September Advocacy Update

September 2020 Update

* State economists issued their latest revenue forecast for the current 2019-21 budget cycle that ends on June 30 next year. And the news is good. Over the summer, economists predicted a steep decline in revenue due to shutdowns to prevent the spread of Covid-19. That led to a special legislative session in August in which lawmakers made budget cuts and planned to tap some emergency reserves.

However, the new forecast shows that tax revenues remained healthy and that the state will finish the biennium with $1.7 billion more than forecast. You can read a summary about why at: https://www.opb.org/article/2020/09/23/oregons-latest-budget-projections-reveal-shocking-improvement-from-past-forecasts/

(A couple of caveats on the forecast: It does assume another round of federal assistance for unemployment and struggling businesses and that Covid-19 stays in check enough to avoid new restrictions. It also doesn’t account for any economic impact the wildfires may have.)

This is fantastic news. Additional budget and/or service cuts won’t have to be made for the fiscal year ending in June. But the news isn’t as good long term.

While the state is able to outrun Covid-19 economic impacts this cycle, eventually a poor economy will catch us. In this same report, economists forecast flat revenue for the 2021-23 biennium. In absolute terms, that doesn’t seem so bad. But in terms of funding essential programs, it means difficult decisions because demand for services naturally grows each budget cycle.

Fortunately, we’ll finish 2019-21 in good shape. Counting the $1.7 billion ending balance, the state could have around $3 billion in reserves available to limit service reductions in 2021-23. Still, crafting the next budget is going to be a challenge for lawmakers when they convene next year.

* You may have seen a small headline here and there regarding the Governor’s Behavioral Health Advisory Council and the disappointment of some participants that final recommendations didn’t do more to revolutionize the state’s publicly funded behavioral health care system.

The Council was appointed by the governor and charged with recommending funding investments that the governor could include in her 2021-23 budget that she presents to the Legislature. When the group was formed, Oregon was expecting significant revenue growth that could be tapped for new major investments. And hope was high that a large funding infusion could make a huge positive impact.

But as the Council was knee-deep in its work, Covid-19 struck. A shutdown soon followed. And as described above, that expected revenue increase evaporated. What emerged from the Council was a modest set of recommendations that, if funded, would be helpful, but that won’t “move the dial” in terms of system reform.

* The Secretary of State recently released an audit about Oregon’s behavioral health system for kids that’s unflattering but accurate. A decent summary can be found at: https://www.opb.org/article/2020/09/09/state-audit-oregon-failing-young-people-struggling-with-mental-health/

Whether this will spur action is the proverbial open question. The report makes 22 recommendations for the Oregon Health Authority, many of which address long-standing deficiencies identified in previous reports and recommendations. Surprisingly, while the audit identifies several silos in responsibility and funding (see pp. 25-28 in the audit), none of the recommendations specifically addresses this fragmentation.

Is this one more in a long line of reports that eventually gets shelved? Probably, if the past is any guide. However, at the very least, the audit keeps alive a steady drumbeat for reform. The more sustained the drumbeat, the likelier that effective action is eventually taken.

* We will soon have our draft legislative agenda in a somewhat final form to distribute as we look forward to the 2021 legislative session. Housing remains our No. 1 priority. Also on this session’s list will be insurance parity in both Medicaid and the commercial marketplace and access protections for mental health medications. We’ll also likely support via coalitions expanded access to telehealth and adding definitions to certain terms in Oregon’s civil commitment statutes.

As time marches on, we’ll have more details to share on these and other priorities. It’s going to be a challenging session. First, revenue will be an issue hanging over any proposal. Second, it will be a virtual session given continued risks from Covid-19. Lawmakers will be at the Statehouse, but we’ll have to advocate from afar.