Ore. budget likely to feel effects of fiscal cliff

New report shows what Oregon could face

State budgets may feel the effects of the fiscal cliff

BEND, Ore. - Leaders in Washington, D.C., met Friday to discuss how to avoid another possible recession. Congress has until Dec. 31 to come up with a plan before tax breaks expire and massive budget cuts go into effect.

A sign things could be headed in the right direction: The New York Stock Exchange ended trading Friday up nearly 46 points.

"I believe that the framework that I've outlined in our meeting today is consistent with the president's call for fair and balanced approach," said House Speaker John Boehner.

Boehner was joined by House Minority Leader, Nancy Pelosi and other congressional leaders, who met with President Obama at the White House.

"We understand that it has to be about cuts, it has to be about revenue, it has to be about growth," said Pelosi.

But what happens if a deal isn't reached? This week, the Pew Center on States released a 28-page report that outlined how the states would be affected if a deal isn't reached in time.

"Oregon allows the deduction of federal income taxes," said State Sen.-Elect Tim Knopp, R-Bend. "If we are paying more federal income taxes, that means we will be able to deduct more at the state (level), which will lower state tax revenue. So it's going to have a double-hit to Oregon."

Knopp says leaders in Oregon are already taking steps to prepare, because this is a serious issue.

"We've already started discussions about how we can work together to benefit Oregon," said Knopp. "We are going to continue, regardless of what happens nationally."

His counterpart, State Rep. Jason Conger, agrees. The Bend Republican says Oregon needs to look at how revenue is raised and how we prepare for downturns in the economy, federally driven or not.

"We should be doing that now in anticipation of it possibly happening in the future," said Conger, "If it doesn't, that's great. But if it does, we'll try to be prepared as best we can."

The state is crunching numbers to see where spending could be cut if the federal government falls off the fiscal cliff. Leaders will meet in December to discuss where the state goes next.

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