Governor's Budget Bolsters Schools, Health Care, Public Safety, And Clean Energy

Strong revenues offer “the ability to do more, the opportunity to do better and the responsibility to do our best,” Governor says.

(SALEM) - Oregon Governor Ted Kulongoski presented a “Hope and Opportunity Budget” for the 2007-09 biennium, with significant new investments in public education, children’s health, law enforcement and criminal justice and the development of renewable energy. “We are entering an era of great opportunity for Oregon,” the Governor told reporters, legislators and government officials during the official rollout of the state budget. “We have the ability to do more, the opportunity to do better and the responsibility to do our best.” For the first time in eight years, the Governor said, Oregon has the resources to keep pace with inflation and population growth and to make schools better, communities safer, while also strengthening critical services for the elderly, the disabled and children and families in need. “We begin with the ability to meet the growing demand for state-funded programs by fully funding the services projected to meet the needs of a growing population,” the Governor said. “But for the first time in many years, we also have additional resources -- $820 million above this level -- to restore, improve and expand critical services.” The bulk of these new resources will be used to make schools better and stabilize funding for the 198 school districts in the state, the Governor said, and expand access to post-secondary education for students who graduate from high school and adults in the workforce who seek to upgrade their skills. Other investments will enable the state to, “make our communities safer…provide a stronger safety net for vulnerable Oregonians…upgrade our mental health system…and control health care costs,” the Governor said.

“We can keep children safe and families stronger. We can clean up our air and water and sustain a healthier landscape. And we can accelerate our movement toward energy independence and a renewable energy economy.” Today’s improving economy highlights the need to rebalance Oregon’s tax system to provide more equity for working families and stability for essential services, the Governor said, highlighting his recommendations for tax fairness under the heading, “the opportunity to do better.” “Almost everyone in Oregon recognizes that our tax system is unstable and unfair,” the Governor said. “And there is a growing consensus on changes within our reach that can make our system more stable and more fair. This legislative session offers an opportunity to act on those consensus items.” The Governor asserted that a growing consensus exists around the need to redirect the state corporate “kicker” to a rainy day fund, rather than let it go to corporations and shareholders, who are reaping significant benefits from Oregon’s economy.

Most of these shareholders live out of state, the Governor said. “Placing the corporate kicker in a rainy day fund will protect our schools, human services and public safety when we hit the next economic downturn.” Raising the $10-corporate minimum tax is also a matter of consensus, the Governor said. The state has not increased the tax since 1931, when most working families lived on less than $30 a week.

“Raising the corporate minimum will enable us to fully fund Head Start for all eligible three- and four-year-olds, and launch our Shared-Responsibility Model to make college truly affordable for all Oregonians.” A third consensus item is the need to raise Oregon’s tobacco tax to match the tax rates now in effect in Washington state. This will enable Oregon to recover more of the costs that smoking inflicts on society, especially the health care system.

“Dedicating new tobacco tax revenues to health care will allow us to provide affordable health insurance to every child in the state and bring more needy adults into the Oregon Health Plan,” the Governor said. A fourth consensus item is the need for a stable funding source for the Oregon State Police, the Governor said. That funding source may be a surcharge on car insurance premiums on policies that go beyond the mandatory minimum coverage.

“No one disputes that we need 24/7 coverage by state troopers on our state highways,” the Governor said. “If we adopt all of the consensus items I have outlined, our tax system will be more fair, more stable and better able to support the services that our citizens deserve for the long-term. We will end our rollercoaster trend of cutting in bad times and re-investing in good times, but never quite getting ahead.” Under the heading of “the responsibility to do our best,” the Governor’s budget allocates $5 million to facilitate the consolidation and administration of school district health plans, which is expected to save $40 million in future biennia.

The budget also proposes to close the Eastern Oregon Training Center in Pendleton and to transition the 40 developmentally-disabled adults who now reside there to community group homes or foster care. Further, the Governor’s budget increases funding for the Government Standards and Practices Commission, the state’s ethics enforcement agency, to provide the “tools to enforce the laws and rules to ensure that the people’s business in conducted openly, honestly and without improper influence.” A

nd, his budget restores full funding for the Oregon Voters Pamphlet and increases staffing for the administration of elections in the Secretary of State’s office. Finally, the Governor’s budget increases reserves to $902 million by doubling the Educational Stability Fund (to $452 million), establishing a new rainy day fund with the proceeds of the corporate kicker ($275 million), boosting the budget’s projected ending balance ($145 million) and re-establishing an emergency fund ($30 million).

These reserves will exceed six percent of the state’s General Fund revenues by the end of the 2007-09 biennium – a record level in recent years and one praised by State Treasurer Randall Edwards as “an enormous step forward on the path of long-term financial stability in Oregon.” Summary of Budget Highlights Education Enterprise:

The Governor’s total Education Enterprise General Fund/Lottery Funds budget is $8.0 billion.

This is $1.1 billion more than 2005-07, or a 15.5% increase. The budget funds K-12 schools at $6.06 billion, or a 14.2% increase over 2005-07.

The Governor’s Budget provides access to Head Start/Oregon Pre-Kindergarten for all eligible 3 and 4-year olds by adding an additional $39 million from an increase in the corporate minimum tax.

Funding for need-based grants through the Student Assistance Commission increases to $110 million Total Funds, $32 million more than the current program level.

This will enable the state to make the first of two new investments to implement a new “shared responsibility model” for college assistance that will make post-secondary education affordable for all Oregonians, boosting grants from an average of $1,200 to $1,800 per year and extending eligibility to 42,000 students in households with incomes as high as $60,000 per year by 2009-11.

The Community College Support Fund is at $483 million. This is $54 million more than 2005-07, or a 12.6% increase.

The Governor’s Budget for Community Colleges also includes $174 million Other Funds for 12 capital construction projects.

The OUS budget includes almost $41 million additional funding for campus operations, including funding for regional campuses, faculty salaries, enrollment growth, and reducing student/faculty ratios.

The OUS budget includes $594 million in Other Funds for 45 capital construction/deferred maintenance projects. Healthy Kids Plan.

The Healthy Kids Plan will offer affordable health insurance options that are expected to cover 95% of these children within three years.

The program will also include coverage for mental health services, treatment for substance abuse, and dental care. The Plan will also expand school-based health care services, adding 13 new school-based health centers.

The Governor’s Budget adds 139 new state troopers for basic around-the-clock coverage on major highways.

This dedicated funding comes from a proposed auto insurance surcharge, raising about $25 million in the 2007-09 biennium.

The Governor’s Budget expands health coverage to an additional 10,000-15,000 low-income Oregonians through the Oregon Health Plan “Standard” program, above the 24,000 currently served.

The budget also increases reimbursement to physicians and hospitals under the Oregon Health Plan.

An additional $6 million is invested in the Healthy Start program that provides family support for at-risk families of first children during the pre-natal period through age

3. This will increase the number of at-risk families served by 7,600 – from about 41% of the eligible population to over 50%.

The budget includes $6 million to expand the quantity (from 10 weeks to 16 weeks) and quality of the basic police training to include complex, real-life scenarios.

Community Corrections receives an additional $25 million under a new funding formula that more accurately reflects the actual costs to counties.

The Governor’s Budget includes $38.2 million to fund the Oregon Innovation Council Innovation Plan - funding ocean wave energy start-ups, strengthening development of nanoscience, and supporting research and development in manufacturing and Oregon food industries.

The budget reflects a significant increase in the Bridge Program, as most of the 365 bridge projects under the Oregon Transportation Investment Act (OTIA III) complete their design phase and go into the more expensive construction phase.

Another $100 million in Lottery bonds will be sold for the Connect Oregon Program.

This will fund a second round of multimodal projects for improving public transportation, the aviation system, the rail network and marine ports.

By the end of the 2007-09 biennium, budget reserves are expected to total $902 million, or slightly over 6% of the General Fund/Lottery Funds budget.

This includes $145 million ending balance proposed in the Governor’s Budget, $30 million in the Emergency Fund, $452 million in the Education Stability Fund, and $275 in corporate kicker revenues that the Governor proposes to put in a Rainy Day Fund.