PHOENIX - Oregon implemented a statewide hiring freeze as the first of a number of cost-cutting measures set to be rolled out in coming weeks, including efforts to reduce pension liabilities.

Oregon Gov. Kate Brown, a Democrat, announced Thursday that she was issuing an executive order implementing the hiring freeze and would be taking further actions in the near future in an effort to alleviate steep cuts proposed by the legislature in the face of a roughly $1.6 billion two-year budget deficit.

Oregon. Gov. Kate Brown
Oregon. Gov. Kate Brown announced measures to cut costs in the face of a $1.6 billion deficit.

“Oregon's children and families deserve the chance to lead healthy and productive lives,” Brown said in a statement. “But the cuts to the state budget recently proposed by the legislature put the most vulnerable Oregonians even more at risk than they are now. This is unacceptable.”

Those cuts, proposed by the legislature’s Joint Committee on Ways and Means, include cuts of 4% to the state K-12 education budget, 28% to the Oregon Health Authority, and 17% to transportation, for an overall cut of 8% from current service levels.

“I'm calling for an all-hands-on-deck approach to protect Oregonians from these cuts and address the budget deficit,” said Brown, explaining that all state agencies would be subject to the hiring freeze until their budgets are approved by the legislature.

“In the coming days I will be making additional announcements on a series of actions to improve overall government finances and operations, including: improvements to collection of debts owed to the state; renegotiation of state vendor price agreements; providing clarity on executive branch policies regarding bargaining with state employee unions; and addressing the unfunded actuarial liability of the Public Employees Retirement System,” Brown said.

Oregon, which carries general obligation ratings of AA-plus from S&P Global Ratings and Fitch Ratings and Aa1from Moody’s Investors Service, has been generally upbeat about its economy, with a lower-than-national-average unemployment rate of 4% according to the most recent estimates and estimates of strong future revenue growth. The Oregon Public Employees Retirement System (OPERS), which Brown mentioned specifically, was 80.5% funded in 2016.

“The entire state must take responsibility and join in this effort,” Brown said. “I have challenged state agencies to look for both short-term savings and ways to address long-term cost drivers throughout state government. I also encourage the Secretary of State, the State Treasurer, the Attorney General, and the Commissioner of the Bureau of Labor and Industries, as well as the Legislative Assembly and the Judicial Department, to adopt policies that freeze hiring, reduce travel expenditures, and optimize facility usage.”

Oregon legislative Republicans, outnumbered in both chambers, had been calling for a hiring freeze just before Brown announced her executive order.

“The budget environment we are facing is nearly unprecedented in our state’s history,” House Republican leader Mike McLane, R-Powell Butte, said in a statement. “We have record and growing revenues, yet Democrats are saying we do not have enough money to pay our bills.”

Oregon’s two-year budget period begins on July 1st of odd-numbered years and concludes on June 30th of the next odd-numbered year. The state’s next budget forecast will come out next month, and according to the state Legislative Fiscal Office is typically the forecast used as the basis for the upcoming biennium’s budget.

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