SALEM — The Governor’s Office has increased its estimate of Oregon’s 2017-18 budget shortfall based on the passage of three ballot measures last week.

The state faces an approximately $1.7 billion shortfall in the upcoming biennium, according to the Governor’s Office.

The increase from the $1.35 billion state economists projected in August is due to the impacts of three successful ballot measures — one supporting veterans’ services, one for career technical education and one for outdoor school — that together are expected to cost about $357 million, said Kristen Grainger, a spokeswoman for Gov. Kate Brown.

That gap and projected cuts to state services were major talking points during the failed campaign for Ballot Measure 97, which sought to impose a tax on certain corporations’ sales in Oregon above $25 million.

State agencies have already submitted their requested budgets. Brown is expected to release a balanced budget early next month.

Brown said in a statement that the state’s “obligations to fund important services” still outpace available revenues.

“The 2017-19 budget I propose on Dec. 1 will reflect my top priority — investing in kids and lifting families out of poverty — but will necessarily include a level of program cuts I find unacceptable,” Brown said. “I have begun discussions with legislative leadership about working together in the upcoming session to better align state resources with our aspirations for a stronger, better Oregon.”

Increases in state wages and benefit costs, as well as health care outlays account for most of the shortfall.

Oregon Senate Majority Leader Ginny Burdick, D-Portland, released a statement Wednesday morning in response to the forecast, noting that Oregon had added jobs, particularly at small businesses, at higher rates than other states.

She said supporting small business will be among Senate Democrats’ funding priorities in the upcoming session.

“We will be working to secure and stabilize funding for schools and critical services that Oregonians depend on,” Burdick said in the statement. “In the 2017 legislative session, we will pursue priorities in transportation, education, public health and safety, as well as continuing to support small businesses to keep Oregon’s economy strong.”

Oregon Senate Republican Leader Ted Ferrioli, R-John Day, had a different take, arguing that slowing job growth meant less income for Oregon families, and criticizing the Legislature for overspending.

He said in a statement that the state’s public employee retirement system — which faces $22 billion in unfunded liability — was giving the state a “fiscal aneurysm.”

“…The Legislature has real work to do to get Oregon’s economy healthy again,” Ferrioli said. “We must come together in 2017 to get our priorities straight and set Oregon’s fiscal house in order before the hole gets any bigger.”