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Why won't they say recession?

The Oregonian
October 8, 2010By Chuck Sheketoff

Sometimes the words that fail to appear in a written commentary are the most revealing. In "There's a whole new way to follow the money," state Rep. Dennis Richardson and Oregon businessman Allen Alley never once mention the word "recession" when discussing Oregon's fiscal woes.

That failure -- even as the pain from the Great Recession continues -- shows that Richardson and Alley are either misinformed or attempting to misinform.

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Why won't they say recession? (PDF)

It's like writing about flooding in New Orleans in 2005 and not mentioning Hurricane Katrina. It's no secret why Oregon and 45 other states face fiscal crises: The worst recession in more than 70 years wreaked havoc on state revenues. With unemployment up and business activity down, state revenue collections have fallen sharply and are slowly rebounding.

Meanwhile, demand for state services that protect people when the economy fails them has skyrocketed. More Oregonians are looking to the state for help with unemployment, food assistance and other emergency needs.

But rather than acknowledge the truth of the recession, Richardson and Alley play games with data to claim falsely that state spending has risen sharply.

As noted by both the Oregon Center for Public Policy and the Oregon Business Council, as a share of personal income, state and local spending in Oregon has remained fairly constant over the past 30 years.

And in the current budget cycle, the Legislature has cut deeply. The 2009 Legislature slashed $2 billion from the state budget, followed by two across the-board cuts ordered by the governor after the recession proved deeper and longer than anticipated.

So how are Richardson and Alley misleading Oregonians? They deceptively rely on the All Funds budget, rather than the General Fund and Lottery budget.

The General Fund and Lottery budget is what most people mean when they talk about the state budget. More than 90 percent of it goes to just three things: education, public safety and health and human services. And they are paid for mostly out of the state's principal source of revenue, the personal income tax.

The All Funds budget, by contrast, simply shows how much money -- including large amounts of federal money -- flows through state coffers. For example, the current All Funds budget includes about $6 billion that the federal government provides to Oregon to spend in our communities on Medicaid.

Although the All Funds budget has grown substantially in recent years, that doesn't mean that the size of state government has grown. As the Legislative Fiscal Office makes clear in a document readily available on its website, "The majority of the increases [in the total funds budget] are directly related to the federal stimulus package provided by Congress and the increases in unemployment insurance payments."

These federal Recovery Act dollars have protected Oregonians from the worst ravages of the recession. Increased unemployment insurance benefits have kept families afloat, food stamps have kept families fed, extra Medicaid funds have kept thousands of Oregonians insured and thousands of health care workers employed, emergency education funds have kept teachers in the classroom. The list goes on.

In other words, the Recovery Act dollars are disaster relief funds for the economic Hurricane Katrina that struck Oregon and the nation. Do Richardson and Alley have a problem with that? Oregonians don't need the politicized, misleading website about Oregon's budget that Richardson and Alley are peddling. What they need is an honest discussion about the public services that Oregonians value and how best to protect them.

Chuck Sheketoff is executive director of the Oregon Center for Public Policy.

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