BY RACHEL CHEESEMAN
SALEM - The $562 million dollar budget shortfall was a heavy blow dealt to agencies across the state, but it was not the last.
An accounting error resulted in an overestimation of projected revenue from tobacco taxes and resulted in an additional $15 million shortfall in the general fund, explained Mazen Malik, a senior economist for the legislative revenue office, raising the final number to $577 million.
Tobacco taxes were calculated to bring in 22 percent of sales from tobacco products, when they actually bring in only 22 cents per pack of cigarettes. This error changed the revenue from tobacco taxes from $480.9 million to $396.4 million, a difference of about $84.5 million and an overestimation of about 21 percent. In addition to the general fund, revenue from tobacco taxes goes toward smoking cessation programs and advertisements, public transportation and the Oregon Health Plan.
Economists were quick to catch the error. Agencies were notified the day after the original forecast, Wednesday, May 27.
Patrick Cooney of the Oregon Department of Transportation said ODOT receives only 2 cents per pack in tobacco tax revenues, so the effect of the miscalculation was “very minimal.”
This shortfall will be added to the current deficit, and agencies statewide will have to factor this in as they attempt to rebalance their budgets.
While this will increase across-the-board budget cuts needed to balance the budget by only two-tenths of a percent, from 9.1 to 9.3 percent, it does increase the current budget deficit by 2.6 percent. Certain agencies that rely heavily on general fund money, like the “big three” departments of Education, Human Services and Public Safety, will have to find ways to further trim their budgets.
The Department of Education will have to cut approximately an additional $6.6 million from its budget, after already being asked to cut $252 million. This will result in cutting another $6 million from the money appropriated by the state for kindergarten through twelfth grade education.
The Department of Human Services will have to cut an additional $4 million from their budget, after cutting $158 million.
The Department of State Police will have to cut another $260,000, and the Department of Corrections another $2 million. At $84.46 to house one inmate per day, that translates to the cost of housing 65 inmates for one year.
Jeanine Hohn, communications manager for the Department of Corrections, said that the additional $2 million was a “drop in the bucket” compared to the $52 million they now will have to cut.
“Obviously, the agency is going to have a challenging time making any kind of cuts,” Hohn said. “We will work closely with the governor’s office and legislative leadership to have the least amount of impact on our correctional system as possible, if that is possible. “
Ann Snyder of the Oregon Youth Authority explained that her agency might take one of several steps to reduce spending in the agency by the necessary $11.9 million, originally forecasted at $11.5 million.
“Some of the options would be we hold additional vacancies, we delay program implementation, we reduce services somehow,” said Snyder. “It means an additional $400,000.”
