Oregon adjourned its 2025 full legislative session in late June with a freshly adopted two-year state budget. One week later, the federal legislature passed House Resolution 1 (HR 1), and Oregon’s budget was suddenly hundreds of millions of dollars in the red.

The policy work in HR 1 reshaped the budget and impacted the federal workforce, federal priorities, and many federal programs. Oregon’s IDD services are largely funded by Medicaid, which means that the policy that shapes them comes from the federal government. Oregon analysts have been working since July to determine the full impact of HR 1 on Oregonians. The Oregon Department of Human Services (ODHS) and other state agencies began sharing their findings during the September legislative days on September 29th, 30th, and October 1st. What they shared shows a significant change for critical human services over the next several bienniums. Medicaid eligibility and SNAP (Supplemental Nutrition Assistance Program) will sustain the hardest hits to funding; however, these cuts are deep, and they will have ripple effects that touch every other part of the Oregon budget.

HR 1 impacts Oregon’s budget in three major ways:

• It shifts costs previously covered by the federal government to states. Example: the cost of SNAP has previously been funded 50% by the federal government and 50% by states; that has now changed to 25% federal funding and 75% state funding.

• It creates new compliance standards that will cost states to implement. Example: Medicaid eligibility must now be reviewed every 6 months rather than the 2-year standard set before. This will require money to pay for IT solutions and potentially humans to complete the higher workload.

• It changes tax codes, reducing the revenue that is coming into the state to fund the budget (the “General Fund”).

Because of these cost drivers and other reduced revenues, Oregon is now approximately $373m over budget for the current (2025-2027) biennium. That number will continue to grow. In Oregon, legislators are required by law to pass a balanced state budget. To get back to that balance, legislators will have to make budget adjustments during the short 2026 session. They may reduce the budget, increase revenue to cover the shortage, or a combination of both. In the 2026 session, legislators will have to make changes that not only eliminate the current $373m deficit but also position Oregon to end up balanced at the end of the biennium (June 30, 2027). With that in mind, they may be looking at a much larger number to target for reduction.

Oregon must decide what these reductions will look like. Legislators have made it clear that reductions will almost certainly be necessary, and so they have joined with the Governor’s Office to ask state agencies to put together a 5% Budget Reduction Exercise. A Budget Reduction Exercise is a list of cuts that add up to a 5% reduction in each agency’s currently approved budget. The Oregon Department of Human Services (ODHS) is the state agency that houses the Office of Developmental Disabilities Services (ODDS). ODDS will send their reductions list to ODHS, which will use them to compile an overall Human Services list of potential cuts. That ODHS list will go to the Governor’s Office by October 17th. The Governor’s Office will make final decisions, and that list will go to Legislators by November 3rd.

These will be hard decisions. Lawmakers on the Joint Committee on Ways and Means completed a statewide roadshow this past Spring as part of their work to understand the spending priorities of Oregonians. They will use the input they heard on that tour to help them make their choices. Legislators will also need to hear from communities about the unseen impacts of enacting some of these proposed cuts. We have often seen that funding cuts in one area only result in cost increases somewhere else. Other times a proposal may sound mild, but a deeper look reveals great harm. Lawmakers will need to hear from our community about whatever reductions are proposed for the IDD service system. We will be ready to talk about the impacts we see, and what they mean for the humans who rely on these services.

The Oregon legislature has been preparing for the 2026 session since the 2025 session ended. They will have huge decisions in front of them on how to make up the budget deficit. Even though the Oregon legislature may be looking to reduce spending by more than the current deficit, they are still not likely to cut to a full 5% of General Fund. This means that not all the reductions proposed by state agencies’ lists are likely to be made. Whatever number they decide upon as their target for reduction, they will have the ideas presented by the state agencies as a starting point. However, they are not limited to what is on those lists—the legislature can take reductions not suggested by the agency if they think it best.

Of course, Oregon’s short sessions are also open for other business. The legislature will be hearing from state agencies about over-expenditures and under-expenditures. They will also receive requests to fill any gaps through the “Rebalance” process. Bills will also be introduced and considered by the legislature through committees and hearings. Bills that require new spending are not entirely off the table, but legislative leaders have made it clear that any new investments should be very clearly tied to cost-savings in the near future. We will follow all of it, as our fates as Oregonians are closely tied to one another during times of economic uncertainty. We will be working with our advocacy community to promote the best possible decisions that have good outcomes for Oregonians with intellectual and developmental disabilities now and for decades to come.

Written by Katie Rose, Executive Director, Oregon Community Brokerages