Restoration of Cuts to Public Investments and Public Services Still Years Away

Oregon’s economy may be on a modest growth path, but the effects of the economic downturn that began in 2001 are lasting for a decade, according to an analysis released today by the Oregon Center for Public Policy (OCPP). State General Fund revenues, and the public investments and public services that the General Fund supports, will not recover from the recession until after the 2009-2011 budget cycle.

“As 2005 approaches, Oregon finds itself in the middle of what is looking like the Doonesbury Decade, a period marked by Oregon’s choice to provide inadequate support for important public services,” said Michael Leachman, policy analyst with the non-profit research institute. Gary Trudeau lampooned Oregon’s budget cuts after the downturn hit in his Doonesbury cartoon strip.

Oregon’s December Economic and Revenue Forecast predicts that Oregon’s economy will grow steadily over the next several years, as the state emerges from the economic downturn that began in 2001. Despite this growth, OCPP’s analysis of the forecast indicates General Fund revenues, adjusted for inflation and population changes, will not reach pre-recession levels until after the 2009-11 budget cycle.

“Economic growth will not be enough to restore the reductions in vital public services and public investments until after the 2009-2011 budget period,” said Michael Leachman, policy analyst at the OCPP. “We can’t count on the economy to bail us out; only new tax revenue from those with the greatest ability to pay will restore Oregon’s public investments to the pre-recession levels that Oregonians enjoyed.”

The OCPP analysis also finds that the General Fund’s projected recovery date is slipping further away compared to earlier forecasts. OCPP’s previous analysis of data in the June 2004 official state revenue forecast projected that the General Fund would recover during the 2009-11 budget cycle. Today, the OCPP analysis of the December forecast finds that recovery will not occur until after 2009-11.

“Oregon doesn’t need to suffer a Doonesbury Decade,” said Leachman. “If we choose, Oregonians can restore education, public safety, human services and other programs cut during the recession,” he said.

Leachman set out a path to ending the Doonesbury Decade early. “Tax reform focused on raising additional revenue from those with the greatest ability to pay will restore our investments in children, protect our communities, and renew our care of children, the sick, and the elderly,” said Leachman.

The Oregon Center for Public Policy uses research and analysis to advance policies and practices that improve the economic and social opportunities of low- and moderate-income Oregonians, the majority of Oregonians.