Republican Gov. Vic Atiyeh is pulling the curtain up Monday on a drama that promises a portent of his reelection prospects in November.
Atiyeh has called the Oregon legislature into special session to exorcise a state deficit projected at $237 million for the biennium ending June 30, 1983.
That is scarcely walking-around money for the federal government. But unlike the U.S. Constitution, Oregon's requires the state to balance its budget every two years. The $3.3 billion general fund budget adopted for the biennium last summer is already 7 percent in the red, with 18 months of "iffy" economic weather ahead.
Atiyeh, who denied Democratic governor Bob Straub a second term in 1978, is himself seeking one in November. But Democrats, who control the state House and Senate, think that Reagan-supporter Atiyeh could be beaten by a deepening statewide recession for which Reaganomics can be held accountable.
High interest rates cut home building in 1981 to its lowest level since World War II. Lumber and wood products--when in demand--account for large segments of employment and income throughout the Pacific Northwest, but Oregon remains the most vulnerable to a national housing depression.
Unemployment, now close to 9 percent for the nation, is over 11 percent in Oregon and near 13 percent in Lane County, the largest producer of softwoods in the country. Oregon's timber harvest dropped 16 percent in 1981 to the lowest level since 1940. More than half of the nation's plywood mills are closed or cut back, and more than half the out-of-work mill hands are in Oregon.
The ripple effects of all this have cut sharply into state income tax revenues, Oregon's principal source of state funds. Oregonians with savings accounts withdrew $300 million more than they deposited in 1981. For Atiyeh and the state's 30 senators and 60 representatives, there are no such savings to call up when they meet Monday.
None of the legislators heading for Salem is counting on a helping hand from Uncle Sam. They know, for example, that the Reagan administration pushed through a 25 percent cut in funds for state-administered, federally funded unemployment compensation, and that as a result the Oregon Employment Division is struggling to process a 30 percent increase in claims with 230 fewer employes. The current 67,500 claimants are faced with two-week delays in getting their checks.
Meanwhile, Atiyeh's proposals for balancing the budget are sufficiently Reaganesque to invite Democratic aspersions. The governor wants to cut $147 million from state programs, some of which have already been cut five times in the past two years. Included in the total are $68 million from human resources, $28 million from higher education, and $11 million from community colleges.
His key revenue proposal would require employers to forward withholding taxes to the state within six days instead of the currently allowed 45 days. This would bring in another $72 million within the biennium. But Atiyeh wants no change now in Oregon's increasingly costly property tax relief program--a rebate to homeowners and renters of 30 percent of their local taxes, which accounts for 17.4 percent of state expenditures.
Democratic leaders in the legislature are pushing a number of alternative schemes, generally including limits on further cuts in agency budgets and a start on scaling back property tax relief.
Such a course is not without risk, however. No notion is more widely shared among Oregonians than that they are being pecked to death by local property taxes. The state's rebate program is all that worked to defeat a Proposition 13-type initiative at the polls in 1980. Another effort to cap the property tax is under way, and Atiyeh's Democratic opponent in November could find himself boxed in by any decision of the Democratic-controlled legislature to cut back the relief program.
Atiyeh has no Republican challenger, but four Democratic officeholders are positioning themselves to seek their party's nomination for governor in the May primary:
* Don Clark, the elected executive for Multnomah County, which includes Portland and is the state's most populous. Clark was the first to declare his candidacy.
* Jerry Rust, a Lane County commissioner and one-time Peace Corps volunteer, whose political base in Oregon's counterculture stems from long service with the Hoedads, an increasingly successful tree-planting cooperative.
* Ted Kulongoski, a state senator from Lane County and the only candidate so far with a solid claim to a statewide following: in 1980, while Carter was losing Oregon to Reagan by 457,000 to 571,000 votes, Kulongoski received 492,000 votes (44 percent) in challenging Bob Packwood's winning bid (578,000 votes) for a third term in the U.S. Senate.
* Frank Ivancie, mayor of Portland and a widely known conservative Democrat, who is reported to be weighing his chances of emerging on top in a primary that could see the liberal vote split among the other three.
Atiyeh, who flew to Washington Jan. 7 to tell the president of Oregon's plight, hopes for the best as he prepares for the worst. He urged Reagan to "declare a policy of his own that home ownership is important." For such a declaration to trickle down in the form of jobs for loggers and mill workers before November would please Oregonians immensely--if they haven't already left to seek work in oil-rich Texas or defense-oriented Southern California.