The Hope and Opportunity Budget

The Governor has proposed his budget for the fiscal biennium 2007-2009. From the Statesman-Journal:

With state coffers now overflowing with money, Gov. Ted Kulongoski proposed a new budget Monday that restores many past cuts to schools, colleges and state programs, while beefing up reserves for the next downturn.

The governor's $14.9 billion general fund and lottery budget would boost spending by 20 percent in 2007-09. He called it the "hope and opportunity" budget.

"We are putting the long, trying days of fiscal crisis behind us," Kulongoski said. "We have the ability to do more with the resources generated by a stronger economy."

The governor's spending plan, used by lawmakers as a starting point to craft agency budgets, mirrors the campaign promises made during Kulongoski's re-election campaign.

As expected, he devoted the lion's share of new money to public schools, community colleges and universities. He also wants to increase taxes on corporations, cigarette smokers and motorists. Money raised would fund his major new initiatives: expanding access to Head Start preschool, more college financial aid, universal health care for children, adding low-income adults to the state health plan, and bolstering state highway patrols.

Read the rest.

  • (Show?)

    I'm trying very hard not to be smug. But hell, let me go on a bender just once.

    To all Republicans who whine about "massive spending", blah, blah, blah. All I can say is the same thing you threw in our face after your theft of the Presidency in 2000: "Elections have consequences".

    This "consequence" is that we will, for once, stop trying to win economically by being Cheaper than the Chinese. Instead we'll go back to our winning formula of being smarter, more innovative. As proven time and time again in California, New York, and Massachusetts (all "high tax/great education" states) that's what works. Your stupid anti-economic, anti-science, ideology doesn't.

    To the various BlueOregonians who during the primaries spewed nothing but pure vitriol at the Governor for not being a "true" Democrat - who attacked Democrats instead of Minnis, her cronies, and the various initiative demogogues who stopped him - all I can say is Thank God the Democratic Party controls its extremists better than the Republican Party controls theirs. If you'd succeeded in tearing Kulongoski down, we'd all be staring at Governor Ron Saxton right now, and his plan to turn Oregon into an education free asphalt parking lot (announced with great fanfare as "The Privatized Education, Open and Clear Skies, fair Employment Act").

    Ahhhhh. That felt good. I'm all better now.

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    My biggest concerns with the budget are as follows:

    1) The increased expenditures may not be sustainable even with the rainy day fund in the event of an economic downturn.

    2) The $275 million being diverted to the rainy day fund, plus the additional $225 million they will allocate from other parts of the general fund is less than half of the total surplus from the 2005-2007 biennium and it looks as though the governor's plan will spend every penny of the surplus from 2005-2007.

    3) Even with the insurance surcharge, the governor's plan looks as though it will cut funding to the OSP. I suspect that the cuts may come from arguably the most important line-item in the OSP's budget -- the crime lab.

    4) The $250 corporate minimum could be prohibitive to people who have been laid off who try to start their own business.

    5) Given that we started with a $1.1 billion surplus, do we really need the government to issue $82 million in debt to finance replacement of the Oregon State Hosptial? I have the same question with regard to creating a new tax to pay for more OSP troopers.

    6) Higher education needs to be supported at much higher levels, but given that Oregon now ranks 25th in K-12 funding and is 29th in affluence, do we really need a 13 percent increase in funding, K-12, at the expense of a bigger increase in funding for higher ed?

  • mrfearless47 (unverified)

    I agree with Sal. The K-12 budget does not require as big an increase, while higher ed sits in the bottom quintile for faculty salaries and gets an "F" for affordability. Limiting tuition increases to 3.4% sounds like a winner, but piled on top of the staggering increases since about 2000, would do little to make Oregon more affordable for many students. Upping student aid without adding the necessary staff needed to process student applications for financial aid is kind of like providing free health care but no doctors. An $8 million budget for increased faculty salaries is simply insulting. With about 5500 FTE faculty in the OUS, this works out to be a raise of $1454 per year or $161 per month. That will be just about enough to offset increasing health care premiums for OUS families and leave the faculty in the same position they were in before. Somehow, I don't view the higher education budget as anywhere near adequate to get Oregon out of the bottom quintile for salaries and at the absolutely bottom for affordability.

  • Dave Porter (unverified)


    I agree with all your sentiments yet find it most relevant that you put "Chinese" and "innovative" in almost the same sentence - as in "This 'consequence' is that we will, for once, stop trying to win economically by being Cheaper than the Chinese. Instead we'll go back to our winning formula of being smarter, more innovative." It's relevant because for us in Oregon to be "smarter" and "more innovative" we need first to recognize the importance of China in our future, then we can build educational programs that give our students the skills to deal with China. China is not going to stay "cheaper." They are working now to create 100 first-class universities and 30 world-class research universities. They already turn out 442,000 new engineers per year compared to 60,000 in the US. They are going to become a formidable competitor in the development of new products, services and ideas. As Democrats, we should not have too much hubris. The challenges of leadership, of bring the public along on how to engage China constructively, are enormous. And a failure to do so could be catastrophic.

  • MsBlue (unverified)

    I've a host of concerns with Governor's budget:

    The corporate minimum and corporate kicker are the only things about corporate taxation that most understand. But the real issue is that we’ve piled tax credit after tax break on big business, and reduced taxation for our big players by only taxing their earnings on what they sell in Oregon – just how much do Nike and ESCO sell here? How about Freightliner, InFocus, or Roseburg Forest Products? If you don’t pay taxes you won’t get the corporate kicker, so giving it up is a big zero. Big Business wants these pieces of bad PR off their backs, but we should give them that only when they start paying real taxes (not a $5000 or even $150,000 corporate minimum). So my response to the Governor’s Budget begins there.

    Do not increase the corporate minimum unless you reverse instate only taxation of corporate earnings (single sales factor). When the reversal is accomplished, require a $250 to $50,000 tax on all entities – C corps, S Corps, LLC’s, partnerships, LLP’s and trusts (others?) (Also non-profits and foundations?) (Enron had 800 entities –how many entities do Intel, Jeld-wen, Stimson Lumber, Tektronix, Umpqua Holdings, Van’s Aircraft and/or Monoco Coach have?). This will provide money to actually process and audit entities’ often complex tax forms and provide court services for entities at their own expense rather than at the expense of other public structures. It will still remain the cheapest insurance most businesses and other entities have. Provide no increase for early education until this is accomplished. Or, add taxes on convenience-sized bottled water and a Latte tax to fund early education initiatives.

    Drop the auto insurance increase. Instead increase the beer and wine tax to provide state troopers, drug and alcohol treatment, mental health services, and support services for those exiting the prison system. Match cigarette and alcohol taxes to the same slot in the national average.
    If cigarette taxes should be the third highest in the nation, as the Governor’s budget suggests, so should the beer and wine tax. Perhaps 10th or 20th highest in the nation would be a better set point for these two.

    Use money borrowed from the new rainy day fund to significantly increase enforcement efforts at the Department of Revenue, BOLI and the Employment Division – by 25-50% – segregate revenue related to the increase and add that money to the rainy day fund for the first biennium. In addition to repaying costs this will both demonstrate the effectiveness of government protections and enforcement and increase the rainy day funds way above the costs.

    Assure that every business and employee involved in building our public infrastructure is following wage and hour law and paying taxes. No individuals and no firms that are tax delinquent or whose principals or top five managers are tax delinquent is allowed to provide either materials or labor until their taxes are fully paid. Those caught cheating (businesses or new businesses with the same owners and/or managers) are not allowed to work on or to provide materials for government-funded projects for three years.

    <h2>Redirect the personal kicker as well as the corporate kicker to the rainy day funds proposed. Having essentially no rainy day fund is a financial crisis for our state, given the slowdown we face. The voters gave a mandate, believe in it – taxes pay for what we want for our state.</h2>
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