State needs to pay as it goes
The budget crisis facing Oregon encompasses both a short-term and a long-term problem. The short-term problem is the $830 million revenue shortfall because of our soaring unemployment rate and an increased demand for social services because of the recession.
The long-term problem is the fact that our current level of programs and services is not sustainable into the future based on the projected revenue forecast. This projected discrepancy between revenues and expenditures is due largely to a series of choices that Oregonians made in the last decade Ñ particularly our decision to cut taxes but not the programs and services that the taxes supported.
With Ballot Measure 5 we reduced our property taxes and shifted more than $4 billion a biennium into the general fund to finance education. We also cut our income taxes by nearly $1.5 billion through the 2 percent 'kicker' Ñ again, without reducing general fund programs.
On the contrary, we actually increased what we expected the state to pay for with the passage of Ballot Measure 11, which set Oregon down the road to a billion-dollar prison construction program.
So the challenge facing Oregon today involves not only addressing the immediate revenue shortfall but also putting the state budget back on a sound and sustainable financial footing into the future.
Productive negotiations are under way that will, I believe, result in consensus on how much of the projected deficit should be addressed through budget cuts. More problematic, however, is how we continue to pay for that portion of the budget we want to preserve.
I approach this budget challenge on the basis of a very simple and straightforward premise: If we want to preserve programs in the face of the budget deficit, we need to pay for them Ñ not by borrowing, not by raiding trust funds set up for other purposes, not through accounting maneuvers Ñ but with real revenue options.
And I have proposed some real revenue options: (1) repealing or at least delaying the implementation of Ballot Measure 88, a tax cut (that has not yet gone into effect) that will benefit primarily those at the upper end of the income scale; (2) increasing the current tax on tobacco by 30 cents per pack, to help pay for health care; and (3) increasing the beer and wine tax by 5 cents per drink, to help pay for mental health and drug and alcohol treatment.
The legislative proposal, by contrast would raid the principal of the Health Care Trust Fund and borrow $100 million from the principal of the Common School Fund. Both of these violate a very simple premise: Pay as you go.
These are trust funds, with the operative word being trust. They were created to build a principal from which interest would be derived to provide long-term sustainable funding for specific purposes.
The Health Care Trust Fund, for example, was established with the proceeds from the national tobacco settlement to provide a revenue source for health-related purposes: smoking prevention and cessation programs as well as providing health-care coverage for the working poor.
The Common School Fund was established when Oregon gained statehood in 1859. It has been building its principal for 143 years to provide an ongoing source of revenue for primary and secondary education.
To raid these trust funds in order to rebalance our current budget shortfall would be irresponsible.
The challenge facing us today is one of accountability.
And if these programs and services aren't important enough to pay for Ñ without borrowing against the future, without accounting tricks and without leaving the decision on how to fund them for someone else to make Ñ then we should cut them. It's that simple.
It is, after all, our commitment to each other Ñ to education and to caring for our vulnerable citizens and our natural environment Ñ that makes Oregon's definition of civic responsibility and quality of life different than that in Texas or some other state. That is important to me and, I think, to most Oregonians as well.
John Kitzhaber, who formerly practiced medicine in Roseburg, is in the final year of his second four-year term as Oregon's governor.