Director's Message
June 5, 2009

To: Employees and Partners of Oregon Housing and Community Services

From: Rick Crager, Deputy Director

Re: Director’s Bulletin – OHCS Budget Passes Ways and Means Subcommittee

OHCS Director Victor Merced is out of the office, so I am stepping in to deliver this week’s message. We have very important news.

Ways and Means approves budget. The Oregon Legislature’s budget writing Ways and Means Committee this morning approved the OHCS budget for the next two years, starting in July. The 2009-11 budget of $2.056 billion received unanimous approval and was sent to the House floor.

On behalf of Victor and other members of the executive team of Oregon Housing and Community Services, I wish to express great thanks to all concerned for passage by the full Ways and Means Committee and earlier passage by the subcommittee that studied our budget.

Homeless misery. While voting their approval, subcommittee members voiced great sympathy for the growing number of Oregonians displaced from their homes. Legislators decried the lack of funding available to staunch the flow of families facing daily life without a roof over their heads.

Homeless Oregonians numbered more than 17,000 this past January, substantially higher than the 12,000 in January 2008. The increase: 37 percent during this most recent year scrutinized.

And Rep. Terry Beyer of Springfield, a subcommittee member, lamented that the scarcity of funds is preventing OHCS from meeting the relentless needs of homeless men and women and families.

“In ideal times we could be doubling the homeless assistance dollars, and we’re not,” Beyer said. “Latest homeless figures were up. I’m not comfortable with this part of the budget.”

Echoing these sentiments, Scappoose Sen. Betsy Johnson, the subcommittee co-chair, said the hurt is being dramatically felt in her district, which reaches along the lower Columbia and down the North Coast.

“The homeless issue is now reaching crisis proportions,” intoned Johnson. She is clearly not content to idly embrace the economic conditions that plague Oregonians.

Good news and more. Passage of the Housing Opportunity Act (commonly called the document recording fee) earlier in the legislative session will be a blessing in the coming biennium.

The act offsets much of the destructive impact of general fund cuts that focused on OHCS homeless programs – the State Homeless Assistance Program and the Emergency Housing Assistance Program. Separately, the act restores funding to the Emergency Housing Assistance Program and Homeownership Assistance Program, also hit by general fund cuts.

These budget cuts struck homelessness hard because this is the small realm of the department’s budget in which general fund monies are concentrated.

We can only be thankful that these vital homelessness supports did not take greater hits in the budget process – that the Housing Opportunity Act saved the day.

“It’s a fine piece of legislation, if I may add,” quipped Rep. Mike Shaufler of Happy Valley, during the subcommittee’s work session. He had carried the Housing Opportunity Act earlier in the legislative session.

The subcommittee’s work revealed noteworthy news: Federal stimulus money substantially bolstered the OHCS budget for the coming biennium.

The approved budget includes an increase of almost $164 million over the governor’s recommended budget that had earlier been under consideration.

The amplified figure required Michelle Deister of the Legislative Fiscal Office (LFO) to double back on the budget process, do an enormous recalculation, then explain the whole concept to Ways and Means legislative leaders. And she did it masterfully.

Key components of the $164 million are:

• Addition of $19.4 million in Lottery-backed bonds.
• Addition of $15.2 million from the Housing Opportunity Act.
• Addition of $132.4 million in additional federal resources, including $53 million for the Low-Income Energy Assistance Program.
• Increase of $1.3 million in lottery funds for debt service and $.7 million in interest earnings on the Lottery-backed bonds.
• Reduction of $2.6 million in general funds.
• Reduction of $2.4 million in other funds related to the general fund losses (technical adjustments).

Thus, Michelle’s presentation to the subcommittee was replete with a framework of “puts and takes,” the concept that dollars and positions are added where needed and removed where policy permitted.

Largely driven by the availability of federal stimulus money, it allowed for the addition of 32 positions, most of which are limited duration jobs required to manage the stimulus money and programs.  

These were partially offset by the traumatic removal of 16 positions that created uncomfortable anticipation at our agency during the past several months.

The breakdown of the 32 new positions follows:

• Five positions as the result of fund shifts, three to the energy program, two to be funded with Lottery-backed bonds.
• Eight positions for managing the Housing Opportunity Act.
• Three positions to manage the Neighborhood Stabilization Program.
• Two positions for the Homeless Prevention and Rapid Reentry Program.
• One position for management of Community Services Block Grant.
• Thirteen positions to manage the weatherization program.

Quick and efficient. The subcommittee’s budget work session was relatively short. Budget policy and figures to support OHCS for the coming two-year period were exceptionally well presented by LFO’s Michelle Deister.

Several important points made during the subcommittee session require explanation:

• A portion of the  OHCS budget approved by the subcommittee depends on the separate approval of the bill allowing the sale of Lottery-backed bonds.

• $16 million from Lottery-bond proceeds is allocated for preservation of nearly 1,600 units of federally subsidized affordable rental housing. This rises to a potential of 2,333 units with the approved increase in the cap on the Oregon Affordable Housing Tax Credit.

• The budget contains $3.1 million in Lottery bonds for use as loans or grants in the preservation of manufactured dwelling communities if viable. If funding is not viable, funds will be redirected to address federally subsidized housing.

• The OHCS single-family program is being cut back dramatically because of the collapse in the housing market and lack of funds to run it.

Again, I offer great thanks to all OHCS staff and partners for excellent work on our budget. I needn’t remind you that in spite of the new positions and new dollars, largely from federal stimulus funding, the department can expect tough going in the coming two years.

The housing market, economists tell us, is a long way from an upswing. In the meantime, OHCS employees will be vigilant to the challenges ahead in meeting the needs of Oregonians struggling to maintain food, housing and the necessities of life.

As we move through this difficult period, be assured this department will continue its work in aiding the administrations of Gov. Ted Kulongoski and President Barack Obama to create jobs.

Beware of little expenses; a small leak will sink a great ship.
~Benjamin Franklin

Rick Crager , Deputy Director
Oregon Housing & Community Services
725 Summer St NE, Suite B
Salem, OR 97301-1266
Phone 503.986.2005
Fax 503.986.2132
Email: rick.crager@hcs.state.or.us
www.ohcs.oregon.gov

-30-