|
2009-2011 Budget Release
REMARKS BY GOVERNOR TED KULONGOSKI
Monday, December 1, 2008
Good morning and thank you for being here today.
I don’t make a habit of starting budget statements by quoting movies. But this is turning out to be year when it is best to expect the unexpected.
So let me offer a quote from the movie Sunset Boulevard. Joe Gillis says to Norma Desmond – an aging film star: “You used to be big.” To which she replies, “I am big! It’s the pictures that got small.”
That, in a nutshell, describes our budget environment.
Oregon is still a big, wondrous, dynamic, opportunity-filled state, with great economic potential – especially in green technology – and a citizenry that understands that education is the pathway to prosperity.
It is the revenue forecast – and therefore the budget – that has gotten, . . .
. . . if not small – certainly smaller than any of us would like.
This – without doubt – is going to cause real hardship for many Oregonians, and require us to lower our sights for the short-term – while raising them for the long-term.
We don’t have the money to do everything that needs to be done in the next two years.
But today I propose a budget that invests in the future by investing in children, working families, businesses, and economic opportunity during these challenging times.
* * *
My purpose this morning is not to spend a lot of time reciting numbers and pointing to graphs because budgets – especially during a recession – are less about numbers than they are about choices.
The budget narrative explains in great detail what is being funded, at what level, and why.
But I do want to put this budget in context – so the people of Oregon understand the reasoning behind the choices I have made and how these priorities will address the fundamental issues facing us – and better position Oregon for long-term economic success when this deep recession passes.
This budget will require state government to decide what we do and how we do it.
In flush times, we can choose to make critical investments in a wide array of services. But when the pie is shrinking – as it is now – we need to invest in those things that are the fundamental building blocks of a strong economy.
In other words, we must invest for the future – even if that means making painful disinvestments in the present.
In that sense, my budget is a visionary statement about where I want to lead Oregon.
And I say without hesitation: I will not lead Oregon into an extended period where we don’t have the education and workforce skills, infrastructure, renewable energy, capacity to innovate, or quality of life necessary to build our economy – and win in the global marketplace.
That is completely unacceptable to me – and would be a far bigger disaster than the recession we are currently in.
One of the essential choices before us is this: How do we continue to move Oregon forward during these hard times.
The public does not need a long recitation from the Governor on the scope of our economic troubles. They already know because they’re living those troubles.
Oregon families are sitting around the kitchen table trying to balance their own budgets – at the same time they’re watching the value of their homes fall and their retirement savings shrink by double digits.
Parents worry they won’t have money to send their children to college – or pay for health care.
And as they watch one industry after another lining up for a federal bailout, they’re wondering who will bail out their economic future.
Oregonians are literally changing lifestyles to accommodate their falling incomes, the declining value of their homes, and their uncertainty about what comes next.
So Oregonians know there is a problem. What they don’t know is whether their leaders are willing and able to create a vision for the future that inspires hope and confidence in the middle of an economic storm.
The message of this budget is: Yes – the storm will pass and we have every reason to look to the future with hope and confidence.
That said, there is no denying that Oregon is feeling the downdraft of what is happening in the national economy. And that means Oregon needs a strong partner in Washington, D.C.
If our federal partners can bail out banks – and perhaps the auto industry – they can bail out homeowners and unemployed Americans who, have worked hard and played by the rules.
That’s why I say it is past time for the federal government to renew and enhance its partnership with the states – a partnership that has become badly frayed.
The place to begin is with a modernization of federal unemployment benefits to reach more jobless workers and provide them with greater financial security during this time of rising unemployment.
I also ask the new administration to pick up the pieces and renew its collaboration with Oregon on critical programs like Medicaid, Food Stamps, daycare, affordable housing, and making a greater commitment to our senior citizens by providing more funds for Long Term Care.
In the meantime, the work of finding hope in an economic storm; confidence in a time of doubt; certainty when we have more questions than answers; and reassurance that Oregon’s best days are still ahead of us – must truly be our own.
Here’s what that means.
First, I will not hide – or gloss over – the reality of Oregon’s 2009-2011 budget. Or, for that matter, the current budget, which has seven months remaining, and that I’ve had to rebalance with an effective 5-percent across the board cut for most state agencies.
Just to give you an idea of the new budget reality – and I define “new” as the previous 90 days – we lost more revenue in the last three months than we were able to save in reserve funds over the last five years.
So there is no “get out of the revenue shortfall free” card for any government service. That includes Measure 57 – which we will implement in the most cost-effective manner possible.
Second, we must protect our reserves – including the Rainy Day Fund that the Legislature and I created in 2007. We can’t simply grab the savings now when we’re probably only in the first phase of this economic and revenue crisis.
Third, it is important for the people of Oregon to understand that having 6.8-percent more dollars this biennium than last—or 3.4 percent annually – does not mean we’re in sound financial shape. Just the opposite.
To take one obvious example: It is a truism that when the economy goes down, the demand for governmental services goes up.
The cost of maintaining the Department of Human Services’ social safety net at the pace that it is currently increasing would require a budget increase of 28-percent in the upcoming biennium. These costs are simply unsustainable.
And similar – although not necessarily as drastic – increases are needed for other state agencies, such as education and public safety, because of inflation and the increased demand for services.
So 6.8-percent more doesn’t leave us in a budget safe harbor – it leaves us in a budget hole. And a deep one at that.
And fourth – taking on the work of finding hope, confidence, certainty and reassurance in these tough economic times requires more creative thinking and vision than simply making across the board cuts.
Across the board cuts are not a solution – they’re a slogan. That’s why I’m determined to take a different approach – an approach that focuses on choosing priorities, not imposing equal pain.
* * *
My passion – and it started long before I became Governor – is to make sure Oregon has the best skilled, best trained, best educated workforce in America. To achieve this goal I’ve made education my top funding priority in the 2009-2011 budget.
Fifty-four percent of General Fund revenue in this budget goes to education. It is a big number – and it has a big purpose: To keep Oregon on track toward a powerful, diverse, high-wage economy when the recession breaks and a national recovery begins.
We cannot afford to lose ground on the progress we’ve made over the last several years reinvesting in education from Head Start to the Oregon Opportunity Grant program for post-secondary education.
As long as I am Governor, we will not close our school doors early – and we will not close the doors of opportunity to the many thousands of Oregonians whose American Dream is to attend an Oregon community college or university.
That, by the way, is why I will ask the Legislature to increase the corporate minimum tax – and dedicate the additional revenues to expanding the availability of Oregon Opportunity Grants.
President Kennedy in setting the goal of reaching the moon said – we don’t do things because they’re easy. We do them because they’re hard. Well my hard goal for Oregon is 40-40-20 by 2025.
That means by the year 2025, at least 40-percent of Oregon adults will have earned a four-year college degree or higher; another 40-percent will have earned a two-year degree; and the remaining 20-percent will have earned at least a high school diploma or its equivalent.
This cannot be done without a continued investment in education at every level. That’s why I’m recommending 6.39-billion dollars for K through 12 in the upcoming biennium.
But here is the more important point: . . .
. . . I intend to increase funding for Head Start, begin, funding a new Early Head Start program for children up to three years old, preserve funding for K through 12, community colleges, the Oregon University System, and to meet the growing demand for the Oregon Opportunity Grant Program, increase funding during the first year of the biennium.
To keep funding at that level for the second year of the biennium – we will need an additional 225-million dollars.
I am not going to touch the Education Stability Fund in the first half of the biennium. But if other revenues are not available in the fiscal year starting July 1, 2010 – I will work with the Legislature to allocate that 225-million from the Education Stability Fund for the second year of the biennium.
In other words, I’m holding all of education – not just K through 12 – harmless in the first year, and we will find additional funding – if necessary – in the second year.
So the bottom line for the entire education enterprise – preschool through the opportunity grant program – over the next two years is: No cuts.
I have one last comment on the higher education budget.
My budget does not yet include an amount for tuition increases, which we expect will be in line with the Higher Education Board’s original request of 3.6 percent per year, so as not to exceed the projected increase in family incomes.
Once established, the tuition amounts will require a technical adjustment to the other funds portion of the Oregon University System budget.
* * *
I stand by my belief that in tough economic times – children go to the head of the line.
That’s why my top priority is education – followed closely by providing affordable health care to all Oregon children under age 19.
My budget includes 670-million dollars to fully fund my Healthy Kids Plan and rebuild the Oregon Health Plan. With this plan, by the end of the 2009-2011 biennium, 80,000 more Oregon children – and 75,000 more adults – will have health care coverage.
We will raise these funds by renewing and restructuring the provider taxes paid by hospitals and insurers.
This will not only be healthy for children, working families and the poor – it will be healthy for Oregon businesses, taxpayers, and our economy.
Raising these additional funds is good fiscal policy for three reasons.
First, by giving uninsured Oregonians the opportunity to obtain quality health care, we will reduce the higher costs that are transferred from the uninsured to the 2 million Oregonians who currently have private insurance.
Second, for every dollar collected in provider taxes, we’ll get back an additional $1.66 from the federal government. We’ll use these combined funds – the full $2.66 – to expand coverage to the uninsured.
By so doing, we will provide more paying patients for Oregon hospitals, which would otherwise face increasing demands for charity care and have to absorb more unpaid bills. This approach offers demonstrable benefits for Oregon’s hospitals, which will be able to recover every dollar they pay in new revenues from new paying patients.
Third, this investment will create a demand for health-care professionals and will add more than 4,000 jobs to our health care sector.
But providing health care for Oregonians is about more than just increasing access.
We must work to control health care costs through good public policies, such as enforcing use of the Prescription Drug List, encouraging the use of electronic medical records, and collecting more information on medical services provided in Oregon to improve care and reduce unnecessary procedures.
Every citizen knows that when you have limited resources and build a budget around certain spending priorities – those decisions have consequences.
This budget is no exception. It makes choices for what state government does and how we do it. And those choices are going to impact the lives of real people. I know that.
I also know that the decisions made in this budget will challenge our dedicated state workers who will have to find new ways to do more with less.
But they have answered this challenge in past recessions, and I am confident they will answer it again.
* * *
I said earlier that we need a strong partnership with the federal government. But we will also need strong support from the Legislature in looking at new revenue sources to fund important social programs.
One of these new sources is the cigarette tax. Every pack of cigarettes sold costs Oregonians $11.16 in health care costs. My budget aims to recoup some of those costs by increasing the cigarette tax by 60-cents a pack, and by a 25 percent tax increase on other tobacco products.
We will use the revenues from these taxes to recover costs in the Oregon Health Plan – and to fund public health, tobacco cessation and health promotion.
***
Which brings me to my third priority: Energy and the environment.
What does continued investment in energy and the environment have to do with making sure that Oregon is ready when the national and state economy recover? In a word – everything.
First of all, the environment is our economy. Billions of dollars in economic activity are tied to our natural resources – meaning healthy forests; and abundant and quality water for our communities, fish and agriculture.
And don’t forget the millions of tourists who come to Oregon every year to enjoy our natural heritage.
But perhaps, most important, protecting the environment and our quality of life is who we are as a people.
So investing in clean air, clean water – and, yes – clean energy – is the right thing to do, and the economically smart thing to do.
My budget invests in developing a long-term plan to restore and preserve water supplies, and protect critical ground water resources.
I also want Oregon to continue to be the leading state for the production and use of green technology, green energy, and green cars.
We started down this road in 2003, picked up speed in 2007, and will approach the finish line in 2011 if my budget proposals for combating climate change and investing in renewable energy are adopted.
In 2007 we set ambitious goals to cut greenhouse gases.
Next year I want to invest almost 2-million dollars to help reach those goals, including an emissions performance standard for new electricity production, development of a low carbon fuel standard, and launching Oregon toward a regional cap and trade system.
There is a lot the state can do to help reverse climate change – everything from buying electric vehicles for our state vehicle fleet to investing in wave energy.
My budget does both – and more. But meaningful cuts in greenhouse gases are only possible if the private sector is a partner in this effort.
Cap and trade will help. But so will innovation and investment in energy efficiency and conservation.
I’d like to see businesses do this on their own. But as a practical matter – they need help. That’s why my budget increases the Business Energy Tax Credit from 35-percent to 50-percent for industrial-scale investments in energy efficiency, and includes 2.5-million in tax credits for full electric and plug-in hybrid vehicles.
This is by no means a comprehensive list of all the investments my budget makes in protecting our environment, reducing our carbon footprint, and putting our state far out front in creating a green economy.
But my message should be unmistakable – and it is the same message I conveyed to business and government leaders in Japan and China: Oregon is open for business. Especially green business.
The last priority I want to talk about – not in spite of the recession but as a critical way out of the recession – is transportation.
I mentioned that Oregonians don’t need to be told how difficult things are right now. In October alone, we lost 14,000 jobs, and I don’t expect the numbers for November and December to be any better.
I’ve always considered myself as a “Jobs Democrat”– especially in times like these. There is an immediate need in Oregon – and across the country – to put people back to work. And almost as important – we need to think creatively about how we invest in our transportation infrastructure, which is the circulatory system of our economy.
If we cannot move people and goods quickly, safely, and inexpensively, Oregon businesses will not be able to compete, and the Oregon economy will not grow.
If you think we have a problem with congestion now – it is projected to get 42-percent worse over the next 15 years if we sit on our hands and refuse to modernize and maintain our investment in the current system.
So investing in transportation is a double win. It will stimulate job creation in the short-term – and put our economy on track for success in the long-term.
That’s why my budget includes the Jobs and Transportation Act of 2009. This Act will raise more than 1-billion dollars to modernize our transportation system. Not just roads and bridges. But airports, seaports, public transit, and rail lines too.
These projects will protect and create 6,700 jobs a year in Oregon in the first five years.
How will my transportation package be funded? With a very modest increase in the gas tax, an increase in registration and title fees, and a first-time title fee on vehicles new to the state.
I know that when the economy is down as it is now – asking Oregon families to pay more for anything is a tough sell. But the money that will go back into the pockets of these same families – and the businesses they own or work for – through a stronger economy and fewer hours wasted in traffic, will far exceed the additional expense.
As for how the dollars will be invested: They will be invested statewide. There will be substantial funding for cities and counties to maintain their roads. We’ll invest hundreds of millions to relieve freight rail bottlenecks. And millions more to rebuild our non-highway infrastructure – funds that, combined with federal dollars, will help take trucks off the road and strengthen our rail and public transit systems.
I mentioned a few moments ago that we are going to shift the state’s tax credit from hybrid cars to plug-in hybrids and all electric vehicles.
You may ask: Is this a climate change issue or a transportation issue?
The answer is both – because my budget is not just about building or rebuilding roads and bridges. It is about creating the greenest, most energy-efficient transportation system in the nation.
And that is exactly what we are going to do.
One final choice I have made in this budget is to invest in creating more jobs for the people of Oregon. I’ve already noted transportation. But my budget calls for investing more than 2-billion dollars in capital construction projects.
In addition to the Job and Transportation Act of 2009, there is also funding for the new State Hospital, and critical investments in our University and Community College campuses and other projects.
By making investments in our public infrastructure, we improve and preserve that infrastructure, grow our economy, and create thousands of family-wage jobs.
* * *
Hope, confidence, certainty and reassurance. These are the words I used earlier to describe what we need to emerge from this recession a stronger, healthier, and more prosperous state.
There are no line items for them in the budget. They will not be part of any federal stimulus plan. And they cannot be put into a reserve fund.
But I believe that hope, confidence, certainty, and reassurance will see us through this very tough time – and the hard choices I had to make in my 2009-2011 budget, . . .
. . . and are a window to Oregon’s future.
So my message to the people of Oregon is: Have hope. Feel confident. Believe with certainty. And rest assured – together we will create a brighter day.
Thank you.
|
