Gov. John Kitzhaber says his budget would put Oregon on stable financial footing PDF Print E-mail
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Original Source | The Oregonian
By Harry Esteve, Tuesday February 1, 2011

SALEM - Gov. John Kitzhaber released his much-awaited recommended budget Tuesday, outlining what he said would be dramatic changes in the way Oregon teaches students, tends sick people and helps thousands of others who depend on government for survival.

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AP/ Gov. John Kitzhaber uses a pie chart showing the breakdown of state spending to explain his budget proposals.
Leaner times call for a "decisive break from the past," and the state must ratchet back its spending to a more sustainable pace, said Kitzhaber. His budget calls for no tax increases, nor does it go after high-profile cuts, such as eliminating state cell phones or cars, as Gov. Jerry Brown has demanded in California.

Instead, it gives most agencies the same amount of money they got in the current budget. He said that will be the base on which to rebuild a state that has been hammered by a deep recession and high unemployment.

"I believe if we do this right, and we do it together, we can use this moment to lay the foundation for a more sustainable and more prosperous future for our state," Kitzhaber, a Democrat, said on the opening day of the 2011 legislative session.

In all, the governor's 2011-13 budget proposes spending $14.5 billion in general fund and lottery dollars, while keeping a cushion of about $220 million. That represents a $1.2 billion increase - or about 4 percent per year - from the current two-year budget of $13.5 billion. It's based on the most recent state revenue forecast.

An 8 percent increase may seem exorbitant, even in post-recessionary times, but it doesn't account for the $1.3 billion in federal stimulus money that temporarily inflated the 2009-11 budget. That money has gone away. If you add the stimulus spending to the equation, Kitzhaber's spending proposal is essentially flat-lined.

Meanwhile, the cost of health care has soared, and a greater percentage of Oregonians are turning to the state for help. The net result: Oregon's revenue is not keeping up with increasing costs, so the state has to find new, less expensive ways to offer its services, Kitzhaber said.

The governor offered a straightforward game plan for the state and the Legislature. He wants to triage schools and state programs in the first year of the state's fiscal biennium, giving most of them just enough money to get by. In the second year, however, schools and state agencies -- especially the Oregon Health Authority -- will be expected to find hundreds of millions of dollars in savings by consolidating districts and eliminating overlaps between state agencies.

Kitzhaber said he expects fierce political pushback on his proposals for school and health care spending. School lobbyists have been pushing for $5.8 billion, saying even that level barely keeps districts afloat. Kitzhaber's opening offer is $5.56 billion.

But he said he wants advocates for schools and social programs to focus less on the budget figures and more on the outcomes the money will buy over the next two years.

State Superintendent Susan Castillo supports Kitzhaber's overall plan to make the education system more effective and efficient but said state funding for K-12 education needs to go up.

"This funding level is drastically lower than the estimated $6.5 billion our schools need to keep up with inflation and maintain the level of current services to students," Castillo said. Kitzhaber's budget will mean reduced learning time, fewer teachers, larger class sizes, and fewer programs to help struggling students meet graduation requirements.

Human services plan


Kitzhaber said his human services budget of about $3.8 billion is 40 percent below what agency heads say they need to keep up with the pressing demand for health care, food stamps, daycare services for single moms and other state programs. Kitzhaber said he doesn't want to kick people off the Oregon Health Plan, but instead plans to reduce payments to doctors and hospitals by more than 15 percent, and reduce the number of medical procedures covered by the plan.

The proposed budget contains some surprises.

Kitzhaber said he wants a statewide vote in November to allow the state to pay for state police patrols from highway funds, such as gas taxes and car registration fees. Current law requires highway funds to be spent only on road and bridge projects. If voters approve the change, that would free up an additional $93 million, which Kitzhaber said he would use to bolster the K-12 budget.

The governor also wants to create a new Early Learning Council that would ensure children enter school ready to learn. The council's proposed $360 million general fund budget would come, in large part, from consolidating early childhood programs housed in five separate state agencies. They include the child care division within the Department of Employment, Head Start from the Education Department, and Healthy Start and other programs under the state's Commission on Children and Families.

Regan Gray, policy director at Children First for Oregon, says her group will be "watching very closely for more details."

"Anywhere we can streamline services, target the most vulnerable kids, we think it's a great idea," she said.

New education board


Kitzhaber also plans to establish a "zero to 20" education investment board, that would oversee spending on all education programs. That would mean a huge shift from traditional competition among K-12 schools, community colleges and higher education for state support.

Although he needs new legislation to make it work, Kitzhaber said he plans to create the new board by executive order so it's ready to go if and when lawmakers agree to the changes.

State prisons would continue to eat up an increasing share of the budget, Kitzhaber said, because of sentencing restrictions imposed by Measure 11. However, he said he plans to build no new prisons over the next two years.

The governor also proposed spending $8 million on job creation programs, including one that would link unemployed workers with "high-demand jobs," a move he said would put 1,300 people to work. He also plans to go forward with his effort to boost employment with a massive weatherization program for public schools.

Reaction from legislative leaders from both parties was generally favorable.

Rep. Dennis Richardson, R-Central Point, one of the most conservative members of the Legislature, called Kitzhaber's recommendations a "refreshing development." He especially liked the governor's focus on outcomes, rather than budget numbers.

"It's not just about how much money," Richardson said, "it's what you get for that money."

-- Harry Esteve

Kitzhaber's budget explained

Some answers to common questions about state spending, state revenue and what constitutes a "shortfall"

 

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