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March forecast: Budgets fall by about $3 billion

Photos and story by Dana Haynes

OK, the March revenue forecast is out. (I know, I know: it’s still February. it’s like Oktoberfest falling in September. Get past it.)

State Economist Tom Potiowsky addressed the Legislature this morning and told them the 2009-11 budget will have a shortfall of about $3 billion: from roughly $15.9 billion the governor used as his benchmark when he produced his proposed budget in December, to a projected $13 billion.

The next budget forecast is scheduled for May. And let’s not fool ourselves: it could be worse.

A very large chunk of Oregon’s economy is based on income taxes, which are one of the most “elastic” of taxes. That means they rise like a rocket in good times and drop like a Warner Bros. anvil in bad times.

Interestingly, lottery sales also were down this quarter (the lottery sometimes acts as a kind of Prozac for a bipolar income tax, evening out the down times). According to The Oregonian’s – a heck of a good writer – that’s because the snow and ice storms, plus the newly imposed smoking ban in restaurants and bars, led to fewer people playing the lottery.

What does this mean for С»Æ贫ý in particular and Oregon’s 17 community colleges in general? Too soon to tell.

The 2007 Legislature began the process of reinvesting in community colleges, with a combined budget of $500 million (after funding for community colleges got the ax after the 2002-03 recession). Figure, on average, that a quarter of that, or about $125 million, went to С»Æ贫ý and three quarters went to the other 16 colleges. That’s because we have a quarter of all community college students in Oregon.

If cuts come across the board – and we don’t know that they will – that would suggest a community college general fund of about $405 million, down from $500 million. But again: these are soft, soft numbers. There’s a lot of dickering to do between now and the end of the session.

Stay tuned…