Governor K's Proposed Budget

[depakid]

My short analysis is that he's serious about structural balance- and not interested in messing around with non-recurring revenues or debt instruments. He looks to be taking more or less of a "program budgeting" or PPBS approach- the kind McNamara and his whiz kids brought to the Pentagon when every branch of the service wanted bigger and better toys.

What was needed was an overall strategic vision- and those toys that fit into the vision got funded- and those that didn't got axed.

There won't be a lot of "fair share" going on here from the looks of it.

If anyone's interested in PPBS or public budgeting principles, there's a fine text online here:

http://www.eli.pdx.edu/erc/morgan/handbook6.pdf

The PPBS stuff starts at p. 84.

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Gov's Dec 1 remarks

Good morning and thank you for joining me today as I release my Recommended Budget for the 2005-07 biennium.

I know you are all anxious to get to the numbers – but before we talk about what’s in or out of this budget, I want to talk more broadly about what this budget means for Oregon’s future.

The key to this budget is that it doesn’t look backward – it looks forward. Current service level budgets start from the question – “where have we been?” This budget starts from the question - “where do we want to go and how can we get there?”

We all know that the revenue available for the 2005-07 biennium is not enough to continue all government services at the level at which they are funded today.

Over the past decade, citizen initiatives like Measure 5 and Measure 11 have significantly increased demands for school and prison funding. We must remember that the demands created by the initiative process also come as mandates to the state budgeting process.

Population has continued to grow while the national economy has slowed.

The hard truth is: the state budget grew in the 1990’s at a rate that was unsustainable given Oregon’s economic and tax structures. We budgeted as if the overcharged economy of the 1990’s would continue forever.

We made the problem worse in the five special sessions in 2001 and 2002, because instead of making the tough decisions that were necessary in a recession economy, we attempted to avoid reality by using one-time revenues to sustain an over-inflated state budget.

Quite simply, Oregon’s state budget process had become unsustainable.
My goal is to make sure Oregon does not fear change or remain locked in the past, but seizes the future with hope.

I continue to be guided by one core belief: Oregon has a bright future.

But if we are to take advantage of the opportunities the future offers, we must have a clear vision of what we want Oregon to be, and we must make the hard decisions needed to get us there.

That is why I believe we must make the tough choices today and do what it takes to build a sustainable budget for the future.

Many of you have asked me which programs we are going to cut to deal with the budget shortfall. That is not how this budget was built.

It is long past time that we stopped looking at budgets cut by cut and started looking at them investment by investment.

It may seem like I’m mincing words here, but this isn’t just about semantics – this is about changing the way Oregon plans for the future.

This budget continues my commitment to instilling discipline and certainty in the budgeting process, by changing the way state government does business in order to generate more revenues for programs without increasing taxes.

We intend to be more efficient in the use of the resources we have. And this budget aims to get us to a brighter future by making targeted investments rather than comparisons to the past.

We must stop looking in the rearview mirror and start focusing on the road ahead. And when I say “we,” I mean all of us – elected officials, the media, and the public.

That means making tough choices and short-term sacrifices today – but just like when families invest for college, or when businesses invest for growth, we know the long-term rewards will be substantial.

Theresa will walk through the budget in more detail in a few minutes.

I want to talk to you first about the key features of this budget – what makes it different from budgets before it and what makes it a roadmap for a successful future. These defining elements are:

* Investments in a set of Oregon Principles;
* Budget discipline and sustainability;
* An emphasis on targeted investments in education and economic development; and
* The structure for a rainy day fund and a preK-16 investment fund.

The very first thing I did in putting together this budget was to identify six Oregon Principles.

The six Oregon Principles are described in detail in the budget document – but quickly, they are that we:

* Provide our children and adults with the educational opportunities they need to succeed today and in the future;
* Take care of our most vulnerable citizens;
* Create family-wage jobs for Oregonians;
* Maintain the high quality of life we enjoy in Oregon;
* Ensure that our citizens are safe in their homes and in their communities; and
* Provide for a stable, efficient and accountable state government.

The Oregon Principles are an important piece of the way I approached this budget. Rather than looking at the budget agency by agency, I viewed it through the framework of how every service provided by the state contributes to the achievement of the principles, regardless of which state agency provides the service.

When we focus only on the funding details of individual programs, we lose sight of the relationship those programs have to each other and to Oregon’s future.

The reality is that for every government program, there is someone out there who will argue that it needs more dollars. They will probably have a very good argument about why their program is critical to Oregonians – and if we look at that one program in isolation, we would very likely agree that it is deserving of our investment.

But this is a zero-sum game. We can’t afford to look at programs in isolation because we simply can’t increase funding for one program without decreasing funding for another.

That’s why we have to focus on the outcomes we are trying to achieve. For example, if we look separately at the Department of Human Services, the Department of Education and the Oregon Youth Authority, we will see that they all operate programs for Oregon’s children.

But it is only when we look at them together, as part of a much larger system, that we can make choices about where to invest limited dollars to best meet our principles to keep kids safe, educated and healthy.

We can also identify opportunities where those agencies might accomplish the same outcomes by operating more efficiently or eliminate overlap by partnering with each other.

The second key element of my budget is that it is disciplined and sustainable. Although some of the numbers for individual program areas may not be as high as some would hope, this budget builds the foundation of stability we need today if we want to be able to expand our investments in the future.

I know some would seek to avoid tough choices by arguing for a borrowing package by the issuance of debt to provide more money for whatever the need may be. Although that might make things easier during this budget cycle, it would narrow our choices in the future and would jeopardize our chances of long-term economic and financial stability.

It would also be an unwise way to use up the state’s bonding capacity.
I have not and will not use debt in the form of bonding for current operating expenses. State government must manage its budget the same way Oregon families manage theirs.

When times are tough and money is tight, you don’t put everything on a credit card and hope you’ll be able to pay it off - with interest - sometime in the future. Instead, you adjust your budget and map out a spending plan so you know you can live within your means while you work to improve your financial situation.

Under my watch, the state will not use a credit card mentality for our operating expenses. This budget pays as we go, making investments in the future.

I want to note one key policy choice I have made. I have told the Lottery Commission that I expect them to expand current games, including line games, and to increase the revenue collected and transferred by the Lottery Commission.

My budget uses the undedicated portions of these additional lottery proceeds to fund the patrol functions of the Oregon State Police.

This was one of the most difficult policy decisions in the budget. Although I have not been a proponent of the state expanding into line games, I believe the impact it will have on public safety outweighs my concern.

With this move, I am ensuring that we have 329 patrol officers in the streets and in the communities of this state, protecting Oregonians.

For two decades we have been cutting the state police, increasingly putting not only our communities at risk, but putting each trooper in harms way. My budget provides a source of funding for state troopers through administrative means without asking the public for more tax dollars.

I am open to finding an alternative source of stable funding, and you will recall I sought to move the state police funding back into the highway fund in the last session.

If this Legislature steps up to the plate to find that alternative source, then I would dedicate these new lottery dollars to education. The third key piece of this budget is its investment in our future through education and economic development.

If we are serious about building long-term prosperity, these must be our top priorities. Here are two hard facts about Oregon’s budget: first, the only way we’re going to generate enough revenue to fund all our needs is by substantially increasing the number of high-wage jobs in Oregon and by growing our economy. That goal is linked to the quality of Oregon’s education system at every level– whether in grade school, college, apprenticeship or professional training.

Second, one of the fastest growing parts of the state budget is the prison system. Keeping criminals off the streets – a responsibility we must always keep as a priority – is requiring us to spend hundreds of millions of dollars that we’d much rather use for health care, education, or transportation.

But the only acceptable way to reduce these costs is to reduce the number of criminals. And that too is linked to the quality of Oregon’s education system. A better school system means more graduates with better job prospects, and fewer dropouts and less crime.

My budget changes the way we think about education in our state by looking it as a lifelong system rather than a series of separate programs. When people think of state funding for education, they immediately think of the K-12 budget. The State School Fund is indeed a critical piece of our investment in Oregonians’ education - but it is not the only piece.

My budget allocates 5 Billion dollars for the basic support needed for K-12 public schools. Although this number is not as high as some would seek, it is an increase over last biennium’s budget.

This number is also significant because of what it represents for the future: it is the first step in stabilizing school funding since Measure 5 was passed in the early 1990s. This is a funding amount that we can sustain, without one-time revenue or bonding or accounting tricks.

I want to be clear that this is only a starting point. Do I wish we could provide more funding to K-12? Absolutely.

But the first step to increasing the investment down the road is ensuring we have a solid foundation on which to build. My budget includes plans to increase our investment in education in the future by building a sustainable preK-16 investment fund.

It also includes a commitment to free up dollars for the classroom within our existing K-12 budget. I believe there are significant opportunities for additional efficiencies through economy of scale in the public school system. Many administrative services such as payroll, data processing and transportation could be centralized, rather than being done individually by each of Oregon’s 198 school districts.

And I believe it is critical to enact a statewide K-12 health insurance pool. I brought this proposal to the last legislature and I will fight for it again this biennium. There could be as much as hundreds of millions of dollars available to funnel directly into the classroom if the school districts and legislators focus in on the reforms I am proposing, and if they dedicate themselves to finding additional reforms in the system.

But as I said, we cannot focus only on K-12 if we want to improve Oregon’s education system. We must also invest in higher education – both in our students and in the institutions that are fuel for economic growth.

My budget opens the doors for more students to attend an Oregon public university or community college. It reflects my commitment to make higher education more affordable and accessible by doubling the number of Opportunity Grants from the current 63,000 students to a total of up to 130,000 over the next two years.

This education and workforce budget also includes important investments that help Oregon families get on path to self-sufficiency through access to important professional training opportunities as well as assistance with child care.

We must also make Oregon a place where businesses thrive. In addition to the quality of Oregon’s education system, our economic prosperity is heavily dependent on the quality of our business environment. For the most part, state government cannot create new jobs or businesses. But we can – and must – make it easier and more appealing for the private sector to do so.

In my first two years in office, the state embarked on an aggressive business development strategy, focused both on helping existing Oregon companies grow and bringing new companies to our state. Since July 2003, more than 10,000 new jobs have been created in Oregon as a direct result of our state economic development efforts.

In fact, just yesterday, Amy’s Kitchen announced their decision to expand their Santa Rosa, California operations to Medford, Oregon. The company expects to complete a land purchase in Medford later this month, at which time they will announce their final plans for expansion. Amy’s, with annual sales of more than $100 million, has grown nearly 25 percent this year, forcing the company to expand its manufacturing space sooner than expected.

The new facility in Medford, when built, could create more than 200 jobs for the area – and it is a success story that clearly demonstrates that Oregon is a great place to do business.

Over the past two years, we also started $2.5 billion of construction projects for Oregon’s transportation infrastructure, creating 5,000 family-wage jobs each year for the next ten years and ensuring our roads and bridges are safe for tourism and commerce. We streamlined business regulations, saving Oregon businesses hours, dollars and more than 250,000 sheets of regulatory paperwork.

But this is only the beginning.

My budget helps further position Oregon as a state that fosters innovation through continued investment in the Oregon Nanoscience and Microtechnologies Institute (ONAMI) which the state helped establish last biennium, as well as new investment in a Commercialized Research Fund that would be available to small businesses that wish to work with Oregon’s research institutions to develop new products.

This budget strengthens the partnership between government and the private sector to increase entrepreneurship and to keep our smartest and our brightest in Oregon to carry out their dreams.

Although education and economic development are the key focuses of my budget, this budget also makes significant progress in the other Oregon Principle areas.

My budget makes strategic investments in the livability of our communities from making the Willamette River a place of recreational and fishing opportunities – to investing in sustainable energy resources that help our environment and help us cut costs.

My budget reflects a commitment to vulnerable Oregonians who struggle to meet their basic daily needs of food, shelter, and medical care – first by putting children at the front of the line and then funding key services for our older Oregonians who deserve to live their remaining years with dignity and care.

My budget recognizes that our communities and state institutions must be safe environments, by ensuring law enforcement have the tools to prevent crimes from happening in the first place, and supporting the needs of our correctional and health institutions that help Oregonians get back on the right track so they can re-enter society as productive citizens.

My budget also helps fight the meth epidemic in Oregon by creating a special statewide team to detect and investigate large methamphetamine operations throughout the state, with a particular focus on cracking down on operations that place the lives of children at risk.

There is one other component to my budget that supports all six Oregon Principles by providing stability for our future - and that is the establishment of a Rainy Day Fund.

We are currently experiencing the result of a decade of operating on faith that our economy would keep growing as it did in the 1990’s, rather than planning for what would happen if it didn’t.

We owe it to our future to do better than that. That’s why my 2005-2007 budget includes a long-term plan for a rainy day fund that I believe will set us on the path to financial stability that state government needs.

I know many may be wondering how we set aside money now when there are many other areas where this revenue could be used. These choices are hard and can be painful. But if we do not set aside anything now, when will we?

When I took office, I pledged to set a new tone in Salem and build the public’s trust. I committed to the people of Oregon that government will hold itself accountable; live within its means; and be a partner for the private sector – a catalyst for the creation of living-wage jobs; a champion for working families; and a steward for our environment.

As I have said before, I believe that times of great economic difficulty are also times of great opportunity. We have already shown that we can rise to tremendous challenges and achieve great things in difficult times.

We must continue to challenge ourselves to stay focused on creating the future we want rather than on the things we cannot do today.

This challenge calls for Oregon to put aside issues of partisanship and ownership. It is time for all of us to think and act differently.

To those who see imperfections in this plan, I welcome your ideas for how to make it better. But at this time when we need to pull together, anyone who criticizes without proposing alternatives needs to look in the mirror and question whether they´re really acting in Oregon´s best interest.

I ask citizens and legislators - if you want to increase funding for a program in the budget or fund a new program, you owe it to Oregonians to tell us exactly how you would pay for it, either by identifying a source of funding or a cut in other programs. You also owe it to us to identify the long-term implications of the changes (including the impact on the budget and other programs in future budget cycles, and the ability of the state budget to sustain that program over time.)

I believe one of our greatest challenges in changing the way Oregon does budgets is educating the public about the choices that must be made. That’s why I have put all of my budget information on the website so the public can see exactly what decisions I am making.

That is also where the media plays a huge role – and I hope you will take it seriously. When you are interviewing someone to get their reaction to the level of funding for a specific program, don’t just let them talk in generalities. Ask them what they would do differently. We all have to face the reality that there is a limited amount of money to be spent and choices must be made.

In the months ahead, I will work with the Legislature and the public to make sure we make the best decisions possible about how to use the dollars citizens pay to their government. It will not be a simple task, but making tomorrow better than today isn’t simple.

It means having a shared vision for a prosperous future and the confidence that with hard work, perseverance and a good strategy, we will all enjoy that future together.

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And here's all yer goodies in detail... dig in (if you dare):

http://governor.oregon.gov/Gov/budget0507/intro.shtml