EXCERPT FROM: OregonLive.com
By Harry Esteve
At Oregon State University in Corvallis, construction is under way on the $12 million Hallie Ford Center, where researchers will focus on the long-term well-being of children and families. At the same time, Malina Newell in Keizer worries that state cuts to day care will threaten the immediate needs of her family.
Newell, a single mom who works at Walmart, has learned that a state budget shortfall will wipe out $17.3 million that was supposed to help thousands of low-income families pay for day care. Without the subsidy, Newell says, she has two choices: Leave her 6- and 7-year-olds home with her 15-year-old or ask for reassignment to a lower paying, overnight shift.
It's a perplexing issue not just for the Keizer mom but for the entire state. Because of the way Oregon's budget works, some families are losing aid while other state dollars are fueling a public building and highway construction boom.
"It's hard for me to see them building roads and not paying for something like child care," says Newell, who adds that she has worked hard to get off welfare and into a job that has a future.
The recession that gripped Oregon and tore a $577 million hole in the state's general fund budget has also created confusing contradictions. Here's a big one: Amid hand-wringing over program cuts and teacher layoffs, total state spending has increased by 17 percent in two years.
How can that be?
The explanation lies in the source of the money. Government borrowing, federal dollars and special fees all contribute to the money that flows in and out of the state budget. In the past two years, for example, about $1 billion in federal stimulus contributed to that overall spending increase.
The problem is that most of that money is restricted and can't be used to pay for education or child care programs. Those programs depend on the state's general fund, which is supported primarily by income taxes and shored up with state lottery profits.
As a result, some state programs are seeing huge spending increases even as others are laying off employees, from midlevel managers to special education aides.
At OSU, crews are erecting new buildings, refurbishing others and laying in new brick and pavement to improve the campus appearance. Total cost: $168 million.
"Considering the economy, this amount of construction is kind of amazing," Mark McCambridge, OSU vice president for finance and administration, said in a statement describing the projects.
"At any given time, we might have one major building project under way and several smaller projects," McCambridge said. "This summer we have close to a dozen major projects. It's a bit hectic -- but it's a nice problem to have."
The Oregon Department of Transportation also is enjoying a banner year.
In 2009, legislators approved higher vehicle registration fees and a gas tax increase that is scheduled to go into effect next year. The extra money, combined with federal stimulus spending and previous fee increases, has led to a spike in road and bridge construction.
"We have more projects right now than we've had in the history of the state," says ODOT spokesman Dave Thompson. "We have dozens and dozens."
In 2001, for example, the state spent about $300 million on highway construction. "We're closer to $900 million now," Thompson says.
The projects create or save hundreds of jobs in the private sector, Thompson says. They also prepare the state for commerce when the economy gets back on track.
"The goods have to come and go," he says. "Transportation is the lifeblood, the system that carries the economy."
Even if the state wanted to transfer money from road projects to other programs, it can't. Voters amended the constitution to require gas taxes and vehicle fees to be spent on roads. And no one is seriously talking about revisiting that decision.
In other cases, fees are dedicated to specific agencies and federal funds come with exacting requirements of how they are spent.
These restrictions explain why Oregon state government can recruit low-income parents to enroll their children in the Healthy Kids insurance program and at the same time send letters to some of those same parents alerting them to cuts in the Employment Related Day Care program.
"Services that are paid for mostly with Oregon tax dollars -- such as Employment Related Day Care -- are more vulnerable to ups and downs in the economy," says Dr. Bruce Goldberg, director of the Department of Human Services. "On the other hand, Healthy Kids is paid for by federal funds and a tax on insurance companies dedicated to health care coverage for children, not state tax dollars."
Private donations and partnerships are also part of the mix.
For example, $6 million in private grants will help pay for the Hallie Ford Center. But the other half will come from state bonds that are repaid from the state's general fund.
State debt payments, in fact, are taking an increasingly larger bite out of the pot of money that pays for schools, health care and prisons. During the next two years, the state's payments on construction debt are estimated to cost the general fund an additional $247 million.