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Governor Takes Long View of State’s Challenges May 23, 2009

Posted by FairSentencing in : Current News , trackback

Gov. Ted Kulongoski on Friday layed out his plans for a “reset” of state government, in which its mission would be retooled to match the fiscal realities of an economy expected to sputter along for many years to come.

The Democratic governor’s first major policy speech since December also will impress upon his Portland City Club audience that he and other state leaders are hard at work addressing Oregonians’ No. 1 concern: creating jobs by expanding the “green economy” and plowing state dollars into transportation and infrastructure projects.

And the speech, timed to coincide with state economists’ release of the latest revenue projections, will speak to the more immediate challenge facing state-financed schools, universities, human services, courts and public safety programs: how to cope with the sharpest decline in state tax dollars since statehood.

But Kulongoski asserted in a recent interview that his understanding about these hard times has prodded him down a longer path — in contrast to the one followed by other leaders focusing almost entirely on the immediate economic and revenue crises.

“The issue for the state is the next decade,” Kulongoski said. “This is an issue that you have to look out there five to 10 years, and you’ve got to have those discussions now.”

Kulongoski insists he’s not disengaged from the immediate challenges facing state government. But he said it is necessary for him to divide his attention between the 2009-11 budget, which goes into effect in July, and Oregon’s longer-term problems.

Specifically, Kulongoski said he hopes to engage voters in reconsidering some of the ballot measures approved in the 1990s. He cited Measures 5 and 50, which limited property taxes and shifted schools from that revenue source to the state’s income taxes. And he said he wants to re-examine the decision to impose mandatory minimum sentences through Measure 11, which has prompted an expansion of prisons and escalation of incarceration costs.

By early 2010, when the Legislature next meets for a brief session, Kulongoski said he hopes to have a blueprint “for how do we structure a discussion with the public about decisions we have collectively made over the last 20 to 25 years that have basically handcuffed the state government’s ability to manage through this economic difficulty. And I am talking about (Measures) 5 and 50 and 11. I mean, it’s skewing the choices that the public wants the Legislature to make.”

Proposal would face opposition

Any attempt in Salem to get voters to reconsider their past choices to limit property taxes and lock away violent criminals is sure to meet stiff opposition by those who promoted or currently support those policies.

Gresham-based conservative activist Don McIntire authored Measure 5 as a way to limit property taxes that had been rapidly rising through the 1980s. He says Kulongoski’s critique that it took away local control hides the real intent of revisiting the property tax initiatives.

“It’s a roundabout way of saying he wants property taxes to go up. That’s the only thing he can mean by it,” McIntire says. “What he’s doing, once again, is serving the government class.”

Oregon Crime Victims United leader Steve Doell said rolling back all or parts of Measure 11 would not net the kind of savings that critics of the mandatory minimum sentencing law promise. Of the $1.3 billion budgeted for the Department of Corrections in 2007-09, $290 million of that is driven by Measure 11, according to Crime Victims United.

“We’re not going to abandon a sentencing structure we worked 20 years to create to alleviate a budget crisis,” Doell said.

In addition to the property tax limit and mandatory sentencing measures, Kulongoski is also interested in revamping the kicker law, which voters in 2000 amended to the Oregon Constitution. It requires that taxes collected in excess by 2 percent of officially projected levels be rebated to households and corporations. Last year, it triggered rebates of $1.1 billion — just before Oregon entered the recession.

The Legislature has for now dropped plans to refer to voters a revamping of the kicker amendment, leaving it as another reform that Kulongoski said he wants to address after the current session’s early-summer adjournment.

As the governor sees it, the economy is undergoing a historic restructuring. Limited credit from banks and home equity will mean consumers can no longer be counted on to create the demand for goods and services that, in turn, create more wage and investment income.

“We are going to have a strong economy again. I believe that,” he said. “It is going to take its time to get there, and it’s not going to be the economy that we had before.”

As some sort of new economy emerges from the recession, Oregonians’ collective personal and corporate income will barely nudge along, Kulongoski expects. That means state taxes collected on wages, investment returns and business activity will fall short of what’s needed to pay for the level of public services Oregonians have come to expect from state government.

That makes this the ideal time, Kulongoski reasons, to ask Oregon voters if they remain committed to their 1990s decisions that forced education to compete with other programs for limited income taxes and to spend more on prisons.

Kulongoski is careful not to fault the Oregon voters who approved those measures.

“I don’t fault them for not looking down the road 25 years and saying, ‘My God, this is really going to get us,’?” he says. “They didn’t see it. Nobody could predict that. I think the long-term impact has finally come and caught us.”

Call for a revised budget

While Kulongoski is intent on looking at the big picture, some legislative leaders — even Democrats — have said the governor would be most helpful if he concentrated on Oregon’s more immediate budgetary crisis by presenting a revised budget that squares with expected state revenues — which are down $2 billion from levels expected when Kulongoski put his spending plan out in December.

“Because his budget is so outdated, it puts an extra burden on him — fairly or unfairly — to either lay out a revised budget or at least a revised vision for the budget we need to pass this session,” said House Speaker Dave Hunt, D-Gladstone.

Senate President Peter Courtney, D-Salem, said it’s taken Kulongoski all of 2009 to come to terms with a recession that is draining billions of dollars from the state budget and thus stymied much of the governor’s spending priorities.

The situation has left the normally affable, grin-wearing governor in a more grim disposition, Courtney said.

“I think he’s really staggered now, and he’s struggling.”

But after working behind the scenes with the governor’s staff since January, Courtney said it’s clear Kulongoski is ready to devote his last 20 months in office to righting the ship of state for future governors to steer.

Is that a futile mission for a governor whose end-of-term lame duck period is fast approaching?

“Not to him. That’s not how he’s built,” Courtney said. “He’s still governor in this world, and I think he sees it as his responsibility to come up with a master plan for how we get through this.”

Kulongoski acknowledged that his futuristic focus may strike some as quixotic, given the time left for a term-limited governor who leaves office at the start of 2011.

But Kulongoski sees little risk and the potential for much reward in trying to lead Oregon down the long road.

“If I’m right, then the next governor is going to have a playbook of how to do this and the choices that have to be made,” he said. “But if I’m wrong, then other than my pride — that I look foolish, that I got a lot more excited than I should have — what’s the harm?”



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