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Brown trying to resurrect projects killed by COVID-19 fallout

Gov. Kate Brown wants to resurrect more than 30 projects costing over $200 million that died last summer when the state bond market collapsed during business shutdowns ordered to combat the COVID-19 pandemic.

Brown’s 2021-23 budget proposal includes Oregon Lottery bonds set aside for projects in nearly every corner of the state.

There’s dam work at Wallowa Lake and Newport, water system fixes in the Deschutes Basin and Hood River, and health facilities in Umatilla and Jefferson counties.

The Oregon Coast Aquarium in Newport and arts facilities in Lincoln City and Beaverton are marked to receive millions for expansion and renovation.

Statewide programs would bolster affordable housing, historic preservation, redevelopment, levees and public works programs.

It’s essentially a repeat of the lottery bond allocations approved by the Legislature and signed by Brown at the end of the 2019 session. The bonds were set to go on sale last summer.

The steady flow of money into the state-run games of chance make the bonds attractive as a conservative long-term investment with relatively small return but a rock-solid record of paying off at the end of the bond’s term. The bonds have performed well during economic booms and recessions.

But COVID-19 was what investors call a “black swan” — a rare unforeseen catastrophic event that upends economies, blowing away the usual rules and strategies of the boom-and-bust market cycles.

When the pandemic ramped up in Oregon at the beginning of March, Gov. Brown issued an executive order telling residents to stay at home and shutting most businesses, including bars and restaurants. The Lottery’s points of sale are inside businesses, and the shutdown cratered revenues as never before. At one point, Lottery sales were off by more than 90%. The state’s May revenue forecast indicated a crippled economy with massive revenue deficits.

Oregon Treasurer Tobias Read announced in July that the lottery bonds approved in 2019 would not go on sale. The bond market required a 4-to-1 revenue-to-debt ratio on the sale and the hit on the lottery sales had sent its balance to just above 3-to-1. Without the sale, the projects were dead.

“There’s not enough money — there is no repair,” said Sen. Betsy Johnson, D-Scappoose, a chair on the budget-writing Joint Ways and Means Committee that had approved the 2019 project list.

Sen. Bill Hansell, R-Athena, a committee member, said the state needed to prioritize the debt service on bonds sold in previous years, ensuring confidence in the state’s annual offerings wasn’t permanently undermined. The 2019 projects were being sold as a package that couldn’t be broken up into smaller chunks to sell.

“If we don’t sell one, we don’t sell any,” he said. “The lottery revenue has just cratered. We already have debt service on projects funded in earlier cycles.”

Beginning in September, state economists reported surprising trends. State revenues were holding relatively steady during the crisis, fueled by income and business taxes. In December, the state’s balance sheet showed that with the partial reopening of businesses in the summer, lottery sales hadn’t just rebounded — sales had risen so strongly that the lottery was on pace to end 2020 with more annual sales than 2019.

Despite the current high COVID-19 infection rates, many lottery sales sites remained open. With vaccines giving hope for an end to the pandemic by next summer, Brown’s 2021-23 state budget proposal included lottery bond sales with the projects to receive revenue largely the same list as in 2019.

On Dec. 1, Brown released her $25.6 billion budget proposal for 2021-23, the next financial year, which begins July 1. Her plan to increase the main government budget — the general fund — by 8% drew the majority of attention from politicians and the media. There were big-ticket items such as $100 million for 7,000 preschool slots for disadvantaged children and the expectation of large and as yet unrealized billions of dollars in federal aid to balance the books.

During the press conference, Brown made one passing reference to the lottery bonds. The proposal was a paragraph on page 310 of the 503-page budget. It said Brown planned to resubmit the same list as 2019, with a few modifications.

After the bond sale failure, the Legislature made an emergency allocation of general funds to make up for the bonds to pay for $7.8 million in repairs to the water system at the Confederated Tribes of Warm Springs. A rail project near Coos Bay was also shifted to another cost area.

Brown did withdraw bonds for a $15 million channel deepening project at the Port of Coos Bay and $6.5 million for an agricultural resource management project at Blue Mountain Community College. Both had been controversial items in the 2019 bond package and would likely flare debate again.

The proposal’s next stop is the Legislature, which convenes Jan. 19. The lottery bonds will be put into a bill and sent through the usual legislative system of hearings. The final list will be combed over by the Joint Ways and Means Committee. The lottery bond budget is usually one of the last pieces of legislation to be sent to the House and Senate chambers for a vote. Oregon does not allow for amendments to legislation on the floor of the House and Senate. It’s an up-or-down vote.

Having enjoyed bipartisan support when originally approved in 2019, the lottery bond projects, which touch just about every corner of the state, have a strong chance of passing largely unaltered.

Location-specific projects

City of Salem - Drinking Water Improvements, $20 million

Eugene Family YMCA Facility $15 million

Wallowa Lake Dam Rehabilitation, $14 million

Deschutes Basin Board of Control Piping Project, $10 million

City of Roseburg -Southern Oregon Medical Workforce Center, $10 million

City of Sweet Home - Wastewater Treatment Plant, $7 million

Oregon Coast Aquarium, Newport, $5 million

YMCA of Columbia-Willamette - Beaverton Hoop YMCA, $5 million

Jefferson County Health and Wellness Center $4.1million

City of Newport - Big Creek Dams, $4.1 million

YMCA of Marion and Polk Counties - Veterans’ Affordable Housing, $4 million

Parrott Creek Child and Family Services, Oregon City - Building Renovation, $3.5 million

Wallowa Valley Center for Wellness, Enterprise, $2.5 million

Center for Hope and Safety, Salem, $2.5 million

Port of Cascade Locks - Business Park Expansion, $2.4 million

Multnomah County School District - Reynolds High School Health Center, $2.33 million

City of Sherwood - Pedestrian Connectors, $2 million

City of Gresham - Gradin Sports Park, $2 million

Curry Health District - Brookings Emergency Room, $2 million

Hacienda CDC Las Adelitas Housing, Portland, $2 million

City of Hood River - Waterfront Stormwater Line, $1.7 million

Umatilla County Jail - Expansion for Mental Health Services, $1.6 million

Beaverton Arts Foundation - Patricia Reser Center for the Arts, $1.5 million

Lincoln City Cultural Center - Cultural Plaza and Grounds, $1.5 million

Port of Morrow - Early Learning Center Expansion, $1.4 million

Statewide projects

Special Public Works Fund, $30 million

Affordable Housing Preservation, $25 million

Affordable Market Rate Housing Acquisition Loan Program, $15 million

Water Supply Development Account, $15 million

Levee Grant Program, $15 million

Brownfields Redevelopment Fund, $5 million

Oregon Main Street Revitalization Grant Program, $5 million

Storm Drainage Improvements, $1.88 million