Oregon lawmakers are preparing to confront one of the most significant fiscal challenges in recent memory, as state leaders move to address a nearly $900 million gap in the state budget following federal funding reductions. The co-chairs of the Legislature’s Joint Committee on Ways and Means announced this week that a public hearing will be held to gather feedback on proposed budget reduction options submitted by state agencies.
The hearing is scheduled for February 3 from 5 p.m. to 8 p.m. in Hearing Room 40 at the Oregon State Capitol in Salem. Members of the public may attend in person or follow the proceedings virtually through the Oregon Legislative Information System. Individuals who wish to testify must register through the committee’s webpage on OLIS. Written testimony will also be accepted for up to 48 hours after the hearing concludes.
The budget shortfall stems from recent federal actions that significantly reduced anticipated funding levels, leaving Oregon with what lawmakers describe as a nearly $900 million deficit. According to Rep. Tawna Sanchez, D-Portland, co-chair of the Joint Committee on Ways and Means, state leaders had anticipated some level of change when crafting the 2025 budget but were met with reductions that exceeded expectations.
“In 2025, we made careful, forward-looking budget decisions, knowing that changes were coming from the federal budget bill. The cuts in that bill were beyond what any state could have predicted, and left a nearly $900 million gap in our state budget,” Sanchez said. “This is a difficult situation. We’ve been working with stakeholders for months, and now we want to hear from the public.”
State agencies were directed in November to prepare prioritized lists outlining potential reductions. Those proposals were reviewed by Ways and Means subcommittees and served as the foundation for bipartisan discussions with legislators and key stakeholders in recent weeks. Lawmakers describe the process as ongoing and evolving, with public input expected to shape the next phase of decision-making.
Any additional reductions would come on top of efficiency measures already adopted during the 2025 legislative session. Those earlier steps included eliminating certain vacant positions and reclaiming unspent funds in an effort to streamline operations and limit the need for deeper program cuts. Legislative leaders now acknowledge that many of the more straightforward savings have already been realized.
“There aren’t very many easy cuts left to make,” said Sen. Kate Lieber, D-SW Portland and Beaverton, who also co-chairs the committee. “We are taking a balanced approach to get through this budget crisis. That means eliminating waste and inefficiencies and potentially making some really tough decisions around program reductions.”
Under the Oregon Constitution, the Legislature is required to pass a balanced budget. Lawmakers are expected to receive updated financial data when the state’s quarterly economic outlook and revenue forecast is presented on February 4, one day after the scheduled public hearing. That forecast will provide clearer guidance on available resources and may influence the scope and scale of any reductions.
The upcoming hearing marks a critical juncture in what legislative leaders have described as a multi-year budget challenge. While no final decisions have been made, officials say the process is intended to remain transparent and inclusive, with opportunities for residents, advocacy groups, and affected communities to weigh in before reductions are finalized.
As the session approaches, lawmakers face the complex task of aligning constitutional requirements with fiscal realities, while balancing competing priorities across education, public safety, health services, and other state-funded programs. The outcome of these deliberations will shape Oregon’s financial landscape for years to come.