Oregon’s new governor requests $1B for housing spending

By CLAIRE RUSH
Associated Press/Report for America

SALEM, Ore. (AP) — Oregon’s recently inaugurated Democratic Gov. Tina Kotek plans to ask lawmakers to allocate more than $1 billion to housing and hundreds of millions more to mental health and education, unveiling her strategy for tackling the state’s most pressing crises in a budget proposal released Tuesday.

Oregon is short 110,000 homes and has some of the highest rates of homelessness and drug addiction in the nation, overwhelming service providers, the criminal justice system and the beleaguered state psychiatric hospital.

“You will see in the budget that the state is taking a bigger role on housing and homelessness, because we have to,” Kotek told reporters Tuesday at the State Library of Oregon in Salem. “I’m proposing investments to disrupt the harmful and expensive pipeline of Oregonians who move from homelessness to jail or the state hospital.”

Of the total money requested for housing, Kotek has asked the Legislature to act as quickly as possible to allocate a $130 million homeless package aimed at reducing the number of people living outside. The package would fund 600 new shelter beds and provide rental assistance for tenants and landlords in order to stem evictions.

Kotek said the biggest issue in drafting the budget was determining how to keep programs afloat with $3.5 billion in one-time federal funding set to expire as the national COVID-19 emergency winds down. Federal relief money, along with higher-than-expected revenue growth, helped state governments including Oregon build historic cash surpluses during the pandemic.

State fiscal analysts expect to have a $4 billion surplus at the end of the current budget cycle. But they have also forecast a mild recession this year that could help flip the surplus into a $560 million budget deficit during the next two years.

Despite those projections, Kotek said that her budget wouldn’t tap into the $2 billion currently in the state’s reserve funds; instead, it would redirect $765 million that was set to be deposited into the reserve toward her priorities.

The proposed budget wouldn’t raise new taxes, Kotek said, although it does assume that lawmakers will pass a bill that would create a monthly cell phone tax to fund the new national 988 Suicide and Crisis Lifeline.

Republicans in Oregon’s House of Representatives said they were “optimistic” that the budget wouldn’t increase taxes, but also expressed concern about spending not being equitably distributed across urban and rural communities.

“One of our greatest concerns remains that the Governor’s proposed homelessness initiative does not reach beyond the urban centers of our state,” the House Republican caucus said in a news release. “If Governor Kotek is going to stay ‘Mission Focused’ on being a Governor for all of Oregon, this must start now.”

Some Republican lawmakers have criticized an executive order that Kotek signed on her first full day in office earlier this month pronouncing a homeless state of emergency. The order only declares an emergency in parts of the state where unsheltered homelessness has increased by at least 50% since 2017, leaving out some rural areas.

The bulk of the proposed $1 billion in housing money would fund the construction and preservation of affordable housing. About $770 million in general obligation bonds would go toward building more units for renters and new homeowners and $118 million in lottery and general fund money toward keeping existing affordable homes on the market.

Highlighting the intersection of the homeless, mental health and criminal justice crises, Kotek has asked that $50 million be allocated to the understaffed Oregon State Hospital, which is at overcapacity. The majority of patients in the public psychiatric hospital are people charged with crimes who have been sent there by a judge to receive treatment aimed at helping them participate in their own defense. Of those so-called aid and assist patients, 60% were homeless prior to their arrest, Kotek said in her budget request.

Kotek also sees boosting the capacity at local mental health and addiction treatment centers as a way to unload some of the burden on the state hospital.

Oregon has grappled with its approach toward drug use. In 2020 it became the first state in the nation to decriminalize small possessions of hard drugs after voters approved Ballot Measure 110. The measure was supposed to channel hundreds of millions of dollars of cannabis tax revenues into drug treatment and harm reduction programs, but a recent audit found that money has been slow to get out the door. In the meantime, overdose deaths fueled by meth and opioids have continued to rise.

Kotek’s proposed budget would direct nearly $280 million toward addiction treatment, overdose prevention and peer support services, drawing from Measure 110 money and federal Medicaid funding.

Education and early learning are other funding priorities for Kotek. Math and language test scores plummeted in Oregon because of the pandemic, and every county in the state is considered a child care desert for infants and toddlers, meaning the number of children needing care outnumber available slots by at least 3-to-1.

Kotek’s budget would invest $100 million in literacy programs aimed at helping children learn how to read, and a similar amount in expanding and creating more child care and preschool facilities. More than $60 million would help provide a living wage to child care workers, who often cite low pay and lack of benefits as reasons for leaving the sector or not entering into it.

Universities, however, say the budget’s proposed funding for higher education is insufficient.

“Oregon’s public universities require greater state support today than ever before to maintain essential programs and wraparound services for an increasingly diverse student body and soften the impact of inflation on students and their families and assuring them a higher standard of living immediately after graduation,” the presidents of Oregon’s eight public universities said in a news release.

Kotek acknowledged that her budget won’t finance the major capital improvement projects that universities have requested funding for, as it would spent the bulk of the state’s general obligation bonds on housing.

The Legislature will have to approve Kotek’s budget request in the coming months before the next budget biennium for 2023-2025 begins in July.

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Claire Rush is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.