The Associated Press
SALEM - A broad section of Oregonians, from the elderly to college students, are worried about proposed rollbacks in government-subsidized state programs. But two high-profile court cases are threatening to make it even worse.
The $11.9 billion general-fund budget for 2005-2007 offered by Gov. Ted Kulongoski envisions higher college tuition, cutbacks in programs that help senior citizens stay in their homes and eliminating dental care for needy adults on the Oregon Health Plan.
But if the state loses either of two cases pending before the Oregon Supreme Court, it would siphon hundreds of millions, even billions, of dollars from public services.
"You're already looking at a cupboard that just has crumbs left," said Sen. Ben Westlund, R-Tumalo. "There aren't any reserves, and, as austere as this current budget is, it's already difficult enough without contemplating additional impacts in the billions of dollars."
The lawsuits stem from two legislative actions.
In 2003, the Legislature adopted sweeping, cost-cutting changes to the state's deep-in-debt public pension system.
But public-worker unions are suing to overturn the changes, which reduced the anticipated benefits of more than 300,000 people to slice the long-term debt of the Public Employee Retirement System by $8 billion over the next 24 years.
"The PERS case is huge, because there are so many elements to it," said Paul Warner, a former state economist and director of the nonpartisan Legislative Revenue Office.
The savings in the 2005-2007 cycle alone add up to an estimated $678 million, he said.
The state, cities, counties and even irrigation districts are counting on the savings from the PERS reforms.
In the other case, citizens sued to reverse a decision by the 2001 Legislature to shift $113 million in federal Medicaid dollars from the state's general fund.
The money was spent on health-related programs as the federal government intended. But that move by lawmakers reduced the popular "kicker" tax refund and sparked the lawsuit.
The Oregon Court of Appeals ruled in April that lawmakers violated the kicker law and ordered the $113 million be sent to taxpayers. The Supreme Court will hear arguments on Jan. 5.
Under the kicker law, the state cuts refund checks if general fund revenues exceed projections by 2 percent or more.
Westlund said the Medicaid money was mistakenly put in the general fund in the first place and had been earmarked to help pay for health programs, not help fund a big tax refund.
If the Supreme Court agrees that the kicker law was violated, the state would owe between $125 and $130 million because taxpayers will be due interest, Warner said.
Many observers expect a PERS ruling in the next few months so the 2005 Legislature can react.