Would Oregon's budget be dramatically smaller if pegged to population growth?

Fiscally conservative members of the Oregon Legislature never much like the size of the state’s budget. But once something is funded, it’s never easy to muster the political willpower to take the cash away.

In a recent opinion piece for The Oregonian, Sen. Doug Whitsett, a Republican from Klamath Falls, offered a creative solution: Peg state spending to population growth and inflation.

"Oregon desperately needs to establish a constitutional limit on the growth of state spending," he wrote. He maintains that the $60 billion all-funds budget is growing out of control.

Whitsett noted that the state’s Legislative Fiscal Office, which keeps a close eye on the budget, had illustrated "for purpose of comparisons" what Oregon’s all-funds budget would look like today if his proposal had been implemented 20 years ago.

"Oregon spent about $20 billion in all-funds budgets 20 years ago," he wrote. "With this spending limit in place, the state’s all-funds budget would be about $27 billion today."

That’s a nearly $33 billion difference. A huge amount of money for a state like Oregon. So huge, in fact, that PolitiFact Oregon wanted to know whether Whitsett was right.

We spoke with Whitsett, who said that he’d gotten this statistic from a presentation that the fiscal office had given at the beginning of the current legislative session. So we called Ken Rocco, the office’s director, and asked him if he remembered this.

Rocco got back to us via e-mail. He offered two pieces of caution.

First: There was no reason in particular that his office chose the budget from 20 years ago to use for their projection.

Second: The data the senator had referred to in his opinion piece hadn’t been calculated accurately. "In looking at this chart, the data presented claimed it was inflating the 1991-93 base year by both inflation and population growth, but when I looked more closely at the data today, it was actually only for inflation."

In fact, he noted, if the calculations been done right, the actual 2011-13 budget -- pegged to population growth and inflation -- would be about $36 billion. "This was not the Senator’s mistake, but LFO’s," Rocco noted.

Nevertheless, the point Whitsett was trying to make -- that spending growth has happened beyond just normal population growth -- remains true, Rocco said. "There are a number of other drivers to budget growth than simply inflation and population increases, such as specific caseload growth, additional mandate programs that require funding, etc."

Let us point out here that the all-funds budget is just that -- all funds. It includes not only the general fund, which lawmakers can allocate however they choose, but also federal money, bond revenue, gas taxes, fees -- in short, a whole lot of money dedicated for specific purposes.

Now, allow us to offer up a slight tangent. Whitsett’s idea is not entirely new. Back in 2006, Measure 48 was put on the Oregon ballot. That measure would have limited any increase in state spending to population growth and inflation increases.

It turned out, this had nothing to do with what Whitsett was writing about, but we bring it up because it illustrates an important point: Measure 48 didn’t apply to things like federal funds. That’s huge given that nearly a fourth of the state budget comes from federal funds.

For instance, about $15 billion of the upcoming all-funds budget comes from federal sources -- that’s about a quarter of the total. Twenty years ago, federal funds only accounted for about 15 percent of the total.  If you were to play by Measure 48’s rules and add that chunk of change to the $36 billion that the fiscal office projected, you’d get an all-funds budget closer to $42 billion.

That, of course would still mean about $18 billion in less budget growth over 20 years. That is no small thing -- but it’s still a lot closer to the current all-funds budget than the initial $27 billion Whitsett mentioned.

Whitsett also pointed out, during an interview, that it would be a mistake to assume the federal government will keep providing a quarter of the state’s all-funds budget. "At some point in time that has to reverse … the current sequester might be a part of that."

Whitsett said that if we had curbed budget growth 20 years ago by pegging it to population growth and inflation, our budget would be about $27 billion today instead of $60 billion. He was referring to an inaccurate calculation made by a typically unimpeachable source. The figure is actually closer to $36 billion.

We won’t hold their error against Whitsett, but we do think it’s important to note that, if federal funds are a concern at all, our budget wouldn’t be quite as slight as Whitsett predicted. We rate this claim Mostly True.

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