Robert J. Castagna
Oregon and the Nation's Fiscal Crisis

After a decade of the greatest economic expansion in the nation’s history, state governments are drowning in tidal waves of red ink, placing safety net services, the common good and the lives of vulnerable persons at risk. Although far from alone, Oregon is a prominently cited example. With its own fiscal problems compounded by federal policies and the absence of significant new federal aid for the states, Oregon has reduced its budgetary support for vulnerable persons, in effect returning responsibility for them to families, community, churches and charities.

During a press conference at the State Capitol on April 9, 2001, initiating Oregon’s Campaign for Fairness, which is co-sponsored by 24 faith-based and community organizations, Archbishop John G. Vlazny of Portland emphasized society’s moral responsibility for vulnerable persons:

Poor, vulnerable and needy persons in our state and society have a special call on our compassion. The budget debate occurring in the Oregon Legislative Assembly this session is not merely about the numbers of financing state government. This public debate is a debate about the morality of state public policy and how we care for the most vulnerable persons in our midst: poor women, children, families, the elderly and disabled persons....we as a people will be judged on how we treat the most vulnerable in our society.

The threat to Portland’s vulnerable residents could be seen at Village Enterprises, which provides assisted living for elderly and disabled persons at St. Anthony’s and Assumption Villages. On Jan. 8, the State of Oregon sent termination notices to 22 Village residents in survival levels 15 through 17 (persons needing assistance with bathing, dressing or ambulation), informing them that their Medicaid benefits were to be terminated on Jan. 31. Additional residents in survival levels 10 through 14 (persons needing assistance with eating, elimination, ambulation or mobility) would lose Medicaid eligibility on March 31. Although Village Enterprises has decided not to evict anyone, these residents, typically an 87-year-old widow whose only income is Social Security, would lose Medicaid funding for medications, housing and care services.

Fortunately, the Legislature ultimately restored funding for survival levels 10 and 11. The residents outside those levels are being reassessed. The stress caused by these termination notices and reassessments to residents, family members, administrators, staff, board members and prospective residents cannot be overstated. In a different setting, Oregon is now investigating whether a suicide that occurred at a hospital was related to a patient’s loss of mental health medication benefits.

The Archdiocese of Portland’s Office of People With Disabilities, directed by Dorothy Coughlin, heard from negatively affected clients. Ms. Coughlin heard, for example, from a foster mother caring for four medically fragile infants who will find their service funds reduced each month: Before the cuts, I barely could cover expenses. To hire quality care support, you have to pay at least $8 per hour. Who will come for $4 an hour? All of the medical foster parents I know are in the same situation.

Coughlin concludes: We have reached crisis level. The human cost is too great.... When the burden of balancing budgets is borne by those most vulnerable in our community, not only does the resulting crisis in human lives create even more critical needs, but our state tragically fails the test of faithful stewardship of the common good, the measure of our care for those most vulnerable among us.

Oregonians’ stewardship of nature is internationally recognized. Greatly blessed with a rugged Pacific coastline, verdant valleys, snow-capped mountains and high desert, Oregon is struggling to provide and maintain programs in education, public safety and social services. School districts have reduced teaching days; a county jail has released more than 100 prisoners; and the state’s courts, closed for business on Fridays through June 30, have deferred processing misdemeanor property crimes.

In the midst of a jobless economic recovery and with one of the nation’s highest unemployment rates (7.5 percent), Oregonians have wrestled with the ugliness of an 18.5 percent revenue shortfall, about $2 billion, in its 2001-3 biennial budget year, which ends on June 30. The intense debates that began during the Legislature’s 2001 regular session continue unabated in the current 2003-5 budget deliberations.

How did Oregon arrive at a budget with a $2 billion shortfall? The national economic climate for the high-tech industry, a major employment sector in Oregon, has been weak, contributing to significant unemployment. Without a rainy day fund to draw upon during a recession, Oregon tapped reserve accounts, borrowed funds, deferred payments and increased taxes. Unfortunately, funds that might have been available had they been saved during the robust 90’s, the fat years, had been returned to taxpayers and were not available during the lean years.

From 1979 through 2001, when tax receipts exceeded revenue estimates by more than 2 percent, Oregon returned to taxpayers nearly $2 billion in credits and refunds. Oregon is also one of the five states without a sales tax; this leaves the state disproportionately dependent on income tax revenues and subject to volatile swings in capital gains taxes. Federal policies also affect state revenues. During the 2002 special sessions, the Legislature declined to disconnect state taxes from the federal government’s accelerated depreciation for businesses. This cost the state about $100 million. Oregon awaits a federal grant that will assist the states with budget shortfalls; but federal priorities compete for funds. A $200 billion aid package would return about $2 billion to Oregon. But that figure is in conflict with the current administration’s spending plans. Instead, Oregon has dealt with its budget woes in special sessions.

After 2002’s five special sessions, the Legislature cut spending and referred a tax increase to the voters to avoid additional budget cuts. On Jan. 28, however, by a vote of 54 percent to 46 percent, Oregon’s voters defeated Measure 28, a temporary income tax surcharge of 0.5 percent. This defeat triggered about $300 million in additional budget cuts. Besides the defeat of Measure 28, the Legislature’s problems were compounded by the March revenue forecast of another shortfall of $245 million, which meant more cuts would be needed to balance the budget.

On March 4 the Legislature finally completed the 2001-3 budget after cutting spending by about $1 billion and after raising resources by tapping reserves, borrowing, deferring payments, raising cigarette taxes and delaying implementation of a tax deduction. The Legislature repaired some of the most lethal cuts due to Measure 28’s failure and restored some human service programs for the most vulnerable: Medicaid assistance for clients in survival levels 10 and 11; prescription drugs for 100,000 health plan participants, transplant and H.I.V.-AIDS patients. There are, however, gaping holes in the safety net of social service programs, and advocates face another uphill battle because of an estimated $2.5 billion shortfall to maintain service levels in the 2003-5 budget beginning July 1.

Eliminated or reduced in the 2001-3 budget, and threatened in the 2003-5 budget, are programs to help the poorest of the poor: General Assistance (about $300 per month for those with less than $50 in assets and unable to work), Emergency Assistance ($350 to help families in jeopardy of becoming homeless), Oregon Project Independence (helps senior citizens needing assistance remain in their homes), Medically Needy (for those who need assistance with high medical costs) and Medicaid assistance to those in long-term care facilities in survival levels 12 through 17.

Oregon’s economic difficulties and service cutbacks are manifesting themselves in the increased requests for services to the St. Vincent de Paul Society, Catholic Charities, parishes and nonprofit organizations. The St. Vincent de Paul Society’s Portland Council has experienced an increase in overall services of 12 percent and a 40-percent increase in requests for help to pay for utilities. According to The Catholic Sentinel, during the past two years the society has served 20 to 30 percent more people in Lane County. In Bend County it served more people in January than in any other month in its history: 1,118 adults and 896 children.

Dennis Keenan, executive director of Catholic Charities in the Archdiocese of Portland, notes a 37 percent increase in people needing help between 2001 and 2002 in 12 Portland area programs. In a survey of emergency assistance requests in seven programs, the staff reports that the number of people seeking help with food, shelter and utility aid had increased by 30 percent in one program and 300 percent in another. The El Programa Hispano, for example, which provides low-income Latino people with emergency assistance, experienced an increase in requests and referrals from 5,085 people in 2001 to 9,540 in 2002. Another program, Rose Haven, which assists homeless women and children through a day center, has seen the number of people cared for jump from a range of 45-65 women served per day in 2001, to 75-95 women in 2002.

Through its Pregnancy Support and Adoption Program and Elizabeth House Maternity Home, Catholic Charities serves women hurt by program cuts. Keenan observes: Many of these persons are single mothers who are attempting to do all that they can to provide a nurturing home for their babies while venturing out to become financially self-sufficient. Cutbacks affecting these clients include $5 per month grant reductions for Temporary Assistance for Needy Families and increased co-payments from $25 to $43 per month for Employment Related Day Care.

Keenan concludes: While the number and the needs of the poor and vulnerable are increasing, the resources for them in Oregon are decreasing....

As Oregon struggles with its budget problems, the Oregon Catholic Conference, under the leadership of Archbishop Vlazny and Bishop Robert F. Vasa of the Diocese of Baker, will continue to advance the common good and urge the protection of vulnerable persons through a strengthened safety net of social services. While families, communities, churches and charities have a moral obligation to contribute to those in need, government has an inescapable moral obligation to protect and provide for vulnerable persons in our midst. The safety net needs to be mended and made whole to protect and provide for the widow, the orphan and the stranger not just in Oregon but throughout our land.

Robert J. Castagna is general counsel and executive director of the Oregon Catholic Conference.