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Friday, May 15, 2009

Governor: Economy Bleak, Maybe Tax The Rich?

Posted by Matt Davis on Fri, May 15, 2009 at 3:52 PM

Governor Ted Kulongoski delivered a bleak speech on Oregon's employment and budget situation at City Club this afternoon, telling listeners the state needs to look seriously at raising income taxes for the super-rich and corporations to pay for basic services in the future.

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KULONGOSKI: A MASTER GESTICULATOR...BUT WHAT ABOUT HIS REVENUE REFORM SKILLS?

"We have a jobs emergency in Oregon," he said. "Over the last four months, this state has been shedding jobs at an alarming rate."

New statewide unemployment numbers are due out on Monday, but they're already at 25-year highs of 12.1 percent—and Kulongoski told the room that it's going to take a "national recovery to bring Oregon's unemployment rate back to the level we saw two years ago."

The Governor also hinted that the state's $3.3bn revenue shortfall means he'll probably have to make cuts in our education budget. "In times like this, when we don't have the revenue state government needs to fully fund our core programs, then we have to make painful adjustments," he said. "And that unfortunately includes education."

Curiously, the Governor ruled out using any of the state's $900million in rainy day funds to pay for state services now, even to cover deficits in education and human services. Instead he plans to convene a cabinet of experts from education, human services and public safety, to look at "end[ing] the budgetary insanity" in Oregon, particularly when it comes to tax rates for corporations and people earning more than $250,000, over the next year.

Kulongoski's term ends in late 2010, so it's pretty unlikely that the economic cabinet will be able to invoke the changes he's calling for. Listeners were pleased to hear the Governor discussing revenue reform at last, but wondered whether perhaps Kulongoski could have considered doing something about it during the last six years of his Gubernatorial term.

"I think the hard work needed to reform the tax system needs to be done, but I also think we could have been working on that for these past six years," said Steve Novick—former candidate for state senator in the democratic primary who is rumored to be considering a run for Governor when Kulongoski retires. "There's nothing wrong with trying to give yourself extra credibility by convening a panel of experts, but it would be nice to see him say 'you know what, I should have done this four years ago even though the pollsters were advising me against it'."

Novick pointed to the statewide kicker as another example of something Kulongoski could have tackled earlier. "The state needs to save during good times so we can protect education and human services," he said. "Not give the money back to people and face a budget crisis when the economy turns bad."

Novick graded Kulongoski 5 out of 10 on his speech. "He sounded a little defensive," he said—adding that Kulongoski could have been more specific about what "human services" actually means. "There's this misconception out there that that means the state's personnel department, but it actually affects old people's ability to stay in their housing, and I would have liked to see more about that," he said. But Novick gave Kulongoski 7.5 out of 10 on his plans. "I think he'll work to support people in the legislature on revenue reform," he said.

"In tough times everyone demands more accountability," said Cathy Kaufman from Children First. "The Governor is right that people are struggling and we must do what we can to help them."

"I think the Governor identified the crisis," said Oregon PTA Legislative Director Otto Schell. "It's deep and widespread, and he's talking about revenue reform. But I was a little perplexed to hear the governor talking about job creation efforts without protecting teachers in the classroom and caseworkers. That doesn't make sense to me."

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