| Speech by Governor Ted Kulongoski |
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| December 6, 2004 |
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OBC Economic Leadership Summit 2004
REMARKS BY GOVERNOR TED KULONGOSKI
Monday, December 6, 2004
Thank you Randy for your introduction – and for your great leadership as Chair of the Oregon Business Council. I also want to thank Senators Wyden and Smith.
We’ve come through a tough election. There’s nothing wrong with that. Elections are supposed to highlight differences. But after the votes are counted, leaders in both parties must put partisanship on the back burner – and Oregon’s economy on the front burner.
Senators Wyden and Smith are doing that. And they are not alone. Senate President Courtney and Speaker Minnis are both on your Leadership Committee.
The success of these summits does not belong to any one party, or any one region of the state, or any one sector of the economy. They belong to Bill Thorndike, Duncan Wyse, the Oregon Business Plan Steering Committee, and all the business leaders, legislators, educators and local officials who – year in and year out – step up for Oregon.
Success also belongs to the people of Oregon. They came to your meetings and put their hopes and dreams on the table – looking for new opportunities and a new vision for their future. To each of them – and to each of you – I say: Thank you. Your voices are being heard – and your three years of hard work on the Oregon Business Plan is paying off.
The Business Plan is nothing less than a GPS for the entire state – helping to guide Oregonians to my vision of long-term economic growth through innovation and the creation of a pre-K through 20 education system that is second to none.
Growing Oregon’s economy is my passion. I say that proudly. But creating family wage jobs is my obsession. And that I say not just proudly – but with the aggressiveness of a battlefield commander, which is how I see myself when it comes to fighting for more jobs for Oregon. Today I can tell you that I am committed to building more capacity and infrastructure so that companies can move here and expand here. I am committed to reducing regulatory barriers that stand in the way of economic growth and job creation. I am committed to education as an enterprise – and to making strategic investments in our schools so that students get the quality education they need – and you get the highly skilled workforce you need. I am committed to staying the course. I will not rest until the Oregon economy becomes an engine for job-creation and healthy profits. And – most of all – I am committed to real change for Oregon.
Mark Twain is one of my boyhood heroes. He became a believer in change when he visited Virginia City, Nevada – a town of rampant sin and abundant booze. “It was no place for a Presbyterian,” Twain said, “and I didn’t long remain one.” My goal is to make sure that Oregonians never fear change and are never imprisoned by the past. I want them to embrace change and face the future with hope and opportunity.
My message to you is the same: Embrace change – and face Oregon’s economic future not just with hope, but with optimism and imagination. There’s a saying: Know the truth and the truth shall set you free. One of the great – but often ignored – truths about Oregon is our favorable business climate. National survey after national survey says we have one of the best. Yet business leaders outside Oregon often have a more favorable view of our regulatory environment and business tax structure than we do. The time has come for all of us to think positive about doing business in Oregon. Talk positive about doing business in Oregon. And act positive about doing business in Oregon.
We are a great state – with abundant resources, a skilled workforce, and a genius for doing more with less. Over the last two years we’ve gone farther – and faster – toward building an innovation economy than most Oregonians believed possible. Today, I promise you – this third Economic Leadership Summit will be the kickoff to even greater progress down the road.
Let me quickly list what we’ve accomplished since our first summit in December 2002.
PERS reform - Together we saved taxpayers 9-billion dollars.
Transportation - Our 2.5-billion dollar package to rebuild Oregon’s roads and bridges has already created or sustained 8,700 jobs – benefiting every county in the state.
Industrial land - This has been a priority for both of us. After only two years we have 20 “project ready” sites – covering over 1,700 acres – with 20 more on the way.
Regulatory barriers and Research & Development - Needless barriers to business are coming down – and investment in R&D is going up, including the Oregon Nanoscience and Microtechnologies Institute.
Education - Since our first summit, the Department of Education has made substantial progress overhauling K to 12 operations and management – to keep the focus on its core mission of educating young minds. And as you know, I rebuilt the Board of Higher Education and directed them to redesign our post-secondary education system.
I’ve tried to deliver on every priority I share with the Oregon Business Plan. But nothing is more important to me than creating jobs. I’ve been directly involved in talks with many of the corporate leaders who are bringing jobs to Oregon – or keeping them here. Following my discussions with Amy’s Kitchen, they announced that they will bring over 200 jobs to Southern Oregon. After I talked with Daimler-Chrysler in Stuttgart, Freightliner – its truck division – added 700 high paying industrial jobs. Intel and Sun Microsystems have both expanded their operations in Oregon and brought hundreds of new jobs. Wachovia, T-Mobile and Royal Caribbean and other companies have created thousands more jobs in Oregon.
So we have made a lot of progress. But there’s an old saying: “You can always find an army for the status quo.” Let me tell you – this is not the army I intend to lead. For the last two years I’ve been all about changing the status quo. And that’s about the only thing over the next two years that will not change.
Last Wednesday, I released my 05-07 budget. Both the technical budget and my Oregon Principles Budget. Needless to say, every conceivable opinion about the budget could be found in the newspaper. But if I were writing my own headline I’d say: Governor makes hard choices today for a stronger economy tomorrow.
Let me start with the first half of that headline: Making hard choices. The fact is: If we’re going to find the hopeful future I believe in, state government must end business as usual when it comes to the budget. That means putting away the credit card and making tough – but necessary – choices. The public and the Legislature are now seeing just how tough the choices we face really are. But times of great economic difficulty are also times of great economic opportunity – if we think and act differently about how we use taxpayer dollars.
I’m not going to talk details about the budget. But I will say this: In preparing my budget, I threw out the old rulebook. This is not a current services budget. My question to every agency head wasn’t – how much did you spend last year? My question was: What will be the outcome if we invest in this program? If the outcome didn’t measurably advance at least one of my six core principles – it didn’t survive. This is not to say I didn’t leave worthy programs on the table. I did. And believe me; I spent many sleepless nights worrying about the people impacted by the cuts I was making. But there was simply no way to avoid tough choices. As a former president once said: We have more will than wallet.
It is true that revenues are higher than they were at the start of the last biennium. But costs have gone up even more. What is driving up costs? More prisons and more prisoners. Federally mandated health benefits. And the cost of living – to name three.
There is no way to balance the budget while holding harmless public safety, human services, and education. These three programs make up 95-percent of the state’s General Fund
The bottom line is: We made the tough choices this year that weren’t made in 01-03. We have 12-billion dollars to spend – and that’s it! I will not go looking for more taxes from citizens. I want citizens to understand – this is what we can buy with the money we have. What my 05-07 budget lacks in dollars it makes up for in fiscal honesty and responsibility. For starters, it is the first budget in Oregon history that is absolutely transparent. Anyone – anywhere – can go to my website and read the budget. Line by line. Program by program.
I constructed my 05-07 budget so that it inherently includes a spending limitation and a long-term plan for a rainy day fund. This will give state government the fiscal stability it has lacked for years. My budget also creates an investment fund for pre-K–20 education – and continues my support for transportation. ConnectOregon will do for rail, marine and aviation what our transportation package last biennium did for roads and bridges. But most important, this is a no-gimmicks, pay-as-you-go budget. We do not borrow money to cover ongoing operating expenses. Doing so is bad business and a threat to our bond rating. We do not shift costs to future budgets. And we do not take money from reserve funds.
So, yes, right now the budgetary landscape is an uphill climb. And as anyone who has climbed Mount Hood knows, when you’re walking up a steep hill, you tend to keep your head down. My goal is to lift heads up and lead this state to economic prosperity
Which brings me to the second part of my headline: Creating a strong economy for tomorrow. By exercising budget discipline with strategic investments, we will unleash the innovative spirit of Oregon’s business community, create jobs, build the best possible education system, and secure our long-term future. That’s my vision for making Oregon the Innovation State. I know I don’t have to convince you. But there is a larger audience listening to what we say at this summit.
The people of Oregon are listening. Companies looking to relocate are listening. The investment community is listening. And, without doubt, our economic competitors are listening. So it is not enough that we believe in a vision of Oregon as the Innovation State – this larger audience must believe it too.
How do we achieve the vision I just described? We begin by building on our past support for public education, sustainable development, and sending children to the head of the line. As Winston Churchill once said: “The future is unknowable, but the past should give us hope.” There’s nothing wrong with glancing in the rearview mirror and taking pride in Oregon’s unique achievements – from the Beach Bill to the Oregon Cultural Trust to the social values we cherish. But checking the rearview mirror is not the same as taking our eyes off the road.
We need to look forward – toward the horizon and beyond. And that’s exactly what I intend to do: Look forward and in partnership with you and the people of Oregon – face up to the four critical challenges that will determine our long-term economic destiny.
These challenges are: Leadership, globalization, technology and education.
I start with leadership for a reason. Leadership is the necessary first step for competing in a global economy, expanding technology, and building a pre-K through 20 education system that is second to none. But even this understates the importance of leadership.
Every priority of the Oregon Business Plan requires steadfast and courageous leadership in both public and private institutions. For all of us in positions of responsibility this means – to paraphrase President Kennedy – asking not what Oregon can do for us, but what we can do for Oregon. That is the first test of leadership in this state. The second test is the ability to recognize danger – and to do something about it. That is what I did with the budget. Our recent history of borrowing, emptying out reserve accounts, and saving nothing for a rainy day posed a serious danger to this state’s financial stability – to say nothing of our children’s future. I believed it was a personal test of my leadership to get Oregon back on the budgetary straight and narrow. To pay as we go. And to start building a reserve that will cushion the fall – next time a recession hits.
The second major challenge affecting our long-term economic future is globalization of the market. Competing in the global economy is the theme of this summit – and it should be.
There are many hard working Oregonians who believe that the global economy is making it more difficult for them to obtain personal and financial security. These concerns are not made up. They’re real. Low cost foreign competitors have hurt some of our workers. And free trade is not always fair trade. Working men and women know that first-hand. But so do many businesses. I cannot put the Genie back in the bottle. And even if I could, it would not be the right decision for Oregon. One in every 4 manufacturing jobs is directly associated with exports.
We live in a global economy. That’s the reality. We can curse the night or light a candle. I say – light a candle. That means instead of complaining about the global marketplace, the smartest thing we can do is compete and make money. This is not a pipedream. We are a coastal state. Our access to the Pacific Rim gives us an enormous competitive advantage – but only if we do a better job marketing Oregon and making sure we produce what the world wants to buy. That won’t happen unless we meet the third challenge to our long-term future: Powering our economy with state-of-the-art technology.
I want to be absolutely clear: I am not turning my back on older industries. Timber and agriculture are essential to Oregon’s economy. And for many of our rural communities – timber and agriculture is the economy. But we are no longer a timber and agriculture state. We’re a traded sector state. Oregon manufactures silicon chips and potato chips – not just wood chips. But that isn’t the full story either. What we’re really about now is exporting what we produce.
There are two ways to look at this. Industries already critical to Oregon’s economy must become part of the Innovation State. The other side of technology and innovation is developing new Oregon industries that will do for the American economy in the 21st century what computers did in the closing decades of the 20th century. I want Oregon to be a world leader in this kind of innovation.
That’s why I reserved a place in my budget for a discussion about investing up to 20-million dollars for stem cell research at OHSU. And that’s why I have announced the creation of the Oregon Innovation Council – or Oregon, Inc. – to recommend to the Legislature and me a long-term plan for making us the Innovation State. The plan must be comprehensive, sustainable and make Oregon globally competitive. It must also advance R&D – and foster technology transfer and the commercialization of our ideas. I am literally going to put the “D” back in R&D. All this will allow us to scope our investments to available resources – without altering my long-term vision of Oregon as the Innovation State.
Our fourth long-term economic challenge is education. I am absolutely convinced that Oregon’s economic future rises or falls on the financial, political and moral commitment we make to pre-K through 20 education. That’s how important this is to me!
Where is the link – the connective tissue – between our economy and our education system? Oregon is a large state with a small population. If we’re going to succeed in the global economy we have to find a niche. For my money, Oregon’s niche is to have the best educated, best trained, best skilled population of any state in America. That means delivering a first rate education to students of every age – and knocking down barriers to education for students of every age.
Nothing will put the Oregon economy into overdrive faster than a stable, well-funded and accessible pre-K through 20 education system. When it comes to education, we are on the same page. The Oregon Business Plan calls for “dramatic change” in the way our education system is managed and funded. My staff is already working with you to make that happen.
You are right when you say that the system we had – three education sectors with separate budgets, policies and goals – is obsolete, wasteful, and an impediment to progress. That’s why when I was making tough budget choices, I came down on the side of strategic investments within education sectors – and across them. I’m talking about 100-million more for K through 12. 20-million more for community colleges and the Oregon University System. 50-million more for Oregon Opportunity Grants. And 8-million for a pre-K through 16 electronic data system – which will allow us to track and manage student progress. These are all critical short-term investments in education.
But over the long haul, my decision to increase the bonding capacity of post-secondary education to 450-million dollars – an unprecedented number – will allow Oregon’s community colleges and universities to dramatically expand and modernize their infrastructure. But they won’t necessarily be expanding on their own. My budget calls for joint capital construction projects between local communities and their community college – on the one hand – and the Oregon University System on the other. A good example is the joint project in Medford between Rogue Community College and Southern Oregon University.
Improving pre-K through 20 education is not just about more dollars. We also have to change the mind-set of managers in each sector. I’m directing managers across the system to work together to move students quickly and smoothly from one sector to the next. My longer-term goal is to stop managing by sector – and to have one coordinated system that delivers education in a way that is better, faster and more cost effective.
I propose consolidating many of the Education Service Districts, and having those that remain handle central office administrative services for most districts – including payroll, data processing and transportation. This will increase efficiencies and allow us to put more money back into the classroom.
We also need a statewide K through 12 health insurance pool. Would a large corporation allow each of its 198 business divisions to go their own way, negotiate their own health care plan, and then send the bill to headquarters? Not a chance. But that is exactly what is happening in our 198 school districts. To further increase efficiency, I have directed my staff to work with the two boards of education to analyze the cost drivers throughout the system. I will also establish new advisory councils for my staff to work with to identify and eliminate barriers to student success.
Right now the biggest barrier to student success is Oregon’s decade-long – and very shortsighted – disinvestment in post-secondary education. If the downward path we’ve been on continues, we condemn ourselves to decades of mediocre economic performance. Even though our population is growing, enrollment in Oregon’s institutions of higher learning is falling. This is a disaster in the making. We cannot become the Innovation State by starving the very institutions that do the R&D and train the minds that will become the next generation of leaders, technical workers and innovators.
I believe that Oregon’s community colleges and universities have the ability to provide a high quality post-secondary education. What they’re lacking – because of our past practices – is the ability to make that high quality education affordable and accessible. We’ve been treating post-secondary education like an ATM for the rest of the budget. When we cut funding, community colleges and universities must raise tuition. That makes it difficult for students of working families to earn the post-secondary education they want and deserve. They lose the chance to reach their full potential – and we lose the talent and energy they bring to our economy.
After a decade of neglect, we have one of the least accessible university systems in the country. Tuition is too high, and financial aid is too low. I am determined to close the affordability gap by controlling tuition costs and increasing financial aid – without sacrificing educational quality. But I am not going to be able to achieve this critical goal on my own. I need help. From you. From the Legislature. And from the federal government – which lately has been AWOL when it comes to post-secondary education.
No one has to tell me how important financial assistance is for college I wouldn’t be here without it. And neither would many of you. For most of our nation’s history, post-secondary education was considered a privilege – an entitlement to be enjoyed by the wealthy. But after World War II, we made higher education affordable and accessible for millions of returning veterans. That is how we became the economic powerhouse we are today: Not by building machines – but by building minds. Unfortunately, we are slipping back into our old ways – viewing post-secondary education as a privilege of the well to-do. This is wrong!
As a nation we have the capacity to think big. Almost sixty years ago, we created the Marshall Plan and rebuilt Europe. But we’re not thinking big today about what matters most – the future of our children and economy. We need a Marshall Plan for post-secondary education – where every qualified young person in this country has the right and opportunity to continue his or her education at a community college or university. This is not just about Oregon. This is about making sure that America is not left behind in an era of global competition. If our nation doesn’t make post-secondary education a top priority – we are going to lose, and lose badly, to nations that do make post-secondary education a top priority. That is why I urge you – as strongly as I know how – to think about this.
Talk with your colleagues and Congressional representatives – and make your views known at community forums, business meetings, and on the op-ed pages. We can look at a Marshall Plan for post-secondary education in two ways. We can wring our hands and say, “This is too hard.” “It won’t work.” “It’s too expensive.” “Let’s wait.” Do we really want to be part of that crowd? Or do we want to say: “This is the time for our nation to be bold.” “This is the time to take risks.” “This is the time for America to restore to every American the opportunity for a post-secondary education.”
I stand on the side of boldness – and I ask you to stand with me. Stand with me in calling for a national investment in a Marshall Plan for post-secondary education. Stand with me by being a forceful voice – in the Legislature and with the public – in support of my budget. Stand with me in making pre-K through 20 education more efficient and cost-effective. Stand with me in building the Innovation State. And stand with me in creating a more prosperous Oregon and a stronger America.
We have made a lot of progress together in the last two years. You are my friends and my partners – and in asking you to stand with me, I at the same time pledge that I will always stand with you.
Thank you.
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