Search Google Appliance


The Oregonian: Oregon Legislature could approve $274 million for OHSU, PSU, others
Author: Christian Gaston, The Oregonian
Posted: January 24, 2014

Read the original story here in The Oregonian.

Oregon Health & Science University has already asked state lawmakers to pony up $200 million toward a new Portland cancer research center. Now the state’s other public universities want some cash, too.

Seven other campuses – all the schools in the Oregon University System except Eastern Oregon University – are seeking money for projects totaling about $74 million.

Both OHSU’s and the other schools’ requests are for bond money, putting the Legislature’s credit card at the center of the 35-day session that starts Feb. 3.

Rep. John Huffman, R-The Dalles, said he learned of the latest cash request last week.

“I was a little bit surprised last week in hearing that they’d be coming with that kind of a capital ask because we had really stepped up to the plate during the 2013 session,” said Huffman, who sits on the budget committee in charge of capital construction.

Before voters approved a plan for annual legislative sessions in 2010, major funding decisions were usually made only during odd-numbered years, when lawmakers set the state budget. But that’s changing this year, with budget issues taking a central role during this year’s short session.

Lawmakers allocated $1 billion in bonded debt during last year’s session, funding a range of projects for universities, community colleges and government agencies. This year, they have roughly $280 million to spend.

Most of the $74 million universities are seeking is for mundane projects -- replacing fire alarms or fixing utility connections.

The $200 million OHSU wants is different. The state contribution would help the university meet a $500 million challenge grant from Nike founder Phil Knight and his wife, Penny, and pay for buildings to house a cancer research center in Portland’s South Waterfront district. OHSU plans to raise $1.2 billion overall.

If approved, the two bond requests would also come from different pools of resources.

“They’re not even in any sense similar,” said Sen. Richard Devlin, D-Tualatin, co-chair of the Legislature’s powerful Ways and Means Committee, which writes the state budget.

Oregon’s debt is nothing like the bills racked up by the federal government. The state must balance its budget each year. But it can issue bonds on future revenue to pay for buildings and infrastructure that would be paid down over two or three decades.

In 2012, the state’s long-term bonded debt was $10.9 billion. As bonds are paid off, the state can issue new ones to replace them. Every year the state determines how much it can borrow and keep debt payments limited to 5 percent of tax revenue and 4 percent of lottery proceeds. That “debt capacity” is affected by interest rates and revenue projections.

A combination of low interest rates and growing tax revenue, along with some old bonds being paid off, enabled the Legislature to issue $1 billion in bonds last year. That sounds like a lot of money, but it’s a relatively small piece of the state’s overall financial picture. Oregon collects roughly $16 billion in income taxes every two years.

“It’s not like we’re issuing debt willy-nilly,” said Tim Duy, a University of Oregon economics professor who sits on the Oregon Debt Advisory Commission. “It’s a controlled portion of your spending going toward debt service.”

The $74 million for universities across the state would come from the $280 million pool of leftover bonding capacity in the current budget. But OHSU is telling legislators they can wait to issue their bonds until 2016, during the next budget cycle when significantly more money will be available.

At the same time, the scrum for state funding will put both the OHSU and university requests in front of the Legislature’s subcommittee on capital construction.

“Just because we have capacity doesn’t mean that we should actually do projects,” said Devlin, who serves on the committee.

But with interest rates low and formal opposition to the spending plans limited so far, higher ed funding looks like one issue the Legislature may find consensus on.

“This is a good time to borrow, and it’s never going to be cheaper to build something. Not in the near future,” said House Majority Leader Val Hoyle, D-Eugene, who sits on the committee. “Interest rates are low and people are looking to get back to work.”

Potential projects
A plan taking shape in the Oregon Legislature would spend about $74 million on projects at state universities.
Portland State University: Renovation, expansion of Graduate School of Education, $17 million
Oregon Institute of Technology: Replace fire alarm system, $2.4 million; repair failed utility tunnel, $1.1 million
Oregon State University: Campus accessibility improvements, $10 million; Cascades Academic Building (Bend), $3.9 million
Southern Oregon University: Seismic/deferred maintenance at McNeal Hall, $21.3 million
University of Oregon: Chapman Hall upgrades, $7 million; repair failed utility tunnel, $2.1 million
Western Oregon University: College of Education supplemental funding, $1.4 million; Oregon Military Academic Building acquisition, phase one, $5 million to $8.1 million


-- Christian Gaston