Oregon Gov. Tina Kotek pushes out heavy agenda leading into the new year

It's been a busy 30 days for Oregon Gov. Tina Kotek.

Since Thanksgiving, she has approved legislation drafted in a wildfire special legislative session, introduced a 2025-27 budget that includes plans for a $800 million in bond authority for affordable housing projects and issued an executive order mandating project labor agreements on state-funded projects.

The top priorities outlined in her budget include more money for housing, homelessness, behavioral health and education, although transportation is likely to dominate the legislative session.

"The December revenue forecast projects stability for Oregon, and I am pleased to share that my budget does not lay off people or cut services, and instead strategically deepens our commitment to building progress on Oregonians' top priorities while remaining disciplined when it comes to new programs," Kotek said.

The Decemberrevenue forecast projects the 2023-25 general fund ending balance at $2.79 billion, as revenues increased by $945 million since the September forecast, according to the Oregon Office of Economic Analysis.

The personal kicker now stands at an expected $1.8 billion that will be returned to taxpayers as a credit on their 2025 tax returns; and the corporate kicker now stands at an expected $1.024 billion and will be retained in the general fund and spent on education over the two-year budget, according to OEA's December report.

In the 2025-27 biennium, general fund available resources are forecast to increase by $2.27 billion, and revenues by $1.3 billion from the September forecast. This results in a total of $37.8 billion projected available resources, according to the OEA.

"As I approach the halfway mark of my first administration and take stock of where we have been and where we are going, I fundamentally believe the Legislature needs to pass budgets for the next two years that build on the progress we have achieved together," Kotek said.

Her $138 billion two-year spending plan would dedicate $700 million to curbing homelessness, $217.9 million for shelters, $188.2 million to a rehousing initiative and $173.2 million to homelessness prevention programs. She also proposes $1.04 billion to increase the housing supply, including $880 million in bond authority for affordable housing split between funding affordable rental units and homeownership. It also includes $100 million to support infrastructure programs to fund water, sewer and transportation at new housing developments.

It would also dedicate $330 million to support the behavioral health workforce with funding split between enhancing mental health services and education and training for people who work in that industry.

She also allocated $16 billion for K-12 education, an additional $600 million over the prior biennium.

While the total spending plan is $138 billion for the two-year period, her proposed general fund and lottery funds budget, where Kotek and lawmakers have more discretion ? and the amount that doesn't include federal funding is $39.3 billion. The total is up from the prior year budget of $33.5 billion approved in 2023.

Her proposal also includes $1.75 billion for the State Highways Fund, which she described as the minimum needed to maintain and repair existing roads and bridges. Lawmakers will spend the next several months debating a larger transportation package that could involve a tax increase to pay for projects over the next decade.

Her busy month also included convening on Nov. 26 a wildfire special session to deal with larger-than-expected suppression costs from the 2024 wildfire season ? and signing legislation that came out of the special session.

She signed Senate Bill 5801 on Dec. 13, a bill approved in the legislative special session to appropriate funds to pay for the historic 2024 wildfire season. It would allocate $218 million to the Department of Forestry (ODF) and the Oregon State Fire Marshal (OSFM) for costs associated with the 2024 wildfire season. ODF will receive $191.5 million and OSFM will receive $26.6 million.

"Following an unprecedented wildfire season, the legislature worked together to deliver needed funding for the people working to keep Oregonians' families safe," said Oregon House Majority Leader Ben Bowman, D-Beaverton. "We have to approach this issue differently. As we continue to confront the climate crisis, we must reframe our thinking around wildfire prevention and emergency preparedness."

Kotek's recommended budget for the upcoming biennium asked for an additional $130 million be spent to modernize and fully fund the state's wildfire readiness and mitigation programs on an ongoing basis.

That recommendation would complement $150 million from the state's reserve fund that would be redeployed for wildfire suppression costs.

Oregon witnessed another brutal wildfire season hitting 1.9 million acres burned, far exceeding the state's 10-year average of 640,000 acres per season and incurring gross costs upwards of $350 million, according to the governor's office.

While more than half of the costs will eventually be reimbursed by the federal government, the funds are needed to pay the firefighters, local fire services, and vendors who responded when Oregon called, Kotek said.

"I am grateful to legislators for taking swift action to ensure the state's fire season costs are addressed and the bills are paid," Kotek said. "Next year, I look forward to working with legislators to ensure the state finds a pathway for sustainable funding to cover wildfire costs in the years ahead."

State Forester Cal Mukumoto, director of the DOF, said he appreciated lawmakers' work in the special session to ensure the state has the funds needed to deal with the wildfire scourge

"As soon as funds are available to us, it will be all hands on deck for our finance team to get payments to the vendors who provided critical services all summer," Mukumoto. "This will be our top priority until we get through all the invoices pending in the system."

Funds will be available immediately to the DOF and OSFM, according to the governor.

The funding "reimburses our agency for the money paid to local fire agencies who stepped up to help their fellow Oregonians," State Fire Marshal Mariana Ruiz-Temple said. "We continue to pay these agencies as the invoices are received. This funding is critical to sustaining essential programs and services that protect Oregonians. We are working alongside our partners to find solutions to fix Oregon's wildfire funding problem."

Kotek also announced on Dec. 19 Executive Order No. 24-31, which will require project labor agreements (PLAs) on nearly all state construction projects in Oregon.

The governor said the order will "improve timeliness, lower costs, invest in high-skilled workers, and increase the quality of state construction projects.

"Oregon will soon embark on multiple large-scale projects across the state," Kotek said. "With these projects, we have a generational opportunity to lift up Oregon workers and reinforce public trust in our ability to do big things and do them well."

The PLAs would also benefit the communities in which the projects are constructed, she said.

The order requires PLAs on state-funded projects where onsite labor costs constitute 15% or more of the total construction, reconstruction or major renovation costs.

Senate Republican leader Daniel Bonham, R-Dalles, issued a sharp rebuke of Kotek's executive order calling it an unconstitutional power grab and insult to Oregon's contractors.

"The Legislature has debated PLAs for years and has deliberately chosen a different path," Bonham said. "The proper branch to make this decision ? the branch that represents the people ? decided not to legislate on this issue for good reason."

PLAs typically require contractors to abide by union-negotiated terms and conditions, effectively excluding many merit-based contractors and small businesses from state projects, Bonham said. PLAs can drive up construction costs and limit opportunities for non-union businesses statewide, he said.

The Senate Republican Caucus is committed to exploring all avenues to challenge this executive overreach and ensure decisions affecting Oregon families and businesses are made through the proper legislative process, he said.