April 1, 2008

Rural Oregon besieged by state cutbacks
Cuts to rural offices and programs marginalize chronic economic problems, say legislators

By RODGER NICHOLS
of The Dalles Chronicle

     Editor’s note: Today’s article is the first of several in a series on how recent decisions in Salem have affected rural Oregon.
     PART 1
     When Ted Ferrioli (R-John Day) resigned in protest from Federal Forest and County Services Taskforce Thursday, it was in response to what many rural officials see as a serious problem: rural Oregon is getting hammered economically, they say, and the state government is making the situation worse.
     “Within the past 60 days, including the Legislative Supplemental Session, we have witnessed elimination of the Office of Rural Policy, the defunding of Rural Development Initiatives and the release of a report from the state economist marginalizing chronic unemployment in rural areas of the state,” Ferrioli said in his letter.
     Ferrioli is no back-bencher. He is the Senate Minority Leader, elected three times since 1996 to represent the sprawling District 30 that reaches from the Willamette Valley to the Idaho border and includes Baker, Grant, Gilliam, Harney, Jefferson, Malheur, Sherman, Wasco, Wheeler and parts of Clackamas, Deschutes and Marion counties.
     He is particularly upset by the defunding of the Rural Development Initiatives.
“I think this whole thing stinks,” Ferrioli said in a recent phone interview. “This is why we’re considered to be such a bad partner with local government.”
     Ferrioli was upset because Ways and Means Committee Co-chairs Sen. Kurt Schrader (D-Canby) and Rep. Mary Nolan (D-Portland) drained rural development of all but minimal life support. The 20-year-old rural development program, which distributed a portion of Oregon’s lottery dollars to counties, had a strong level of achievement, right up to the moment it was defunded.
     A report of the 2005-2007 biennium, released in October 2007, laid out the success story.:
     • Amount invested in the program: $7,014,368.
     • Amount leveraged through other public and private funds: $184,414,616.
     • Leverage ratio: more than 26 to 1, giving a return on investment of 2,600 percent
     • Number of jobs created or retained: 3,560.
     • Cost per job of original investment: $1,970.
     The program began two decades ago, when Oregon legislators used some of the first Oregon Lottery dollars to set up a “Regional Strategies Program.”
     Out of that 1987 effort came the regional and rural investment programs administered by 13 Regional Investment Boards.
     The theory was to spread a portion of the lottery money to the state’s 36 counties for use in economic development.
     Counties banded together in two, three, and four-county groups to pool the money and decide on its distribution within the group.
     At its peak, the 36 counties would split as much as $25 million. And though investment in the program declined over the years, Governor Kulongoski recommended expanding its biennial budget for the 2007-2009 biennium from $7.1 million to more than $11 million.
     But the program hit a budgetary brick wall in Ways and Means. Co-chairs Schrader and Nolan had different plans for the money.
     Instead of expanding the program, as suggested by the Democratic governor, the two chopped the previous $7.1 million budget was chopped to $2 million.
And the co-chairs didn’t stop with simply cutting the budget. They added restrictions to the use of the reduced monies.
     “The $2 million was divided for two purposes,” said Bob Repine, head of the Oregon Economic and Community Development Department. “A million dollars was set aside for operational monies. Then they were given a million dollars [to develop] this needs and issues strategy. That money had very specific line that said it couldn’t be used for anything else.”
     In essence, the RIBs could keep the doors open and work on a comprehensive report on each RIB’s project priorities for presentation to the 2008 legislature. The RIBs were forbidden to engage in any economic development activity until the report had been completed.
     Some said the programs would have been cut entirely, had it been possible.
     “There is in fact, ongoing, revolving loan funds that are run by the staff,” said Mike McArthur, executive of the Association of Oregon Counties. “There are projects that are pending. Some regions had money from the previous biennium left to spend. It’s not that you can just close the door and walk away.”
     “It’s very frustrating, and so we’ve got some very capable people that are sitting around with nothing to do,” said Susan Morgan (R-Myrtle Creek), a Ways and Means committee member who previously served as its chair. “I think it just reflects the fact that they’re urban folks” she added in reference to the co-chairs.      “It has historically been rural Republicans that fight for that funding, so now that there really aren’t any of us that are anywhere near the decision-making part of the process, it’s kind of fallen off the table.”
     Members of the various Regional Investment Boards and their staffs were even more pointed. “This is getting the rug jerked out from under us,” said Sondra Lino of the Southeast Regional Alliance.
     “We have hundreds of hours of volunteer time from the private sector working to make this a success,” said Harney County Judge Steve Grasty. “I think its a slap in the face of all those volunteers by the state to not support refunding it.”
     Compounding the problem is a bleak backdrop. Oregon counties will start the new fiscal year in July minus a collective $250 million worth of timber payments from the federal government.
     “This lack of caring about rural communties at a time when we’re losing the timber safety net dollars is criminal,” said Ferrioli.
     Next: Co-Chairs Sen. Kurt Schrader and Rep. Mary Nolan explain their decision and the regional investment boards dispute their reasons.