Getting ready for Wednesday in Oregon

The governor and the legislature obviously know that something bad is going to come out of Wednesday morning's update on the state's tax revenue forecast. They are already starting to ask agencies for suggestions for 5% reductions in their budgets for the current biennium. Since there are only a few months left, this is an impossible target. For the schools, with contracts in place for their expenses, it's not likely they can do anything at all.

So when the new estimate comes in, showing at least a billion dollars shortfall for the next biennium and enough damage for this one to wipe out the rainy day fund, there isn't much they will be able to do except spend it. They were already planning to spend the EFB (Ending Fund Balance) down to almost nothing, which means that the so-called rainy day fund was just the EFB. With the two combined reduced to almost zero, they will be legally obliged to super-balance the next biennium and restore some semblance of an EFB. So figure that the actual shortfall for 09-11 is already down a billion before it starts, and will be down two billion at least when the forecast comes in. When the forecast becomes realistic, which by policy in Oregon is always very and generally too late, it will be down three billion or more.

This is before considering the effect on costs of PERS. Maybe this time, we can collectively agree that making promises that oblige future generations is unethical, and that whatever money the current generation chooses to provide its public employees for their pensions should be given to them via 401(k) or whatever, at their own future risk entirely.