Illustrations by Wilder Schmaltz

THE STATE BUDGET is facing a crippling $577 million shortfall, but one possible solution is a lose-lose situation for Democrats vying for reelection: a special session.

Governor Ted Kulongoski's budget cuts will go into effect this Thursday, July 1. Under Oregon state law, the governor does not have the power to make targeted cuts to specific programs—he can only slice programs equally. So Republicans tried to call a special session of the legislature (they're not supposed to meet again until 2011), pulling all representatives to Salem to write up a list of targeted cuts. However, the Republicans failed to get a majority of votes and their plan for a special session failed.

Left without a choice, the governor has ordered all state departments to slash nine percent from their budgets. That cut hurts education and human services especially hard. Portland Public Schools announced on June 23 that it would have to eliminate 126 teaching positions and possibly cut all physical education classes to balance its budget. The Department of Human Services is cutting 362 positions for people who work with seniors and people with disabilities.

Even Governor Kulongoski himself thinks cutting nine percent from every state department is a bad idea. At a May press conference, Kulongoski said, "I do not like the option of across-the-board cuts. I have always maintained that government services are not of equal value."

But if Democrats had agreed to meet for the Republican-called special session—which is still a possibility—their cuts to specific schools and services would surely become cannon fodder for the GOP during an election year.

Chuck Sheketoff, executive director of the Oregon Center for Public Policy, says calling a special session is unlikely with tight elections on the horizon.

"Too many people are looking over their shoulder," Sheketoff says.

A special session would be helpful if legislators developed a concrete plan for distributing the state's money, says Sheketoff, but it's a gamble. "The problem with a special session is that if you don't have a clear plan going into it... anything can happen."

Democratic leaders say they're open to the idea of calling a special session, but it wouldn't help the situation. The budget gap is so deep that even targeted cuts would seriously hurt services.

"It would not be helpful to make further changes," agrees Democratic House Majority Leader and Southwest Portland Representative Mary Nolan. "There are no good places to cut."

Democratic State Senator Chip Shields says the call for a special session is essentially a political move on the part of Republicans to bash the governor's cuts. "It's just ridiculous," he says.

But Alan Tresidder, a well-connected Salem lobbyist with clients such as Nike and Oregon Advocacy Center, thinks it's inevitable that the legislature will have a special session.

"I do not believe the legislature is going to let the nine percent across-the-board cut be the final answer," Tresidder says. "They're inherently unfair. You are cutting some programs not nearly enough and others too much."

Democrats' hopes rest on a long-shot budget Band-Aid from the federal government: There is a slim possibility that the state will receive between $200 to 300 million from the feds to shore up education and human services programs.

Nolan says extra funding would be the only reason to have a special session, since the newfound funds would allow the legislature to move money around more easily. The bill, folded into a national extension of unemployment benefits, is currently being filibustered in the Senate.

While Portland has been alarmed at the cuts to schools coming down the pipe, there is only one specific cut Governor Kulongoski deemed completely unacceptable: the Department of Corrections' plan to close three prisons and release over 800 inmates.

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FIVE IDEAS TO CUT THE BUDGET. PERMANENTLY.

Governor Ted Kulongoski's "Reset Cabinet" spent eight months studying ways to permanently streamline the state's budget. Here are a few notable ideas from the list Kulongoski presented on June 25.

Rewrite Measure 11. Thanks to Measure 11, which enacted minimum sentence requirements for certain crimes, Oregon's state prison population has doubled in the past 15 years. Kulongoski says, "Incarceration is the most expensive tool in the public safety toolbox."

Move state prison inmates to county facilities. If state prisoners served their last year in county jails, the financial burden would weigh less on the state.

Make state employees contribute more of their own money to retirement accounts. The state currently deposits an additional six percent of salary into these accounts.

Force teachers' unions into statewide bargaining. The hodgepodge of regional negotiations eats up time and money.

Create a strong reserve fund. As Kulongoski says, "We could cut the cost of government by 20 percent and still face a budget hole when the next recession hits."

— compiled by Stefan Kamph