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Oregon’s Comeback: A 26 Point Plan to Control Spending and Reform Government

Oregon’s Comeback: A 26 Point Plan to Control Spending and Reform Government

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Published by esherred
Over the last two decades, Oregon’s elected officials failed to effectively budget for our future.
As a consequence, we face what outgoing Governor Ted Kulongoski and his Reset Cabinet
call “a decade of deficits.”

The steady erosion in Oregonians’ earning power that began at the start of John Kitzhaber’s
second term as governor has left the state without sufficient tax revenues to fund state
services and schools unless we transform Oregon’s budgeting process. This – and
Kitzhhaber’s eight-year failure to control spending, reinvent state government and rein in public
employee compensation – have helped create the problems we are dealing with today.
Over the last two decades, Oregon’s elected officials failed to effectively budget for our future.
As a consequence, we face what outgoing Governor Ted Kulongoski and his Reset Cabinet
call “a decade of deficits.”

The steady erosion in Oregonians’ earning power that began at the start of John Kitzhaber’s
second term as governor has left the state without sufficient tax revenues to fund state
services and schools unless we transform Oregon’s budgeting process. This – and
Kitzhhaber’s eight-year failure to control spending, reinvent state government and rein in public
employee compensation – have helped create the problems we are dealing with today.

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Published by: esherred on Aug 18, 2010
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10/26/2010

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 Oregon’s Comeback: A Plan to Control Spending and Reform Government   2
Oregon’s Comeback: A Plan to ControlSpending and Reform Government
OVERVIEW
Over the last two decades, Oregon’s elected officials failed to effectively budget for our future.As a consequence, we face what outgoing Governor Ted Kulongoski and his Reset Cabinetcall “a decade of deficits.”The steady erosion in Oregonians’ earning power that began at the start of John Kitzhaber’ssecond term as governor has left the state without sufficient tax revenues to fund stateservices and schools unless we transform Oregon’s budgeting process. This – andKitzhhaber’s eight-year failure to control spending, reinvent state government and rein in publicemployee compensation – have helped create the problems we are dealing with today.The May 2010 Revenue Forecast now estimates $796 million less than the state had originallyanticipated for the 2009-11 budget.
1
While revenues are expected to increase by $1.8 billionfor the 2011-13 biennium, this increase will not be enough to fund the projected $4 billionescalation in state expenses. In other words, state
revenue
growth is forecast at 14 percent for the next biennium while expenditure
growth
is forecast at 26 percent. The difference betweenthe two is the structural deficit or budget shortfall, which for the 2011-13 biennium, is projectedto be $2.7 billion.
(Final Report – Governor’s Reset Cabinet, June 2010, page. 22)
The gap between projected revenues and projected spending will continue into the nextdecade unless we slow the rate of spending and create more private sector jobs to supportpublic sector services. The structural deficits for the next eight years are projected to totalmore than $10 billion if the state tries to sustain the services it now provides.
1
May 25, 2010 Revenue Forecast, Office of Economic Analysis, Department of AdministrativeServices, State of Oregon.
 
 Oregon’s Comeback: A Plan to Control Spending and Reform Government  3
Included in that $2.7 billion “shortfall” in the 2011-13 Essential Budget Level (EBL) is the $375million that the state will pay to cover raises and health benefits for state workers over the nexttwo years.
2
The state will also need to generate an additional $247 million to fully fund newprojects started midway through the 2009-11 biennium. Furthermore, the EBL also includesthe $1.4 billion in 2009-11 spending that was paid for with federal stimulus dollars. The state isalso obligated to pay for the projected increased costs of the Public Employees RetirementSystem (PERS) totaling $368 million, as well as an estimated $487 million in social servicescaseload growth.
3
 
(Final Report – Governor’s Reset Cabinet, June 2010, page. 26)
All of this contributes to what
The Oregonian
has correctly described as “a financial chasm asprecarious as any in its 151-year history.” Oregon’s EBL budgets are unsustainable. AsGovernor Kulongoski’s Reset Cabinet said:“With cuts made in the current budget, tax increases in place, federal support on thedecline and reserves all but exhausted, there are fewer options for plugging holes andrebalancing budgets in the future.”
4
 
2
“Oregon budget stands at precarious crossroads,”
The Oregonian
, Saturday, July 24, 2010.
3
Final Report – Governor’s Reset Cabinet, June 2010, page 27.
4
Final Report – Governor’s Reset Cabinet, June 2010, page 28.
 

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