Budget Cuts Present Challenge to New Governor

Consider what Washington Governor Christine Gregoire announced last week:

Saying Washington's ballooning budget deficit means "we have all run out of time,"Gov. Chris Gregoire on Tuesday proposed eliminating the state's health insurance for the poor and needy, ending the state food assistance, no longer funding programs for gifted students and delaying grant payments that help low-income students go to college. Last week, Gregoire asked to reopen the state's current contract with union workers in hopes of winning concessions. "The financial situation for our state is significant and will continue to require all of us to work together, Gregoire said in a statement."

Could this be a harbinger of things to come in Oregon?

The answer is maybe.

Much depends on what Governor-Elect John Kitzhaber does as he puts the next biennial budget together. He has until February 1, 2011 to get it done and transmit it officially to the legislature. He faces a projected $3.5 billion deficit on a general fund base of $16 billion for 2011-13.

Look at this pie chart.
It illustrates the difficult nature of the budget balancing act Kitzhaber and the new legislature will have to perform. If there are no new taxes – and, so far, no one who matters is talking about new taxes – cuts will fall in four areas: K-12 education; higher education; social services; and cops and prisons. Many of those interested in these important state programs voted for Kitzhaber and will be depending on him to limit budget reductions; however, there is almost no other place to go to balance the budget.

It also is not clear whether the new governor will try to re-open state employee union contracts. But, if he wants to make cuts in state employee compensation and the Public Employee Retirement System, he will have to do so. Republicans in the legislature will push for cuts in those very areas.

So far, the Kitzhaber Transition has operated below the public radar. The governor-elect has held one press conference and has appointed veteran transition adviser Tom Imeson to lead his effort while, at the same time, saying he, as governor, would take a hands-on approach to the effort. He also has focused his transition on economic issues.

The governor-elect's website, www.johnkitzhaber.com, lists five transition committees which the governor charged "to help grow Oregon’s economy and put Oregonians back to work across the state."

Here is a further text of what the governor-elect said the five teams would do:
“I said during the campaign that I would be ready to start on day one – and this is day one – day one of our effort to put Oregon back to work,” Governor-elect Kitzhaber said. “Beginning today, I intend to pull Oregon together and begin the necessary work to create jobs and get the private sector economy moving. And just as I said during the campaign, I cannot do this alone – I need the help of Oregonians from across the state to achieve our goals during the legislative session and throughout my administration."

  • Economic Development Team: Align State Economic Development Tools to Better Meet the Needs of Business

The Economic Development Team will identify ways the state can improve and better organize its efforts to connect Oregon businesses to sources of investment capital and information, such as advanced market research. The goal is to make it easier for Oregon businesses to identify state loan programs and technical assistance offered by multiple state agencies so that employers reach their job-creating potential.

Team Leaders:
Ted Wheeler, Treasurer, State of Oregon
Wally Van Valkenburg, managing partner, Stoel Rives; chair, Oregon Business Development Commission

  • Manufacturing Team: Sustain and Recruit Manufacturing Jobs to Oregon

The goal is not just to create jobs; the goal is to create jobs that pay at or above the national per capita income. Central to this is developing a strategy to expand Oregon’s manufacturing sector. The Manufacturing Team will work to identify the needs of the industry that will sustain and recruit manufacturing jobs to Oregon.

Team Leaders:
John Carter, CEO, Schnitzer Steel
John Mohlis, executive secretary, Oregon Building Trades Council

  • Energy Efficiency Team: Create Jobs and Invest in Our Schools

Oregon can put people back to work on large-scale energy efficiency upgrades to our schools, save schools money and improve the learning environment for Oregon’s next generation of leaders. Such an effort can be done a number of different ways and over different timelines, but the bottom line is this – by immediately saving state dollars that would otherwise go to paying for energy-related costs, there will be an available revenue stream that is freed up for repayment.

The Energy Efficiency Team will work to establish the financing mechanism and project criteria, keeping in mind that the goal is to have the program up and running by next summer.

Team Leaders:

Margaret Kirkpatrick, vice president and general counsel, NW Natural
Barbara Byrd, secretary-treasurer, AFL-CIO
Maurice Rahming, president, O’Neill Electric

  • Biomass Team: Increase Demand for Biomass to Create More Forestry Jobs

The Biomass Team will lead a group of stakeholders to foster the growth of a bioenergy industry in Oregon, beginning with woody biomass. Oregon has a huge opportunity to create jobs in rural areas through the use of woody biomass that is now produced as mill waste and by clearing forests. The team will identify opportunities for increasing the demand for woody biomass in the short-term, as well as look at the long-term by exploring other bioenergy sources such as converting waste to fuels.

Team Leaders:
John Shelk, managing director, Ochoco Lumber Company
Matt Donegan, co-founder and co-president, Forest Capital Partners

  • Workforce Development Team: Identify High-Demand Jobs and Train Oregonians

Although Oregon faces high unemployment, there are certain sectors that continue to have unfilled jobs. In addition, as our economy recovers, new jobs created will require new sets of skills. The Workforce Development Team will develop a strategy to connect Oregonians seeking work to the education and training needed to qualify for immediate job opportunities.

The team will look closely at high-demand occupations like healthcare workers, technicians and welders, and new occupations like wind power and other clean technology technical jobs that offer obvious targets for new or redirected training investments and that help to attract new economic investment to Oregon.

Team Leaders:
Dave Williams, vice president, NW Natural; chair, Oregon Workforce Investment Board
Lori Luchak, president, Miles Fiberglass