Gov. Tina Kotek proposes $32.1 billion budget, keying on homes, schools and mental health

The $32.1 billion state budget Gov. Tina Kotek proposed Tuesday redirects hundreds of millions of dollars that would have gone to the state’s reserves to build houses, teach kids to read and improve access to mental health services.

Kotek has named education, housing and homelessness and mental health and addiction her top priorities during her first year in office, and a 28-page preview of her proposed budget shared ahead of a press conference Tuesday morning reflects those priorities. 

Education and human services, including funding behavioral health and homelessness, make up a combined 75% of the budget proposal, with $13.5 billion budgeted for education and $10.8 billion for human services. It’s an increase over the $26.8 billion budget legislators approved two years ago for the 2021-23 budget cycle, 

Oregon budgets in two-year cycles, and the next begins July 1. Governors usually must present their budget proposals to the Legislature by mid-December. Newly elected governors, including Kotek, have until Feb. 1 to share their plan for state spending.

From there, the governor and her staff negotiate with legislative leaders, lawmakers on the budget-writing Ways and Means Committee and other interested parties to reach a compromise that the Legislature will vote on later this spring. Kotek’s proposed budget provides a roadmap for Democrats in the legislative majority, who share many of her priorities, but details will change over the next few months of negotiations.

A December report  from legislative budget analysts predicted that the state would have $30.2 billion in revenue from the General Fund and Lottery Funds, and that it would cost $30.7 billion to continue funding programs at the same level as the prior budget – a gap of more than $500 million. Kotek’s proposal consists of $32.5 billion in revenue and $32.1 billion in spending. 

It also reflects the state’s latest federally approved Medicaid plan, which beginning in 2024 includes a waiver allowing the state to use $1.1 billion in federal funds to help pay rent and food costs for people on the Oregon Health Plan who are homeless or have unstable housing. One in three Oregonians receive health care through the Oregon Health Plan, and the plan allows the state to use federal funds to address issues like homelessness that contribute to health issues. 

Kotek’s budget proposal involves redirecting $765 million that would have automatically been saved in the state’s reserve funds, which now total more than $2 billion, to programs intended to improve education, homelessness and mental health. 

Housing and homelessness

About 18,000 Oregonians are homeless, according to the U.S. Department of Housing and Urban Development, and about 11,000 are unsheltered, living in tents or cars. Many more Oregonians are on the brink of homelessness, dealing with high rent and minimal savings. 

Kotek earlier this month called for $130 million in spending during the current budget period to add 600 new shelter beds, rehouse 1,200 homeless individuals or families and provide rent assistance and eviction prevention services to help 8,750 households stay in their homes.

Her request for the next budget period includes $172 million to help rehouse homeless people and connect them to long-term rent assistance if needed. It also includes $130 million for permanent supportive housing, or housing bundled with other services including counseling and job help, as well as $73 million for a permanent homeless prevention program and $24 million to operate new and existing shelters.

To start meeting the goal of building 36,000 new homes per year, Kotek’s proposing creating a new state office and spending $770 million on bonds to build more homes affordable to low-income families. The proposed Housing Production and Accountability Office, jointly overseen by the Department of Land Conservation and Development and the Department of Consumer and Business Services, would be in charge of working with developers and local governments to reduce bureaucratic land use laws or permitting barriers that slow the building process. 

Mental health and addiction

Kotek’s proposed budget calls for building on the $1 billion the Legislature allocated to behavioral health in 2021, money that has been slow to reach Oregonians in need. Staffing shortages and complicated funding systems make it difficult for people in crisis to find the help they need, leading to preventable deaths and incarceration.

“Despite many innovative programs and people who work tirelessly to serve their clients, Oregon’s patchwork of funding and revolving strategic direction have left Oregonians with a confusing conglomeration of services and a hopeless outlook,” the budget document said. 

Kotek’s plan calls for more funding for incentives for behavioral health workers, including $60 million earmarked for student loan repayment, scholarships and tuition stipends, $20 million to nearly double an incentive program run through the Oregon Health Authority and $127.4 million to continue a 30% rate increase for providers treating Medicaid patients that was enacted in 2022. 

The Medicaid plan, also called a waiver, and funds from Measure 110, the voter-approved law that decriminalized possession of small amounts of drugs and allocated money to addiction services, will provide $278.9 million for treatment, housing and employment assistance and peer support services for people struggling with substance abuse issues.

Kotek’s budget request includes $14.9 million to expand jail diversion programs and $47.6 million to mobile crisis teams like the CAHOOTS program in Eugene where mental health professionals, rather than police, respond to people who are intoxicated or experiencing mental health breaks. The goal of those teams is to help people find treatment, rather than send them to jail, and free police to focus on more serious crimes. 

iIt includes $195.7 million to continue some of the 2021 investments, with more money for aid services including community-based behavioral health centers. Another $40 million would go toward operating mental health residential facilities. 

There’s also money earmarked for suicide and youth serrives, including $18.4 million to operate the state’s new 988 help line and $7.7 million to expand suicide prevention programs. And the Oregon State Hospital, which houses people charged with crimes who are not competent to aid and assist in their own defense, and others, would receive more than $50 million to hire more workers and upgrade facilities. 

Education

Fewer than half of Oregon’s third-grade students were reading at grade level in the 2021-22 school year, and research shows that students who aren’t reading at grade level in third grade are four times more likely than their peers to drop out of high school. Kotek’s budget calls for $100 million for preschools, elementary schools, community-based organizations and tribes to teach children to read.

There’s also a proposal to spend $20 million in the summer of 2023 for summer school programs focused on literacy, with schools providing a 50% match. Kotek plans to seek the same funding in 2024, but it’s not included in the proposed budget. Her request also calls for $30 million for summer enrichment programs, which are intended to help children connect with each other and their communities as they recover from the pandemic and its effects on schools. 

More than $200 million would be set aside for programs for early childhood education and care, including $62.5 million to pay preschool teachers more and reduce teacher-to-student ratios for young children with disabilities. Another $100 million would go toward building or expanding child care facilities. And the remaining money would support efforts to add child care facilities at affordable housing developments and expand the state’s employment-related day care program, which helps low-income working families and students pay for child care. 

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