The state’s top budget writers have proposed closing a small prison near the Oregon coast as lawmakers try to balance a huge budget shortfall created by the COVID-19 pandemic and business shutdowns.

Oregon is on track to be more than $1 billion short in its general fund and lottery budget, assuming the state spends down its reserves but leaves some cushion for the next budget cycle. That’s because the state is collecting billions less in income taxes, lottery revenue and business taxes than economists had expected for the two year budget cycle that ends in June 2021.

Lawmakers are considering shutting the Shutter Creek Correctional Institution this year and later closing Warner Creek Correctional Facility as well. The proposed closures were first reported by Oregon Public Broadcasting.

Budget writers plan to take public testimony on the proposed cuts next week, with daylong virtual hearings planned Wednesday through Friday. Legislative leaders expect to return to Salem for a special session to make the budget adjustments the last week of July or early August.

Lawmakers in both parties and Gov. Kate Brown have said they will prioritize protecting the $9 billion state school fund, the main source of money for Oregon’s 1,300 public schools. Lawmakers also hope to keep intact money for early learning and statewide initiatives slated to be funded by a new business tax on sales, according to Rep. Dan Rayfield, D-Corvallis, a co-chair of the Legislature’s budget writing committee.

“We think that this next year is going to be extremely critical in terms of providing services for vulnerable Oregonians,” Rayfield said. “We were leery about making cuts (to those things), which caused us to look at other cuts.”

In a 13-page framework, the budget co-chairs — Rayfield, along with state Sens. Elizabeth Steiner Hayward and Betsy Johnson — said they tried to “protect essential investments in public education, health care, child welfare, housing, economic development, and other critical areas during this unprecedented public health and economic crisis.”

Among those “other critical areas,” the proposal maintains funding for Oregon State Police troopers and fighting wildfires. It would cancel the launch or expansion of several programs to help senior citizens, low-income families and people needing mental health treatment. And it would delay purchases of new state police vehicles, training for new troopers, cancel Outdoor School and Farm to School grants, limit which students qualify for free community college, cut help for intellectually and developmentally disabled Oregonians and reduce solar rebates.

The cuts do not include any state employee wage freezes or cuts, which lawmakers have pointed out are the purview of the governor. State employees ranging from frontline workers to executives are supposed to receive raises of up to 15% spread across the two-year budget that reached its halfway mark July 1.

While not a final product, the ideas include a mix of nearly $400 million in cuts and administrative savings, pulling another $400 million from a state reserve fund for schools and so-called “resource adjustments” to close a nearly $1.1 billion budget gap.

The proposed prison closures would be staggered. Shutter Creek, a 300-bed facility in North Bend, would close quickly under the plan. Warner Creek, a 492-bed facility in Lakeview, would close during the budget cycle that runs from 2021-23. The budget document does not specify how much money that would save.

Cuts to agencies within the human services realm represent the largest portion of the budget realignment, with more than $180 million in reduced spending.

More than $80 million of that comes in the form of holding positions vacant, reducing services and supplies spending, restricting travel and actuarial adjustments.

But lawmakers have also proposed eliminating some services at the Oregon State Hospital, which would include laying off 22 “non-direct care staff.” Details of those changes are not laid out in the framework.

— The Associated Press and Hillary Borrud of The Oregonian/OregonLive contributed to this report.

— Betsy Hammond; betsyhammond@oregonian.com; @OregonianPol

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