Governor unveils jobs program, revenue proposals

With the shadow of a $4.2 billion-plus deficit looming and unemployment at 12.1 percent, Oregon Gov. Ted Kulongoski of Friday revealed several proposals that he believes will create jobs and fix the state's ailing economy.

Kulongoski, speaking before the Portland City Club, said he remains committed to pushing several new revenue sources, including a gas tax and a still-evolving provider tax that would help provide health care to tens of thousands of uninsured patients.

Kulongoski said the state's 12.1 percent unemployment rate, the country's second-worst, is "painful."

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"We have not lost control of our destiny," Kulongoski said. "We will not surrender to fear. And we will get through this."

The remarks came just hours after lawmakers learned they'll need to fill an additional $351.3 million budget gap before adjourning in late June. The state faced an $855 million shortfall after its February revenue forecast. The $351.3 million shortfall is in addition to that. The state also faces a $3.6 billion shortfall in the next two-year budget, which begins on July 1.

Kulongoski said it would take a national recovery to restore the state's unemployment rate to the less-than 5 percent levels of two years ago.

The governor also proposed an Emergency Jobs Program that he said would create 12,000 entry-level temporary jobs paying between $8.40 and $10 per hour. Local governments, community colleges and workforce development agencies would oversee hiring.

More than 81,000 unemployed Oregonians are seeking entry-level jobs, according to the state's research. However, fewer than 1,000 such positions are currently available.

The Oregon Food Bank will sponsor as many as 1,000 of the program's jobs, he said. The Oregon Youth Conservation Corps and the Oregon forestry and agriculture departments will oversee another 500 of the positions.

The temporary workers will include those who clear trails, repair campsites, clean up watersheds and thin underbrush in forests. Kulongoski called on lawmakers to quickly approve the program.

The Legislature has targeted a June 30 adjournment date.

Kulongoski noted that the $13 billion budget with which lawmakers will work next biennium is about $4 billion less than the Legislature had expected to have at the end of 2007.

"The money simply isn't there any more," he said. "Some government functions have to go, at least for the foreseeable future. Oregon state government can no longer be all things to all people."

The governor also addressed the concerns of schools leaders who might face a $1 billion cut over the next two years.

"The reality is education is not the only responsibility of state government," he said. "The state must also look out for our most vulnerable citizens, keep the public safe and secure in their homes and communities and protect our pristine environment."

While $900 million in federal stimulus funds will help balance Oregon's budget, Kulongoski won't ask lawmakers to tap the $900 million Rainy Day Fund.

"The end of this legislative session is a long way from the end of the biennium," he said. "The economy has not stopped its decline, and we do not know what a recovery will look like when the current economic decline ends."

If the state doesn't keep those reserves, it could lead to hundreds of millions in additional cuts early next year.

"We've seen this movie before: it's called 'Five Special Sessions', in 2002, and we don't want to do that again," he said.

Kulongoski remains committed to seeking four revenue sources that he introduced last December:

• A provider tax that would help provide health care for all Oregon children up to age 19, which would spark $1 billion in federally matched grants. Providers and lawmakers are finalizing plans that would insure 80,000 children and around 50,000 uninsured adults.
• A gas tax and increase in vehicle registration fees.
• An increase in the corporate minimum tax, which is currently $10.
• A cigarette tax increase to provide more alcohol and drug treatment.

Kulongoski also threw his backing behind a measure that would increase income tax rates for those earning more than $250,000.

All measures drew applause from many in the audience of 400 City Club members.

Kulongoski also said Measure 5 and Measure 50, which limit property tax collections, have led to a "budgetary vise" that restrict the state's revenue options. He called for revenue system reforms, which would help spark economic recovery.

The governor plans to assemble an economic cabinet once the Legislature adjourns this summer.

Kulongoski blasted a Republican plan, introduced May 12, that party leaders said would maintain current service levels without raising taxes.

"It's baloney," he said. "They're just playing with numbers."

City Club members received the governor's speech warmly.

"I like his emphasis on putting people back to work," said Marc Catelnuovo-Tedesco, a Portland-based residential architect. "It's also very encouraging that he's open to a debate about the spending straitjacket we've created for ourselves" with Oregon's various tax reforms, enacted over the past 20 years.