State Senator Doug Whitsett District 28 Newsletter December 26^th

ASSIGNMENTS

At my request, Senate President Peter Courtney (D) appointed me to the full Ways and Means committee. Ways and Means is arguably the most influential committee in the legislative process because all state expenditures must be authorized by that committee. I thank the Senate President for granting my request. Courtney also assigned me to two Ways and Means sub-committees. The Transportation and Economic Development sub-committee will deal with the financial aspects of Oregon’s roads, ports, railroads, airports, and mass transit as well as all state efforts to maintain and grow our job base and housing opportunities. The General Government sub-committee is the counterpart to the General Government policy committee. As the legislative session winds down this committee will be one of the last ones kept open. Working together with this policy committee, the Ways and Means sub-committee on General Government will be instrumental in deciding which bills move forward and which bill do not.

My work on the interim Legislative Audit committee really helped me to better understand the current budgeting process and to identify budget areas that I would like to improve. The legislature has set performance measures for each agency designed to measure their outcomes relative to the tax money that they spend. The agencies are required to use evidence based practices to identify the most effective outcomes. It is the job of Ways and Means to oversee and evaluate these processes and to allocate tax money where it will do the most good. In fact, every bill that costs tax dollars must be authorized by Ways and Means. Working on that committee will allow me to more closely evaluate, and help to influence, how those tax dollars are spent. The committee is made up of about 2/3 Democrats and 1/3 Republicans which also represents the current political balance of the Oregon Senate. I expect this division to make fiscal conservative positions difficult to pass but I am pleased to be at the table and look forward to the work.

BUDGET

Governor Ted Kulongoski’s proposed all funds budget for 2007-09 is $49.2 billion. The proposal represents a 15% overall increase in spending over the current budget cycle. It is equals to about $13,500 for each man women and child in Oregon and represents a $2000 increase per capita over last budget cycle.

The Governor’s proposed General Fund / Lottery budget is $14.9 billion. The proposal represents a 20% increase over the last budget cycle which equals approximately $4100 for each man women and child in Oregon and represents an $850 increase in per capita spending for the next budget cycle.

Oregon’s projected General Fund and Lottery revenue is enough to provide for essential service budgeting plus $820 million for potential government growth and savings for harder times. Essential service budgeting means rolling up the costs from this budget cycle to cover the costs of the same level of services during the next budget cycle. Roll up costs are the rate of increase in government costs. They are essentially the rate of government inflation, which has been averaging between 5 and 7% per year, and are about three times the private sector inflation rate.

.         Regardless of the fact that our projected revenue provides for that essential service budgeting plus $820 million, the Governor’s is proposing new taxes that would exceed $600 million in total. Some of his proposals include reneging on the corporate tax refund credit ($275 million), increasing the corporate minimum tax which will primarily affect small business corporations ($85 million), an 84 cent per pack increase in the cigarette tax ($150 million), a real estate transfer tax that is being called an increased document recording fee ($65 million), and a surcharge on automobile insurance policies ($30 million).Other concepts being advanced are statewide service development charges for schools and yet another sales tax proposal. If only the first five proposals were enacted, the total increase in spending capacity would be almost $1.5 billion. That is an increase of more than $400 for every man, women and child in Oregon, in a single budget cycle.

The sources of the all fund budget are about ¼ ($15 billion) from general fund and lottery revenue, about ¼  ($12 billion) from federal fund revenue, and  about ½ ($22 billion) from other funds revenue. Oregon ranks about 40^th in the nation in taxes per capita, but ranks. 8^th in the nation in spending per capita.  The difference is in the $22 billion collected from other sources that are mostly dedicated to fund specific expenses  These include the fuel taxes, weight per mile tax, tuition, auto license & registration, drivers licenses, liquor sales revenue, and a myriad of other charges for services.

CONTENTIOUS SESSON?

The length of the legislative session always depends on resolution of the budget. Policy issues may be avoided or postponed until later sessions. Oregon’s Constitution requires that each Legislature balance the budget. With that in mind, there are two key requirements for a quick and agreeable legislative session.  First, agreement must be reached early regarding how much money there is to spend. Considering the new taxes the Governor has proposed and imbedded in his proposed budget, early agreement appears unlikely. Second, agreement must be reached early on how much will be spent on K-12 education.  That expense item runs about 40% of the entire GF/Lottery budget. The education unions have already thanked the Governor for his $6.06 billion proposal, but have said it is not enough by a quarter of a billion dollars. Without significant new taxes the $6.3 billion demand by the education unions will not leave enough for seniors, disabled, veterans, and public safety

PRIORITIES FOR 2007

Our first priority must be to provide for our seniors, disabled, and veterans. They are the folks that worked to build, and fought to preserve, the infrastructure and lifestyle that we enjoy. They are the unfortunate whose disabilities prevent self support. It is unacceptable that they are collectively losing the budget battle for adequate care.

Safety in our homes and our communities is vital. Local District Court judges agree that the root cause of more than 90% of the personal and property crimes in our community are drug and alcohol related. We must attack alcohol and drug abuse through both law enforcement and intervention and treatment. To that end, I have introduced legislation that will dedicate 1% of our general fund budget to the Oregon State Police Patrol Division. That 1`% will provide funds to double the number of sworn patrol officers.

Preservation of our agricultural and municipal water resources is vital to our small town culture, economy, and lifestyle. We have witnessed the financial and ecological disaster created by the 2001 water shut off to Klamath project farms. Our communities must unite in opposition to those who continue their efforts to decimate our rural communities by denying our use of our surface and ground water resources.

We must provide better education performance and better financial accounting by school districts. During past years, student performance has continued to decline in many districts even though we have increased average spending per student by $250 per year for each of the last eight years. That combined increase is more than $2000 per student, more than $50,000 increase per class of 25 students over the past eight years. The current request for funding, if granted, would add an additional $41,000 per class of 25 students to the funding stream. I have introduced legislation that will require school districts to make full public financial disclosure  as well as submit to privately funded financial audits by licensed Oregon auditors.

EDUCATION ENTERPRISE NOT WORKING

More money has not, and probably will not, improve the performance of our schools. In fact, following a large scale meeting of the K-12 education stakeholders held in Portland Dec. 11-13, the recommendation was made that both English and Math Achievement Standards for high school sophomores should be REDUCED by 3 points each. Certainly, someone needs to explain to the public why they are requesting an enormous increase in spending to achieve significantly lower expectations.

The United States spends more on education per student than any other industrialized country except one. Yet our student education achievement fails to rank in the top 25% among those nations. Reducing achievement standards and reducing expectations is no way to either improve performance or narrow that embarrassing achievement gap. Something is fundamentally wrong with an education system that “dumbs down” education achievement goals in order to improve performance. It is apparent that we need fundamental reform including accountability for teaching outcomes, introduction of competition (charters, vouchers, education tax credits, open enrollment, private schools), and the refocus of our attention on the students’ performance rather than school employee compensation.

PARTICIPATE

Gail and I are looking forward to our second legislative session STARTING January 8^th. We remind you that your thoughts and opinions are critical to appropriate legislation. Please stay in touch by letter, phone and email. We will always make ourselves available when you are in Salem. Please call ahead so we can rearrange our schedule when you come by the office.

Best regards,

Doug