OR increasing its appetite for federal money

By Shelby Sebens | Northwest Watchdog

Oregon is gorging itself on the the federal pie.

The money it gets from the feds rose to 6.1 percent — to $16.4 billion — in 2013-15, as compared to 2011-13. The Oregon Health Authority got the largest chunk, about $7.6 billion. Part of that — roughly $1.2 billion — is for the state’s expanded Medicaid program, a joint effort with the federal government. By 2016, the feds are expected to fund the program in full.

The Department of Human Services also got a large slice, about $6.3 billion; the rest was divided between various government agencies — about $500,000 for public safety and $1.5 billion for education.

From 2008 to 2010 states saw a historic high in federal money as part of their budgets thanks to stimulus funds. Those rates fell, however, either because of fewer federal dollars or increased state revenue, according to the Pew Charitable Trusts.

But data provided to Northwest Watchdog from the Oregon’s legislative fiscal office shows the state’s reliance on federal dollars has steadily increased since 1977.

A Pew States study found Oregon’s reliance on federal money as a share of the state budget increased from 29 percent in 2000 to 36 percent in 2012. Oregon ‘s budget is set up on a biennium, so the numbers from the state are different, showing a slight uptick from 27.7 percent reliance on federal money in the 2011-2013 budget to 28.1 percent in 2013-15, according to Ken Rocco, state legislative fiscal officer. Some numbers are subject to change; state is updating the 2013-15 budget with changes made in the 2013 special session and the 2014 regular session, Rocco said.

Either way, reliance on federal money is increasing, and fiscal watchdogs are concerned.

“At some point the federal government’s going to have to cut back on that federal funding,” Joe Luppino-Esposito, editor and counsel for State Budget Solutions, told Northwest Watchdog. “It’s really a problem when states have become too reliant on these funds.”

Luppino-Esposito said the nonprofit seeking to change the way states budget their money is preparing to review the latest trends on states’ federal reliance. Oftentimes, he said, states to make abrupt cuts to make up for the loss of federal money rather than looking for places to create more efficiency.

“What they wind up doing is just slashing budgets across the board,” he said.

Rocco attributed the changes in federal reliance to the unpredictability of federal programs, such as the stimulus dollars ,and changes to the Medicaid match rate, as well as an increase in unemployment insurance payments because of unemployment insurance extensions.

Contact Shelby Sebens at SSebens@Watchdog.org.

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