code to the federal tax code will have a negative impact of $110 million on Oregon’s 2011-13 revenue. In addition, it was noted by legislators that while total revenues for the 2011-13 biennium are projected to be up over 2009-11 revenues by $1.3 billion (10.8%), the state will not have all of these additional resources because federal stimulus dollars are expected to decline significantly.

Governor Kitzhaber has asked the House and Senate co-chairs to adopt a budget based on the March forecast and Governor Kitzhaber called the forecast “consistent with the analysis we used in creating my budget.”

Oregon Education Investment Team Announced

Governor Kitzhaber will hold a press conference at 11:00 a.m. this morning to present the Oregon Education Investment Team, a temporary group designed to help Kitzhaber create a 0-20 education system and a new oversight board.

Executive Order No. 11-02 charges the team with "creating a plan of policy and budget recommendations to comprehensively transform Oregon's approach to education." The group will "engage the public, legislators and stakeholders in the creation of a new investment and budget process for education in Oregon." Read the full executive order here. Listen to the press conference here (TBA). 

Governor Kitzhaber Releases Budget - February 1, 2011

The Governor's 2011-13 budget, "Laying the Foundation - Governor's Budget Message" was released at a press conference this morning. Governor Kitzhaber commented that "...the next biennium will be our most difficult," and that balancing the budget will require "leadership with the courage and discipline to look beyond the next two years to where we want Oregon to be in 2020 and beyond." His budget provides $588.2 million total funds for CCWD with $410 million for the community college support fund (a reduction of 9% from the 2009-11 LAB.) Kitzhaber prefaced his comments by noting, "[T]he next biennium will be our most difficult," and that balancing the budget will require "leadership with the courage and discipline to look beyond the next two years to where we want Oregon to be in 2020 and beyond." Information on the Governor's Office and priorities can be found here.

 Governor-elect Kitzhaber Announces Team

Governor-elect Kitzhaber announced his team of top aides, led by Chief of Staff, Curtis Robinhold. Other appointments include Tim Raphael as Communications Director, Brian Shipley as Legislative Director, Kendall Clawson as Director of Executive Appointments, Cheryl Myers as the Minority Women and Emerging Small Business Advocate (MWESB). Key advisors for priority issues include: Nancy Golden, Education; Scott Nelson, Jobs & Economy; Duke Shepard, Labor and Human Services; and Mike Bonetto, Healthcare. [Read more here.]

Governor-Elect Kitzhaber Moves Toward Transition

Kitzhaber will direct his own transition to the governorship and charge five teams with specific tasks that will help grow Oregon’s economy. He will use this year’s Oregon Business Summit to begin to turn his Oregon Business Plan into a set of specific actions to improve Oregon’s economy and will use the Community Solutions model from his previous administration to develop regional economic development strategies. OCCA is encouraging all Presidents to attend the Oregon Business Summit.

The teams that are to help grow and attract business to Oregon are:

• Economic Development Team-headed by Ted Wheeler, Treasurer, State of Oregon and Wally Van Valkenburg, managing partner, Stoel Rives.  

• Manufacturing Team-headed by John Carter, CEO, Schnitzer Steel and John Mohlis, executive secretary, Oregon Building Trades Council.

•  Energy Efficiency Team-headed by Margaret Kirkpatrick, vice president and general counsel, NW Natural and Barbara Byrd, secretary-treasurer, AFL-CIO, and Maurice Rahming, president, O’Neill Electric. 

• Biomass Team-headed by John Shelk, managing director, Ochoco Lumber Company and Matt Donegam, co-founder and co-president, Forest Capital Partners.

•  Workforce Development Team-headed by Dave Williams, vice president of NW Natural and chair of the Oregon Workforce Investment Board and Lori Luchak, president of Miles Fiberglass.

Tom Imeson, public affairs director for the Port of Portland, will help to coordinate the policy teams on a temporary, part-time basis and Imeson and the Governor will work with each team to recruit more members from around the state.