Gov. John Kitzhaber may call the Oregon Legislature back to Salem for the third time this year, thanks to worsening budget scenarios and an economic stimulus package passed by the U.S. Congress last week.
The governor issued his line-item vetoes to the Legislature’s second special session Tuesday, and will announce his plan to balance Oregon’s budget at 11 a.m. today. He is expected to call the Legislature back into session in June, once the state’s quarterly economic forecast is released.
A third special session will probably be called even if the economic forecast doesn’t show a larger deficit because Congress’ economic stimulus package will cause Oregon to sink hundreds of million dollars deeper into debt.
State Sen. Tony Corcoran, D-Cottage Grove, said the state may see even larger higher education cuts as a result of Congress’ action.
“Higher education could be looking at more severe cuts — there’s no question about it,” Corcoran said.
Congress passed the Job Creation and Worker Assistance Act of 2002 on Thursday. It provides 13 extra weeks of unemployment insurance to states with high jobless rates and federal tax breaks for business investment, but will likely strip $148 million of revenue from Oregon’s budget over the next two years. Oregon relies on the federal tax structure to set the state tax rates.
If a special session is called in June, Corcoran said the Legislature might try to amend Oregon’s tax code so the new stimulus package doesn’t hurt the state, but such action would require three-fifths approval by the Legislature.
Brian Rooney, a regional economist for the Oregon Employment Department, said Oregon will be hard hit by the new stimulus package.
“In the short run, it makes our state budget system more difficult,” Rooney said. But he added that
in the long run, tax cuts may
encourage businesses to invest more,
generating higher tax revenues once the economy turns for the better.
Rooney said Oregon qualifies for the extra 13 weeks of unemployment insurance because its 8 percent unemployment rate is one of the highest in the nation.
U.S. Rep. Peter DeFazio, D-Eugene, said Oregonians desperately need the relief the stimulus package provides.
“It’s about time we sent real assistance to Oregonians and all American families,” he said.